M a r k e t N e w s

Kenya: Two Geothermal Plants to Get Sh3 Billion Funding

Posted on : Tuesday, 12th April 2016

The push for clean energy has received a major boost after a Sh3 billion ($29.65 million) concessional loan was approved to finance two geothermal power projects in Menengai with an estimated total output of 70 megawatts (MW).

 
A clean energy fund, backed by six multilateral development banks will provide the loan.
 
The Climate Investment Fund said the loan endorsed through its Clean Technology Fund component will help expand the country's output of clean energy through projects structured as Independent Power Producers and implemented with support from the African Development Bank.
 
"Kenya is already demonstrating its ability to reshape its energy future by developing its vast geothermal resources through Menengai," said Joao Duarte Cunha, the bank's coordinator for Clean Technology Fund.
 
"But it still faces market barriers to full deployment of its renewables. This infusion of capital will thus serve to build investor confidence and improve bankability of these vital resources. Furthermore, the success of the independent producers can serve as a beacon for other countries looking to achieve similar green energy goals."
 
The Climate fund is backed by the AfDB, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank and the World Bank Group.
 
The AfDB said the Clean Technology funds will create a concessional lending designed to ensure the Menengai projects' financial "viability and commercial bankability by shoring up conventional financing and breaking down barriers to private investment".
 
Although initially expensive to drill, geothermal becomes more reliable over time than both hydro and thermal power which are prone to vagaries of weather and high international fuel prices.
 
Industry estimates show it costs about 9 US cents (Sh9.18) to produce one kilowatt of electricity from geothermal energy compared to 20 US cents (Sh20.4) using diesel, a situation that has buoyed the push for more geothermal projects across the country and lower dependence especially on thermal sources that still form a big chunk of the national energy mix.
 
The AfDB said that in a market where electrification is only 23 per cent and private investment remains modest, the Clean Technolgoy-supported plan will play a vital role by showing that the structure is economically viable for private investors.
 
It added that it will support and build a track record in a nascent market and reducing the country's dependence on hydro and thermal power sources.
 
Statistics by the ministry of energy shows that as at December the country had an installed capacity of 811.3 MW of thermal power, almost 35.3 per cent of the overall installed capacity.
 
Data by the Energy Regulatory Commission show that the demand for electricity in the country hit a record high last year.

Source : allafrica.com
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