Kengen Opens Bidding for 560 MW Geothermal Power Plant

Filed under: Business |
Kenya geothermal project e1348938291204 photo

Kenya is undergoing a geothermal boom

Kengen has opened bidding for the construction of geothermal power plants in the Great Rift Valley, in an initiative to achieve production of 585 megawatts (MW) of power through geothermal operations by 2016.

The competition, advertised in local newspapers asks for bids from companies and consortiums for the construction of 560 MW power plants, to be located at Olkaria in the Great Rift Valley.  The advertisement promises bidders that while the sought-after contract would be based on a joint-venture agreement: “The successful bidder or consortium would be the majority shareholder”.

The company intends construction of the power plants to proceed in phases, developing 140 MW sections at a time.  Under the terms of the agreement, the successful bidder will transfer the completed power plants over to Kengen within the 10-20 years following completion.

Kengen announced a plan earlier this year in February to maximise output by pushing production in the geothermal sector.  The company – which is Kenya’s top energy producer – intends to build six geothermal power plants, which are to achieve a production level of 585 MW by 2016 at an estimated cost of $12 billion.

The company’s plans come as a step in the right direction for Kenya’s Vision 2030 goal of reducing reliance on hydro and thermal power, and expanding its green energy sector through innovative geothermal and wind power generation projects.  Hydro power currently accounts for 46 percent of the country’s electricity demand; but with only 15 percent of Kenyans currently connected to the national power grid consumption is set to rise in line with national development.  With hydropower so susceptible to weather trends, the country has outlined a shift to greater reliance on alternative green energy production, in its Vision 2030.

The government has estimated that given the geologically active areas present in Kenya, particularly in the Rift Valley region, the country has the potential to produce 15,000 MW of energy through geothermal sources – despite currently only achieving an output of 200 MW from this sector; 15,000 MW being the estimated power demand of the country by 2030.  However, the government remains realistic and targets 5,000 MW of geothermal power by the vision year.  In its report entitled the Least Cost Power Development Plan, the government announced: “Geothermal resources are the choice for the future generating capacity in Kenya. The optimum solution indicates that geothermal capacity should be increased from the current 198MW to 5,530 MW in the planning period, equivalent to 26 percent of the system peak demand by 2031.”

As Kengen launches its new geothermal project, it also yesterday announced positive whole-year results, with its pre-tax profits jumping 11 percent over the course of the year, reaching 4 billion Kenyan shillings ($47 million).  The company also disclosed a 14.5 percent rise in revenue, peaking at 17.4 billion shillings ($204 million), which the company says it attributable to increased output from new plants linked with an increase in sales this year.  On the back of these positive results, the company went on to increase its dividend per share to 0.60 Shillings ($0.007), a 20 percent rise.