Business Maverick

Business Maverick

Top Africa Geothermal Utility Seeks $2 Billion to Add Output

Part of the ol-Karia geothermal power generation complex near the shores of Lake Naivasha some 120 kilometers north-east of capital, Nairobi. Photographer: Tony Karumba/AFP/Getty Images

Kenya Electricity Generating Co., Africa’s geothermal pioneer, plans to raise $1.95 billion to build new, and upgrade existing plants in a bid to almost double its power output from the renewable fuel.

KenGen, as the Kenyan state-owned company is known, plans to add 651 megawatts from underground steam in the next five years, said Cyrus Karingithi, an assistant manager for resource development and infrastructure. Most of the funds will be sought from development financiers, Karingithi said in an interview on Tuesday at a geothermal field located about 120 kilometers (75 miles) northwest of the capital Nairobi.

President Uhuru Kenyatta is pushing investors to tap Kenya’s vast geothermal resources with a goal to switch completely to renewable energy to generate electricity for the nation’s grid, from about 90% currently. Kenyatta said at President Joe Biden’s climate summit last month that there are “huge investment opportunities” in his country’s steam power given just a fraction of the resource is being used.

KenGen plans to build four new 140-megawatt steam-power plants each, including a project to be delivered as a public-private partnership, according to Karingithi. Steam wells have already been drilled at two of the planned facilities. The company also plans to upgrade some projects to add 66 megawatts and to deliver another 25 megawatts from wellheads, mobile generating plants, at the Eburru field.

The company’s shares fell 1.7% by close of trading on Wednesday in Nairobi. They have dropped 15% this year.

The business requires significant capital-expenditure given high initial costs for geothermal power, necessitating the preference for concessionary debt, according to Churchill Ogutu, head of research at Genghis Capital. “The company has been pivoting away from the expensive thermal electricity and into the more efficient and green-friendly geothermal,” Ogutu said in an email.

KenGen is able to generate 1,803 megawatts of Kenya’s total installed capacity of 2,892 megawatts. Of that, 705.5 megawatts is geothermal energy produced by the company.

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