Published on 19 Nov 2024

Asian firms power up Kenyan geothermal ambitions

Renewable energy sector draws interest from China, Japan, and Indonesia

The Geothermal electricity potential of Kenya has caught the attention of Asian investors with China taking the lead. State-owned construction company PowerChina broke ground on the 35 MW Orpower 22 geothermal plant, owned by Chinese firm Kaishan Group. The US$93m project is part of a broader effort to harness Kenya's geothermal capacity, of which only 10% of an estimated 10,000 MW has been exploited so far, leaving significant room for growth.

Orpower 22, slated for a 17-month construction period, is part of the larger 105 MW Menengai Geothermal Power Project, located about 200km northwest of the capital Nairobi. Kenya’s state-run Geothermal Development Company (GDC) awarded three contracts to independent power producers to finance, build, and operate geothermal plants, each with a capacity of 35 MW, in Menengai. The first plant, owned by Nairobi-based Sosian Energy, is already operational and was also built by PowerChina and is operated by Kaishan. Electricity generated by the Menengai plants is fed into the national grid via the Kenya Electricity Transmission Company and then distributed to consumers by the Kenya Power and Lighting Company.

Japanese firms are also investing in Kenya’s geothermal sector. The Japan Bank for International Cooperation (JBIC) and Mizuho Bank extended a loan of US$14.4m to supply geothermal equipment to the third Menengai plant, owned by UK-based Globeleq. Toyota Tsusho Corporation, alongside its Kenyan subsidiary, CFAO Kenya, were awarded the engineering, procurement, and construction contract, while Fuji Electric will produce key equipment such as geothermal steam turbines and power generators.

Geothermal energy accounts for nearly a third of Kenya’s electricity supply, producing 950 MW of the country’s total 3,321 MW installed capacity. Kenya ranks as the world’s seventh-largest producer of geothermal power, a technology that taps into subsurface heat, using steam or hot water from underground reservoirs to generate electricity. The country’s geothermal potential is largely due to its position along the East African Rift System, where tectonic activity brings geothermal heat closer to the surface. The Rift Valley offers an exceptionally cost-effective environment for geothermal extraction; drilling depths for geothermal wells can be as shallow as 900m, compared to the global average of 3,000m to 4,000m, reducing drilling costs and improving project economics. With its emission-free profile, geothermal energy also allows Kenya to attract climate financing to support its electrification goals.

Indonesia is investing in Kenya as well, with the state-owned Pertamina developing two geothermal sites. Earlier this year, a Pertamina delegation visited Nairobi to discuss fast-tracking development of the Suswa geothermal field. In December, the Indonesian energy giant announced a strategic partnership with GDC and Emirati renewables company Masdar to invest $1.2bn in the 300 MW Suswa site. Additionally, Pertamina has entered into an agreement with Africa Geothermal International Limited (AGIL) to advance the Longonot geothermal concession, approximately 60km northwest of Nairobi. AGIL, which received a licence for Longonot in 2009, estimates a development potential of up to 500 MW, with the first phase expected to come online by 2027.

References

‘AGIL to drill its first geothermal well in Longonot, Kenya’, Renewable Energy Magazine, 01 February 2018

‘Kenya taps the earth's heat’, International Monetary Fund, December 2022

‘Energy-electrical power systems’, International Trade Administration U.S. Department of Commerce, 19 August 2023

‘Pertamina Geothermal Energy and Africa Geothermal International Limited have signed a partnership for geothermal development in Kenya, primarily in Longonot’, Think GeoEnergy, 21 August 2023

‘Indonesia's Pertamina Geothermal explores partnership with Kenyan firms’, Reuters, 22 August 2023

‘Pertamina Geothermal Energy explores collaboration with AGIL to develop Longonot concession in Kenya’, Pertamina, 22 August 2023

‘PT Pertamina Geothermal Energy, GDC, and Masdar join forces for US$1.2 billion Suswa Geothermal field project in Kenya’, Indonesia Business Post, 07 December 2023

‘Pertamina Geothermal Energy, GDC, and AGIL agree on accelerating 2 geothermal fields development in Kenya’, Pertamina, 08 March 2024

‘A modular power plant is steaming up Kenya's geothermal efficiency’, Power, 03 September 2024

‘Kenya’s Menengai geothermal project to power half a million homes with clean energy’, African Development Bank Group, 15 October 2024

‘TDB Group signs loan agreement with JBIC-Mizuho-NEXI for on-lending to provide geothermal equipment for Menengai Power Project in Kenya’, TDB Group, 15 October 2024