Call for expressions of interest: 300 MW Suswa Phase I development

Call for expressions of interest: 300 MW Suswa Phase I development OLK02 wellhead plant of GEG at Olkaria in Kenya (source: Green Energy Group)
Alexander Richter 6 Jan 2014

Kenya's Geothermal Development Company (GDC) issues Call for Expressions of Interest for the joint development of 300 MW geothermal power plants in the Suswa Phase I with an expected investment of at least $400 million.

We reported on Geothermal Development Company of Kenya (GDC) looking to raise $300 million, with details now emerging.

GDC, a 100% state-owned corporation, tasked with accelerating the development of geothermal energy in Kenya, is undertaking geothermal development at Suswa Prospect. Detailed surface studies comprising of geology, geophysics, surface heat measurement, baseline environmental and social economic assessment estimates the field potential to be about 750 MW. The current project aims to realize about 300 MW between year 2016 and 2018.

The estimated 300 MW Suswa Phase I Geothermal Project including the power plants construction is projected to be completed between 2016 and 2018. GDC jointly with the selected investors will develop the steam by drilling exploration, appraisal and production wells. The competitively selected investors will thereafter construct the power plants and generate power with the fuel mined from this prospect. A total of 120 wells will be drilled for this Phase.

The detailed surface study has been completed. The studies leading to ESIA license from National Environmental Management Authority (NEMA) relating to the resource development is in progress. Infrastructural development will start from July, 2014/15.

Under this project, GDC will obtain all land rights, permits and undertake construction of the road network, drilling water reticulation system, drilling of exploration and appraisal wells to confirm presence of the resource. In addition, jointly with the selected partners, GDC will undertake all the remaining drilling works (production and re-injection), feasibility study(s) and construction of the necessary steam gathering and reinjection network. GDC’s investment will comprise a total of 20% to 40% of the required capital for this development phase or as may be agreed between the parties.
After power plants commissioning by the development partners, GDC will be responsible for reservoir management and the brine reinjection system.

The Investors, under a joint steam development contract, will finance between 60% and 80% of the require capital for the steam development in a manner to be spelled out in the detailed request for proposal to be issued to the shortlisted investors. The investors will recoup their investments through regular payments made from revenue generated through steam sales in a manner to be spelled out in the detailed request for proposal over a period of 20 years or any other agreed period.

Further, the Investors will finance, design, construct, operate and maintain the power plants. While steam field is under development, the investor will have the opportunity to install wellhead generation units for early power generation. The Government of Kenya will not provide sovereign guarantees relating to this investment and therefore the investors should seek other alternatives such as MIGA (World Bank).

It is expected that the short listing will be completed by April, 2014 followed by request for detailed proposal. The Selection of preferred investors will be completed by December, 2014. The award to the preferred investors will be subject to the investor successfully negotiating a Power Purchase Agreement (PPA) with Kenya Power and Lighting Company Limited (power off taker), securing a generation license from the Energy Regulatory Commission and conclude financing within an agreed period by the parties.

A period of 24 – 36 months will be provided for power plant construction.

For details of the Call for Expressions of Interest, see link below.

Deadline is February 20, 2014.

Source: Official Tender Overview (pdf)