Interview with Mr. Atef Marzouk, GRMF Project Manager at the African Union Commission

As the date approaches for the kick-off meeting for the Geothermal Risk Mitigation Facility’s (GRMF) 6th Application Round on May 6, 2020 from 02:00 pm to 4:30 pm (Addis Ababa time (GMT+3)), GRMF has approached us to publish an interview with Mr. Atef Marzouk, the GRMF Project Manager at the African Union Commission.

In the intereview, Mr. Marzouk provides a brief background on the GRMF, the organization’s achievements, and its current status. The full interview is published below:

Interview with Atef Marzouk, GRMF Project Manager, East Africa

Since the launch of Geothermal Risk Mitigation Facility (GRMF), a de-risking facility to foster the development of a geothermal market in East Africa and to provide indigenous, low cost power generation for the region, 30 projects have been awarded grants and there are very good perspectives for the future. Now the 6th application round was announced. Due to the current situation regarding the coronavirus, the kick-off meeting will be held in the form of a webinar on 6th May 2020. ThinkGeoEnergy spoke with the Head of Energy Division of the AUC and GRMF Project Manager, Atef Marzouk, to learn more about the current activities of the program and its impact on the geothermal sector in East Africa.

Mr. Atef, thank you for taking your time for this interview with Think GeoEnergy. Could you give us a brief introduction to GRMF as well as its mission?

The geothermal resources of the East Africa Rift System (EARS) have a potential to generate over 15,000 MWe (megawatts of electricity). However, this resource is currently only used to a limited extent in the EARS countries. Geothermal energy is a clean, renewable, environment-friendly and indigenous resource that can improve the energy-generation mix, but its development is facing many challenges. The main challenges for development of geothermal resources in EARS are, among others: (i) large upfront cost of geothermal resource exploration and development; (ii) inadequate policy and regulatory framework to attract investment; and (iii) limited capacity in geothermal energy development value chain.

In June 2009, the AUC was requested to play a leading role in harmonization and coordination of geothermal energy exploration and development in the East African Rift System, by the Ministers responsible for energy of 11 countries. In response to this request, the Geothermal Risk Mitigation Facility (GRMF) that was established in 2012 by the AUC together with the German Federal Ministry for Economic Cooperation and the European Union (EU) – Africa Infrastructure Trust Fund, managed through the German Development Bank (KfW). In 2014 the UK Department for International Development (DFID) added their contribution to the GRMF bringing the total size of the Facility above USD 100 million. The objective of the Facility is to encourage public and private investors as well as public private partnerships to develop geothermal prospects for power generation in Eastern Africa by supporting early stage development by providing grants for two types of activities:

• Surface studies to determine the optimal location of exploration wells at the most
  promising geothermal prospects; and
• Drilling exploration wells and testing of reservoir by drilling further confirmation wells at
  the most promising geothermal prospects, to assist developers secure financing for
  subsequent wells for field development.

The grants are awarded through competitive Application Rounds based on quality of the proposed project’s geological, technical data and work programme, financial viability and environmental/social sustainability. In addition, evaluation criteria include the capacity and experience of the applicants and their partners.

What is the grant intensity for eligible activities that GRMF provides to project developers?

In the past 5 application rounds, GRMF has provided 80% for the total eligible cost of the surface studies that aim to identify an optimum location for drilling, 40% for the total eligible cost of drilling of two full size wells as well as 20% of infrastructure upgrading.

After this comprehensive description of GRMF, what have you reached since the launch of the program in 2012?

In the last 5 years we carried out 5 application rounds and a sixth one will be launched during the virtual kick off meeting on 6 May 2020 via a webinar because of the ongoing spread of covid-19 which prevents a physical gathering. During these first application rounds we received 62 applications. Out of these 62 applications, 30 have been awarded. The 30 awarded projects consist of 14 surface studies and 16 drilling programs in 6 different countries, i.e. in Comoros, Djibouti, Ethiopia, Kenya, Rwanda, Uganda and Tanzania. In total, the awarded projects are carried out by 10 private and 6 public developers. Furthermore, the regulation of GRMF is constantly reviewed and improved after each application round.

Referring to the improvements of the program, what has been changed in the recent past

So far, developers can submit application for power projects in combination with direct-use applications. It is important to point out that stand alone direct-use applications are not eligible for GRMF grants at the moment. However, AUC through the Regional Geothermal Coordination Unit (secretariat of GRMF) is currently assessing the potential extension of the facility. An online survey was launched from 24 th January to 12 th February 2020 with that regard. The interesting outcome of this report forms the informational base for further discussions with the relevant financing institutions and donors, in order to (i) develop further financial instruments for the advanced project phases, and to (ii) assess the potential financial support for direct-use projects.

Furthermore, we would like to take this opportunity to point out that GRMF remains fully operational despite the coronavirus. The kick-off meeting for the 6th GRMF application round will take place on 6 May 2020 from 12:00 to 14:30 (Ethiopian time) in the form of a webinar. Further information about the webinar will be published shortly on our homepage www.grmf-eastafrica.org. We are looking forward to numerous participants and a large number of applications.

Source: E-mail correspondence