Kaishan and GDC sign framework agreement for development of five geothermal sites in Kenya

The Geothermal Development Company (GDC) and Kaishan Group Co. Ltd. (Kaishan) have signed a framework agreement that sets the foundation for potential extensive collaboration on the development of five geothermal blocks in Kenya and along the East African Rift Valley, namely Paka, Silali, Korosi, Baringo, and Suswa.

All five blocks are within GDC concession areas, and are described to have the potential to support up to 2 GW of power generation capacity.

At this stage, the agreement only serves as the foundation for the next stages of cooperation between the two parties. It is not yet legally binding. However, due diligence studies will begin immediately to evaluate opportunities for joint exploration, assessment, utilization, and development of geothermal resources.

If such development schemes are found to be viable, the two parties will sign separate legally binding cooperation agreements for each geothermal block subject to development plans mutually agreed between the parties.

The framework agreement also has a provision on the use of surplus electricity produced during off-peak hours to produce green hydrogen and ammonia, thus helping to balance the supply and demand of the power grid and promoting lower electricity prices.

The agreement further widens the role of the Kaishan Group in Kenya’s geothermal sector. In the Menengai field, the first geothermal power plant to come online in 2023 was built with counterpressure steam expanders from Kaishan. The second geothermal power plant was developed and built by OrPower 22, a company that Kaishan acquired in 2023.

The Kaishan Group is also building a geothermal-powered green ammonia facility under a geothermal power supply agreement with KenGen, the state-owned operator of the Olkaria geothermal power plant complex.

The agreement also presents a potential pathway for the private development of power plant infrastructure in the other geothermal fields being explored by GDC. The Menengai field was developed under a private-public model, with GDC executing geothermal drilling and steam field management, while private partners undertook power plant construction and operations. GDC has already been given clearance to start drilling in Suswa, while a substantial number of wells have already been drilled at the Paka, Baringo, and Silali fields.

Source: Kaishan Group