Kenyan “Daily Nation” reports on the set up of a new geothermal unit for the country. Based on that decision, “the State is set to constitute a technical committee to deal with the working relationship between two power producers after power utility functions are split once more. The Kenya Electricity Generating Company (KenGen, as developer and O&M company) is grappling with the formation of a parallel parastatal for geothermal production. The Energy ministry, Geothermal Development Company (GDC) and KenGen officials will make up the committee.
Like KenGen, Kenya Power & Lighting Company (KPLC, as distributor) is also set to cede some of its functions. KenGen will leave the geothermal part, seen as the future of generation, to GDC.
The largely hydropower producer has in the past carried out geothermal exploration on behalf of the government. At KPLC, transmission is to be hived off. This is the second split since 2000 when KPLC and KenGen were split from the old KPLC.
The committee on the power production firms’ link is expected to decide on staff recruitment. Amongst its task is to decide whether employees in the geology wing of KenGen are to be transferred to GDC. A decision will be made on whether the corporation will outsource services from KenGen. GDC and the Kenya Electricity Transmission Company, chaired by Justus Kagenu, will appoint CEOs according to the PS.
This is the second split since 2000 when KPLC and KenGen were split from the old KPLC.
GDC is tasked with developing steam fields and selling geothermal energy for electricity generation. The government will finance risks associated with the exploration. GDC, a limited liability company has 20,000 ordinary shares. Treasury is the majority shareholder with 19,990, according to its memorandum and articles of association, with the Energy ministry holding 10 shares.
Kenya is investing in cheaper geothermal power generation to reverse the energy crisis caused by high fuel prices and over-dependence on water-driven power production. During the KenGen initial public offering in 2006, investors were promised that the government would take over the risky exploration and drilling venture, which quite often yield zero results.
Kenya has a potential of 3,000 to 4,000 megawatts (MW) for geothermal generation and the focus is now on developing the vast resources to increase power output to meet demand rising at 8 per cent annually.
Geothermal electricity can be delivered to consumers at about 4 Kenyan Shilling (Sh, about 3 US$ cents) per kilowatt-hour compared to Sh10 to Sh15 (16-24 US$ cents) for other sources.
The Sessional Paper No. 4 of 2004 on Energy recognised the need for the government to create a special geothermal firm to drive exploration of steam to generate electricity as a clean sustainable source.
The main hindrance to geothermal power development has been high tariffs arising from high costs related to steam exploration. “For tariffs to be low, the government is undertaking exploration. KenGen and private investors will undertake plant construction for generating electricity,” said the PS.
Mr Nyoike said KenGen, which is currently 30 per cent owned by private investors, will construct two geothermal plants of 140 MW at Olkaria IV near Naivasha to increase power feed to the national grid.
“KenGen has been involved in resource assessment in Olkaria IV. The two plants will each have 70 MW and the Government of Japan is willing to give Kenya a loan but financing terms are yet to be finalised,” he said.
The Least Cost Power Development Plan (LCPDP) of 2009 to 2029 provides for the installation of new geothermal plants between Olkaria and Lake Bogoria, with a generation of 1790 MW and GDC developing the steam fields.
Source: Daily Nation (Kenya)