UK investment firm acquires controlling stake Menengai geothermal IPP project, Kenya

UK investment firm acquires controlling stake Menengai geothermal IPP project, Kenya Steam pipes at Menengai, Kenya (source: GDC)
Alexander Richter 8 Feb 2021

Energy investment and development company Globeleq acquires a majority stake in Quantum Power East Africa, essentially taking over the 35 MW private geothermal power project in Menengai, Kenya. Globeleq is owned by UK development finance institution CDC and Norwegian state-owned investment firm Norfund.

Through its Africa-focused energy firm Globeleq, UK development finance institution CDC has acquired a controlling stake in Quantum Power East Africa GT Menengai (QPEA). The company is one of the three private IPPs to develop geothermal power projects in Menengai under a steam supply contract with Geothermal Development Company (GDC) in Kenya. Globeleq is an Africa-focused energy company, owned 70% by UK’s CDC and 30% by the Norwegian state-owned investment company Norfund.

As reported by The Standard in Kenya this morning, this follows the failure of the three private geothermal power projects to kick off construction. As we reported before there have been several delays due to a series of factors, on e.g. the set steam supply price by GDC and the achievable power purchase in the contracts with Kenya Power, state guarantees etc.

Quantum Power has the contract for the development of one of a total of three 35 MW geothermal power projects as part of the wider Menengai geothermal field development.

GDC developed the field, drilled the wells and set up the steam gathering system, which was concluded recently, as we reported. With the approach of state-driven drilling, the hope was to de-risk investment and development of power projects. Yet recently, there seems to be a policy shift on private power projects with efforts to have KenGen take over wells drilled by GDC.

The news broke with an approval by the Competition Authority of Kenya of the acquisition of the QPEA GT Menengai Ltd by Globeleq Geothermal (Kenya) Ltd. published on Friday last week.

These IPP projects were initially scheduled to start operations in December 2016.

Quantum Power recently reported an investment cost for the development of its Menengai plant at around $98 million. The company has a 25-year PPA with Kenya Power, for a price of Sh5.50 (USD 0.05) / kWh of electricity to the company and another Sh2.20 (USD 0.02) / kWh to GDC for the steam.

Source: The Standard