Africa: Can Nation Become Africa's Geothermal Valley?
2 March 2011
Kenya is exploiting its rich geothermal potential to harness
alternative and reliable energy that could lower the cost of
manufacturing and spur economic growth. Dr. Silas Simiyu, the managing
director of the state-owned Geothermal Development Company (GDC) tells
TradeInvestAfrica why now is the perfect time for interested investors
to explore the opportunities in the industry.
The global trend of reducing carbon emissions from fossil fuels has
sparked an interest in renewable energy. What is the potential of
geothermal energy in East Africa and globally?
Globally, the potential for high grid geothermal resources alone is
estimated to be in excess of 60 000MW. However, if you consider the
different levels of resources, it is significantly higher than that.
In the East African region, the potential is now estimated at 15
000MW. During the 1990s, the wells were drilled with a depth of 2 000
meters and had an average productivity of around 5MW.
Today, they are being drilled with a depth of 3 000 Km and the average
productivity has gone up from 7MW to 8MW. The capacity to extract
energy from the ground increases with improved technologies. This is
precisely why in Kenya the potential is now in excess of 10 000MW,
which is ten times the current total power capacity.
What is the long-term vision for geothermal energy in Kenya?
Without a reliable source of energy, the country cannot reach the
level of industrialisation that it is targeting by the year 2030. The
government has established the Least Cost Power Development Plan
(LCPDP) and has also looked into the different power generation modes
that can be used to meet the target of up to 15 000MW.
The advantage that we have in Kenya is that all our non-clean energy
sources are imported. The government is working to ensure that 60% of
the energy needs come from renewable sources. The development of
geothermal energy as the main source of energy is viable because it
can be generated locally and is not affected by the changing weather
patterns.
To install 5 000MW of geothermal energy in the next 20 years would
require an investment of US$4.5-billion. Raising that kind of money
would be an arduous task for the government and the plan is to seek
international investors. The development of the geothermal industry
has been slow over the years due to the lack of private sector
participation.
The major challenge for investors is the high upfront risks and the
enormous investment capital that is required for this kind of venture.
In order to facilitate investor entry into the industry, the
Geothermal Development Company(GDC) will undertake exploration and
drilling for all fields and provide steam to investors so as to
mitigate upfront risks.
Kenya is one of the leading countries globally with significant
geothermal resources and the government has invested a lot to develop
the industry. This includes supporting scientific research, drilling
and the generation of electricity. There are numerous investment
opportunities for interested companies that range from supply of
equipment and materials, development of steam fields and power plants,
supply of early generation equipment, civil engineering and
construction.
What guarantees and incentives do potential investors have?
Potential nvestors will want to have a Power Purchasing Agreement
(PPA) that is enforceable and also reasonable tariffs that can yield
appropriate return on the investment - these can be made available.
Previously it was challenging for companies to invest in the industry
due to cumbersome entry procedures.
For instance, one was required to seek licences and approvals from
three different ministries. These processes have now been simplified
through the establishment of a one-stop advisory and investment
facilitation service at the GDC.
Kenya has an ambitious infrastructure construction programme and a
determination to upgrade its power generation grid and transform the
country into a green energy leader. The new constitution is expected
to help establish a more transparent political system and balanced
economy.
We are hoping that this envisaged transparency will reassure
investors. The existing rules that govern foreign investment in the
country should help instill confidence in companies looking to invest
in the geothermal industry.
Which other applications of geothermal energy is GDC considering
besides power?
As GDC develops geothermal energy for power generation, the water we
separate before taking the resource out of the ground will be used for
other industrial purposes. That way, we can tap into the other
benefits that geothermal energy can bring. The Menengai area in the
Rift Valley province, which we are currently developing, has a
community of large-scale farmers who are interested in starting other
factories around the geothermal power plants. Pastoralists at the
Maasai Mara have a thriving hides and skins processing industry that
requires sulphuric acid. We are able to produce sulphuric acid from
hydrogen sulphide to be used in tanning plants.
We are also working with some hoteliers to develop a tourist resort at
Lake Bogoria where there are hot springs. The resort will feature
heating and spas supported by geothermal energy. In some specific
areas, we do not want to drill for power generation but rather we want
to liaise with the local communities to tap into the hospitality
industry.
Floriculture is an important foreign exchange earner for Kenya and
there are Dutch investors growing flowers around Lake Naivasha. I
think the world's largest geothermal-powered greenhouse is in Kenya,
along Lake Naivasha. Geothermal steam has some carbon dioxide and
hydrogen sulphide.
The farm there generates electricity to ensure the greenhouses have
light for about two hours (as opposed to 12 hours) and they inject
carbon dioxide to stimulate photosynthesis. The use of this technique
has resulted in a 40% increase in the flowers produced, which
consequently reduced the area required for growing flowers. The EU
market does not allow the use of pesticides even though mildew is a
common concern in flower farming.
Geothermal heating provides a constant temperature that eliminates the
formation of mildew. This increases the overall yield and also allows
for real green farming without the use of pesticides.
Going forward, we want to have a holistic approach to the utilisation
of geothermal resources.
Are we going to see a "geothermal valley" in Kenya in the next 20 or
30 years?
Yes, that is the goal and some people have already mooted that kind of
concept. In one area where there are three geothermal fields owned by
different developers, a very huge flat area lies in between the
fields. An investor is interested in putting up a geothermal park
there. The park would host industries looking to take advantage of the
high temperature fluids and condensed water from the fields.
Some of the factories would need a huge amount of electric power and
this would involve the direct utilisation of high temperature fluids,
which is more efficient than converting it into electricity and then
converting it into heat. This obviously reduces the overall cost of
energy.
Reliable and affordable energy supply would spur growth in the
manufacturing sector, which is currently battling to remain competitive.
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