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Dr. Silas M. SimiyuManaging Director & CEO
Geothermal Development Company Ltd
May 18, 2011
Development of Geothermal Resources in Kenya
Power Sector Overview
Ministry of Energy
Ministry of Energy
ERCERC
Energy Tribunal
Energy Tribunal
KenGenKenGen
ImportssImportss
IPPsIPPs
REAREA
GDC –steam resource development
GDC –steam resource development
KETRACO – Transmission /Wholesale Market operator
KETRACO – Transmission /Wholesale Market operator
KPLC – Distribution/Supply KPLC – Distribution/Supply
CustomersCustomers
The Geothermal Development CompanyThe Geothermal Development Company
• Incorporated in 2008 to accelerate development of geothermal resources in Kenya by reducing upfront risks to investors
Geothermal in Electricity Mix
4
Projected Electricity Demand
5
Least Cost Power Development Plan (LCPDP)Electricity demand of about 15,000 MW by 2030 is projected. At least 5,000 MW of electricity will come from geothermal
Mission & Vision
Resource prospectingDrilling (all stages)Field developmentReservoir and managementContracting for power plant development
Core Activities
Vision: To be a world leader in the development of geothermal resources
Mission: To develop 5,000 MW by 2030
Geothermal Power
Direct Use
Greenhouse HeatingHeating of greenhouses for cut roses ~160 hectaresExtraction of CO2 & H2S
Injection of CO2 to aid in photosynthesisFumigation of soils and sterilization of liquid recycled plant fertilizers using H2S
Water RecoveryPotable waterIrrigation
Industrial ApplicationsHeating and dryingIndustrial processes
Why Geothermal?
9
Abundant and indigenous
Suswa, Longonot, Olkaria, Eburru, Menengai, Arus-Bogoria, Lake Baringo, Korosi, Paka,
Lake Magadi, Badlands, Silali, Emuruangogolak, Namarunu Barrier Mwananyamala Homa Hills
Low Cost
*Based on construction time – additional time would be needed for feasibility and other pre-construction activities **6US cents/kwh based on importing hydro power from Ethiopia vs. 12 US cents/kwh based on remaining projects in Kenya, e.g. Mutonga***Lower than 10 cents/kwh, greater than 80% availability, less than 3 years, lower than 0.20 CO2 kg/kwh and known natural potentia
• Wind
• Coal
• MSD
• Nuclear
• Gas CNG
• Hydro**
• Gas Kerosene
• Solar
• Co-gene- ration
8.8
10.2
12.5
16.5
30-50
tbd
Assessment criteria
Generation Option
Low costUS$c/kwh Availability Fast delivery*
Environment friendly
Natural potential Comments
• Current GTs running at high loads, need more base load
• Coal potential in Kitui
• Significant potential, but dependent on weather
• Could pursue along side coal opportunity
• Dependent on weather with low average availability
• Min plant size of 500 MW required, politically sensitive
• Significant proven potential
• High exposure to hydrology risk (60% of installed capacity)
• Need to import, liquify for transport and re-gas
• Attractive intermediate capacity, but not large base load
• Geothermal
Location and transmission benefit
? ?
?
??
11
Other advantages of Geothermal
• Green • Not affected by adverse weather• 95% Availability• Predictable cost of power over the plant
life• Technology already successful in Kenya• Modular incremental development
Development Strategies
14
Single GoK Entity Approach
1956-59 1967-70 1971-76 1976 - 85 1986-2003• Two
Exploratory wells drilled to a depth of ~950m
• GoK & UNDP entered into an agreement to extensively undertake geothermal resource assessment
• Drilling was accelerated and about 23 wells were drilled
• Drilling continued in Olkaria II Steam field ~ 30 wells by 1992
• Wells never discharged and later abandoned
• Six wells were drilled with positive results.
• 45 MW (Olkaria I) commissioned between 1981-1985
• From 1992, financiers pulled out and no major works undertaken until 1999
• Most financing was from World Bank
• Olkaria II 70MW commissioned in 2003
• Decision was to concentrate geothermal development at Olkaria (80km2) after positive well results.
2003-2012
• Drilling ongoing
• Olkaria IV 140MW planned for 2012
Concessioning
1998
• Olkaria III concession for 100 MW
Jul 2000
• 8MW Com.
Dec2000
• 12 MW
Mar2002
• 13 MW
Sep2003
• 13.6 MW
2008
• 55 MW
2013
• 100 MW
Olkaria III
The first 13 MW developed from wells drilled by Government
Concessioning
• IPP license given in 2009• Targets to develop max
of 140 MW on a 700 MW Prospect
Observation• Under utilization of the
resource• Slow development pace
Longonot
Suswa
Observation• Growth relatively slow, expected development pace not realized
2007• Suswa (>600 MW)
concessioned to IPP
Surface Exploration
Exploration and Appraisal drilling
Feasibility Study
Production & Development of Steam Supply
Construction and Operation of Power Plant
GDC
GDC
GDC
GDC
Private Entity
Investment by Private entity/KenGen
Sale of Steam
Development Strategy
GDC Development Strategy
20
CHALLENGES
CHALLENGE ISSUES SOLUTION
Financial Accelerated geothermal development entails large upfront financial input
GoK annual support of US$150 million GDC to generate internal revenue from steam sales to support the GoK budget Identify and consider alternative sources of financing
Social & Environmental
Land, local politics, competition for resources
Community engagement at all stages of developmentDemand for royalty payments?
Availability of drilling water
Land, local politics, competition for resources
Use boreholes as source of waterUse brine and recycle 100%
CHALLENGESCHALLENGE ISSUES SOLUTION
Inadequate infrastructure
Geothermal operations occur mainly in remote locations away from developed infrastructure
-GDC started operations in accessible areas and will need heavy infrastructural investment to open up other remote areas
-Incremental development and feed into distribution network
-Power evacuation from remote sites
Human Capacity Building
Geothermal industry requires specialized skills not readily available
On-the-Job training Short term Consultancy Services to bridge gap Geothermal Training Institute to train staff Partnerships with leading geothermal institutions
THANK YOU
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