WB steps in to boost geothermal generation

September 2, 2011

, NAIROBI, Kenya, Sep 2 – The World Bank has developed a risk mitigation fund in an effort to accelerate geothermal development in the country.

The $13 million (Sh1.2 billion) fund is aimed at underwriting dry well drilling in the event a well is found not to have any steam.

This is expected to boost investor confidence in financing geothermal exploration in the country.

Mits Motomoshi, an Energy and Financial Specialist with the World Bank said on Friday that the Bretton Woods institution was in talks with the Kenyan Government and the International Geothermal Association on how the fund will be used in future drilling exercises.

“We have started discussions with development partners and the government as they start exploration in the Rift Valley,” Mr Motomoshi said.

The government has been on a quest to switch to more renewable sources of energy such as geothermal and wind as the vagaries of weather wreak havoc on hydro generation of power.

However, high upfront costs associated with geothermal exploration, have slowed down progress on harnessing. With an estimated potential of 14,000 megawatts, the country has only been able to harness 265MW out of a total installed capacity of 1185MW.

Geothermal Development Company Managing Director Dr Silas Simiyu said it cost Sh400 million on average to drill a single well making the process slow and expensive.

“The way things have been done in the past is that you wait for an investor to come and put in money before you have even shown that existence of the resource. But with the fund it is very easy for partners to come on board because there is evidence the resource is there,” Dr Simiyu said.

GDC, with two drilling rigs, is in the process of securing four more rigs that will speed up the geothermal exploration. The Ministry of Energy has also has committed Sh26 billion to GDC for related projects.

Dr Simiyu said that to accelerate the speed of power connection to the national grid, GDC intends to use wellhead generation technology to be installed immediately a well is drilled.

“The wellhead power generators will enable us to move quickly and start injecting power to the grid and recoup our costs,” he said.

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