Kenya's 63 MW geothermal plant nears completion

From the newsletter

Kenya's state-owned electricity generator, KenGen, has announced that its 63 MW Olkaria 1 geothermal plant is 70% complete, with the first turbine expected to be operational by June 2026. This comes at a time when Kenya is experiencing load shedding due to increased electricity demand and a lack of baseload power to meet the growing peak demand.

• Kenya has sought electricity imports from Ethiopia to meet its growing demand, with peak demand rising by more than 350 MW in the last four years. It currently imports 200 MW and plans to double this amount, with negotiations currently ongoing.

• However, Kenya has abundant renewable energy resources. Geothermal energy alone could meet its current demand if harnessed fully. Currently, the 940 MW installed capacity is only about a tenth of its potential.

More details

• Speaking yesterday at the Africa Energy Forum in Cape Town, South Africa, KenGen's Managing Director and CEO, Engineer Peter Njenga, announced that essential equipment for the 63 MW Olkaria 1 project, including steam turbines and generators, has been successfully delivered to the site.

• Geothermal power plays a key part in Kenya's electricity supply, contributing about 40% of the generation mix. Its cost is lower compared to other renewable energy technologies like solar and wind. KenGen's plants, in particular, offer the lowest prices. For instance, geothermal power from Independent Power Producers (IPPs) costs Sh17 per kWh, while KenGen's cost is Sh8. In wind power, IPPs charge Sh15 per kWh against KenGen's Sh9.

• The company, which has positioned Kenya among global leaders in geothermal (ranking sixth globally), has expanded its operations to Ethiopia. They have been contracted to drill wells for a 150 MW geothermal power plant in Ethiopia's Oromia region.

• Geothermal heat as a resource is prevalent in the East African Rift System, which, in addition to Kenya and Ethiopia, includes Tanzania, Uganda, Djibouti, and Eritrea. However, not all these countries have tapped into this resource. Tanzania is targeting 200 MW and Uganda is targeting 1,500 MW by the end of the decade. 

• Other countries like Zambia, Namibia, and even some in North Africa, such as Morocco, Algeria, and Tunisia, also have geothermal prospects. However, these may be more suitable for direct heating applications than large-scale electricity generation.

• Researchers predict that the cost of geothermal energy technology will decrease by as much as 80% by 2035. This reduction is expected to make it a highly competitive and potentially one of the cheapest sources of dispatchable, low-emission electricity.

• KenGen reported a net profit of $41 million, a 79% growth in profit after tax, for the six months ending December 2024. The company plans to drill 42 new geothermal wells at the Olkaria field over the next five years to add 200 MW to its capacity. The company is also exploring emerging technologies like battery energy storage and is currently reviewing applications for its pilot project.

Our take

• Ongoing research is set to reduce the cost of geothermal technology and increase its competitiveness with other renewable energy sources like solar technology, which has historically attracted big research funding. This will make it an even more attractive and viable option for power generation.

• Despite its ability to generate firm and reliable electricity, its widespread adoption is constrained by its geographical limitations. The resource is not uniformly available in Africa, which restricts its broad appeal across various regions.

• For Kenya, tapping into geothermal energy will provide the much-needed baseload power for grid stability. Over the past years, grid additions were mainly from intermittent renewables like solar and wind, which do not provide consistent power.