Globeleq, the London-based power company, has been awarded KES 8.89 billion ($72 million) to build a 35-megawatt (MW) power plant at the Menengai Crater geothermal fields in Nakuru, bolstering Kenya’s efforts to transition to clean energy fully and, as a result, lower the cost of electricity.
Globeleq CEO Mike Scholey announced that Globeleq had entered into a financing agreement with the African Development Bank (AfDB), the Eastern and Southern African Trade and Development Bank (TDB), and Finnfund.
In 2021, Globeleq acquired a majority stake in Quantum Power East Africa, one of three independent power producers (IPPs) to which Geothermal Development Company (GDC) granted exclusive rights to build and operate steam-driven power plants.
Globeleq, along with Sosian Menengai Geothermal Power and OrPower Twenty-Two Company, was chosen in 2013 through competitive bidding to build, operate, and own the first three power plants in Menengai, each generating 35 Megawatts and pumping a total of 105 MegaWatts into the national grid.
Scholey stated that Globeleq will begin the construction of the power plant within the next few months and it will be completed by September 2025. British Nation Investment (BII – formerly CDC) owns 70% of Globeleq, with the remainder owned by Norwegian DFI Norfund.
Globeleq CEO stated, “as an active participant in the Kenyan energy sector for many years, the Menengai geothermal project is our first geothermal project. It fully aligns with our focus on quality investments which utilise renewable energy sources to create clean, reliable and cost-effective energy for the country and be an active part of the solution to the climate crisis.”
The announcement follows the Kenyan and UK governments’ recent commitment at COP27 in Egypt to accelerate green investment projects worth KES 500 billion in Kenya, including the Menengai project.
Currently, an estimated 80% of Kenya’s electricity comes from clean sources, primarily geothermal and wind, and the country has set an ambitious goal of transitioning to 100% clean energy by 2028.
President William Ruto announced the ambitious target at the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) in Egypt.
Ruto emphasized the importance of increasing the use of clean energy to lower Kenya’s electricity costs by eliminating the fuel cost charge that thermal power plants charge for supporting the grid, particularly during peak demand or when hydro production is low due to drought.
The Menengai Project is Kenya’s second large-scale geothermal field, following the Olkaria units in Naivasha Sub-County, which are being explored by the Kenya Electricity Generating Company (KenGen).
Mr Scholey stated that once completed, the project will significantly boost Kenya’s efforts to achieve a 100% transition to clean energy in order to provide cheap electricity while also protecting the environment from the pollution caused by thermal power plants.
Kenyans have been dealing with high power bills, owing primarily to the fuel cost charge, which Kenya Power collects from customers on behalf of thermal power generators.
When fuel prices rise and the amount of oil consumed by generators rises, the charge rises significantly. Because of the high fuel cost, increased use of electricity from fuel generators results in high power bills for consumers, emphasizing why reducing reliance on thermal plants is critical to lowering electricity costs.
Construction is also underway at the Sosian Menengai Geothermal Power Plant, which has received KES 6.5 billion in funding from China-based Zhejiang Kaishan Compressor. The two parties also signed a 14-year KES 1.8 billion agreement for system operations and maintenance.
Menengai phase one is part of the government’s 5,000-MegaWatt project to produce affordable, reliable, and green energy. The state corporation has drilled steam wells with a capacity of 165 MW. This steam will be more than enough to power the first 105MW of electricity generated by the three IPPs.
Once the three IPPs are fully operational, electricity generated by the multibillion-shilling Menengai Geothermal Project will cost at least Sh7 per kilowatt less than diesel or hydropower, according to GDC Managing Director and CEO Engineer Jared Othieno.
GDC has already built the steam gathering system, and a 132 kilovolt (kV) substation has been built by Kenya Electricity Transmission Company (Ketraco) to transmit electricity from the three power plants.
The Menengai Model arrangement called for GDC to bear the initial risks and then invite private sector players to build, own, and operate the plants for 25 years.
Read Also: AfDB Loans $72 Million for Building 35MW Geothermal Plant in Menengai
