Kenya Electricity Generating Company (KenGen) has reached a deal with Ethiopian Electric Power (EEP), to drill geothermal wells in Ethiopia. Valued at about $76 million, the project is financed by the World Bank through a loan to the Ethiopian government.
The contract was secured in a joint bid with Chinese firm, Shandong Kerui Group and it involves drilling as well as rig operation and maintenance of the wells.
“We are delighted to announce that our diversification strategy is finally paying dividend. This is good news for KenGen, our shareholders and indeed for Kenya as a country,” KenGen CEO, Rebecca Miano said.
The project will be implemented in two phases; Phase I involves the purchase of drilling rigs and Phase II entails the provision of drilling services. KenGen, which runs several geothermal stations in Kenya, will supply about 30 percent of the component of Phase II translating to almost $6.2 million.
“As we extend our services to Ethiopia, we are leveraging on our expertise, in-depth knowledge of the African Rift Valley and close to four decades of successful drilling experience,” Miano added.
The deal is considered a boost to the revenue streams of KenGen, which is already Kenya’s biggest electricity generator.
Maximizing Ethiopia’s geothermal potential
Although Ethiopia is endowed with abundant renewable energy resources and has a potential to generate over 60,000 megawatts (MW) of electric power from hydroelectric, wind, solar and geothermal sources, it only has approximately 2,300 MW of installed generation capacity to serve a population of over 100 million people.
The country is particularly rich in geothermal resources, with a potential to generate up to 10,000 MW of power.
The deal will help Ethiopia end a 38-year wait for a commercial breakthrough in geothermal development and improve access to electricity which stood at about 43 percent of the population last year.
Having started trials in 1981, the country’s geothermal drilling rigs are idle and broken down, highlighting the need to purchase new ones, EEP CEO Abraham Belay revealed.
KenGen has invested in experts with considerable experience in geothermal exploration and drilling and will build the capacity of teams from Ethiopia who will be working on the project. The firm also has a Geothermal Centre of Excellence which conducts training programs for both local and international students seeking knowledge on green energy.
“We will be delighted to have you (KenGen) build the capacity of our people to manage the equipment and run the power plants even after you exit the sites,” Belay said.
More so, the United States-sponsored Power Africa initiative is supporting five geothermal projects in Ethiopia that total more than 1,200 MW of potential generation capacity, and represent a combined estimated value of more than $5 billion, a 2017 report shows.
Kenya Electricity Generating Company (KenGen) is the leading electric power generation company in Kenya, producing about 75 percent of the electricity consumed in the country. The firm has a focus on offering expert services in electricity generation, geothermal development consulting, power plant operation and maintenance services across Africa.