East Africa’s geothermal opportunity

Kenya is a world leader in geothermal energy and it is now exporting its expertise around the region.

By Liz Bains on
28th June 2023

Geothermal energy has been described as an unsung hero of net zero. While solar and wind have captured the imagination as clean alternatives to fossil fuels and been given development priority along with hydropower, the potential of geothermal energy is often overlooked. 

Geothermal energy occurs as heat produced deep below the earth’s surface and is a highly location-specific energy source, found only in places with the right combination of geological conditions. Sites concentrate along active tectonic faults lines and volcanic areas where magma has been brought closer to the surface. Wells are drilled to access the reservoirs of pressurised steam and hot water which can then be used to drive turbines to generate electricity.

Global leaders

The United States and Indonesia are the world’s leading producers of geothermal energy, with 2,653MW and 2,343MW of installed capacity respectively as of 2022, according to the International Renewable Energy Agency (IRENA). 

The other nations making up the top five are the Philippines (1,932MW), New Zealand (1,273MW) and Mexico (1,059MW).

Installed geothermal capacity, 2022 (MW)
Top 10 countries by installed capacity

Kenya is the leader in Africa and ranks sixth worldwide, with 949MW of capacity installed as of 2022 and another 35MW currently undergoing test runs, ahead of beginning commercial operations at the end of July.

The only other African country with any geothermal capacity is Ethiopia, with just 7.3MW installed.

The tectonically active East African Rift System (EARS) region, which stretches 6,400km in length and 64km wide, offers huge potential for developing geothermal projects. At the African Rift Geothermal Conference in 2020, it was said the geothermal potential of the region is in excess of 15,000MW. 

The EARS runs through Djibouti, Ethiopia, Eritrea, Kenya, Tanzania, Uganda, Rwanda, Democratic Republic of Congo, Burundi, Malawi and Zambia. 

Tectonic plates and geological activity
East Africa is an area of strong tectonic activity

What makes geothermal particularly attractive as an energy source is that it can be used to generate baseload supplies of electricity, as well as providing heat for direct use industrial projects. Unlike solar and wind, which are intermittent sources of energy and hydropower, which is susceptible to droughts, the supply of geothermal energy is constant, as well as clean and renewable. It is also a cheap source of energy, with the high costs confined to the initial exploration and drilling phases. 

With more than half of the continent’s population living without electricity and funding becoming increasingly difficult to access for hydrocarbons projects, geothermal energy is finally gaining more attention across East Africa. Governments are turning to regional leader Kenya for support and guidance and pushing ahead with plans to exploit their geothermal resources.

Kenya sets the template

Geothermal energy today accounts for 45.4% of Kenya’s electricity generation capacity. It has been a slow journey to get there. The country first began to explore the potential of geothermal in the 1950s, but it was only in the 1980s that significant electricity production began, after drilling confirmed a geothermal resource in Olkaria. 

After a decade-or-so-long hiatus during which funding was unavailable for new projects, development activity accelerated following the establishment in 2008 of the state-owned Geothermal Development Company (GDC) to absorb the early-stage risk associated with investments.

GDC was mandated to carry out exploration, drill appraisal and production wells, manage proven fields and sell steam to third parties. Between 2009 and 2010 alone, GDG drilled 59 wells in Olkaria.

To date, six power plants have been developed and expanded in the Olkaria field by Kenya Electricity Generating Company (KenGen).

Attention has now shifted to the Menengai field. While the power plants at Olkaria were funded through the Kenyan government, Menengai is being developed using a combination of public and private financing. Under the first phase, three independent power projects (IPPs) are planned, each with a capacity of 35MW. 

The first project, being developed by the local Sosian Energy, is expected to start commercial operations in July. Construction of the second IPP got under way in June. It is being developed by London-headquartered Globeleq and is expected to begin commercial operations in 2025. The third project is due to be executed by the US’ Orpower 22.

Steam will be supplied to the plants by GDC, under a 25-year project implementation and steam supply agreement, and the output sold to national distribution company Kenya Power under a power purchase agreement (PPA).

GDC has already built the 25km steam gathering system at Menengai to collect steam from 13 geothermal wells and deliver it to the power plants. Kenya Electricity Transmission Company has constructed power evacuation facilities including a substation and a 132kV overhead transmission line.

The long-term aim is to develop 465MW of generating capacity over five phases at Menengai. 

It has been estimated there is 10,000MW of geothermal potential across 23 sites in Kenya. GDC is currently conducting exploration and appraisal drilling at Paka, Korosi and Silali. About 100MW of capacity is envisaged at the Paka geothermal area.

The chairmain of KenGen, Julius Migos Ogamba, said in an interview with African Business magazine in June that the company is planning to add 2,000MW of geothermal capacity over the next 10 years. 

He said that at a cost of US$3 million per MW, geothermal energy is much more expensive to develop than hydropower, but it is also much more reliable. Hydro plants are increasingly being affected by poor hydrology, which climate change will only worsen.

Hydropower PPAs are agreed at about 3 US cents a kilowatt hour (KWh), while KenGen signed the PPAs for the IPPs at 6.5-7 US cents a kilowatt hour. 

Direct use geothermal

GDC’s mandate was recently expanded to include promoting the development of direct use geothermal projects. On 30 May, it issued a request for proposals for establishing direct use investments at the Menengai field. The examples of possible investments included agricultural projects such as greenhouse heating, aquaculture, milk pasteurisation and crop drying, and energy-intensive industrial manufacturing schemes requiring heat and electricity. 

Direct use projects already in existence at the Olkaria field include a flower farm, geothermal spas and heated swimming pools. A demonstration facility has been set up at Menengai to showcase opportunities including a heated greenhouse, a laundry and a grain dryer.

Ogamba said in the interview that there are plans to establish a green energy park at Olkaria with fertiliser, iron and steel, textiles and food and beverage plants fueled by geothermal energy. Companies were invited to express interest in leasing land plots at the park earlier this year.

Kenya's success in becoming a world leader in geothermal energy stems from a combination of good geography and increasingly strong political will.

The country has also benefitted from the Geothermal Risk Mitigation Facility (GRMF), which was established in 2012 to fund, facilitate and accelerate geothermal investment in East Africa, as well as financial support from other development partners.

The GRMF is a joint facility of the African Union Commission, the German Federal Ministry for Economic Cooperation and Development (BMZ) and the EU-Africa infrastructure Trust Fund.

Its objective is to encourage public and private sector investment in geothermal developments by co-funding surface studies and drilling programmes. Across its seven funding rounds to date, it has supported programmes in Djibouti, Ethiopia, Kenya, Uganda, Tanzania and Comoros.

In 2022, the GRMF Oversight Committee expanded the facility to include the promotion of direct use geothermal investments, launching the GRMF HEAT funding programme for surface studies and infrastructure upgrades. The first call for expressions of interest in March this year elicited 17 applications for funding. A pre-bidding workshop was held in early June.

Kenya’s neighbours are now looking to emulate its success in developing geothermal projects. Following the GDC model, Tanzania has established the Tanzania Geothermal Development Company and Djibouti has formed the Office of Geothermal Energy Development (ODDEG).

Exporting knowledge

KenGen is also eagerly exporting its knowledge gained over the past four decades, winning geothermal drilling contracts in Ethiopia and Djibouti.

“We’re in Ethiopia and Djibouti providing technical support for drilling. But we’re also looking at providing surface studies to other countries, like Rwanda and Comoros,” Peketsa Mangi, general manager of geothermal development at KenGen, was quoted as saying in a December 2022 International Monetary Fund article.

In June 2023, Kenya’s President William Ruto confirmed that KenGen had successfully drilled one geothermal well in Galla Le Koma in central Djibouti and is contracted to drill a second.

Geothermal energy occurs as pressurised steam and hot water
Geothermal energy occurs as pressurised steam

Situated the northern end of the EARS, Djibouti has a geothermal potential estimated at 1,000MW. ODDEG is currently assessing the commercial viability of the geothermal resource in the Lake Assal region with hopes of developing 50MW of power capacity. The US$31.2 million exploratory well drilling programme is being supported with funding from seven donors including the World Bank and the African Development Bank. The second phase of the project envisages the development of an IPP. 

Reykjavik-based Verkís Consulting Engineers has also conducted a feasibility study, financed by the Global Fund for Development Cooperation, on the potential for direct use geothermal projects in Djibouti. 

Ethiopia projects

Ethiopia has an estimated exploitable geothermal potential of around 5,000-10,000MW. It currently has just 7.3MW of installed capacity at Aluto Langano which was commissioned in 1998.

This is set to change thanks to two 150MW IPPs planned for the Tulu Moye and Corbetti geothermal areas. 

The Tule Moye IPP is being constructed in the area around the Tule Moye volcano in Oromia, 100km south-east of Addis Ababa. It is being developed by Tulu Moye Geothermal Operations (TMGO), a consortium comprising Meridiam (65%) and Reykjavik Geothermal (35%). 

TMGO signed a 25-year PPA and Implementation Agreement (IA) with Ethiopian Electric Power (EEP) in December 2017 for the development, design, construction, financing, operation and maintenance of a 150MW geothermal power plant over two phases. 

In March 2022, the project company awarded a US$100 million engineering, procurement and construction contract to Japan’s Mitsubishi and SEPCO Electric Power Corporation to build the 50MW first phase of capacity, with commercial operation due within two years.

The 100MW second phase is due to be implemented by 2026. The drilling for the project is being carried out by KenGen and Marriott Drilling Group. 

Corbetti Geothermal is the development company for Ethiopia’s second 150MW IPP, to be built in the Corbetti caldera, and the principal participants are Berkeley Energy, Reykjavik Geothermal and InfraCo Africa.  

Surface exploration studies for the project have been completed and exploration drilling was due to begin in 2022, with the 50MW first phase of project operational by 2027.

The plan is to drill four to six exploratory wells to raise finance to drill the further four to seven wells required for the first phase capacity. 

Corbetti Geothermal signed a PPA with EEP and an IA in March 2020. 

The PPA for both IPPs includes the option of expansion to 500MW over two further phases, bringing the total investment cost for each project to around US$2 billion.

The GRMF has provided funding to support the drilling programmes for both the Tulu Moye and Corbetti projects. A final investment decision on the Corbetti project will be based on the outcome of the drilling.

Tanzania drilling programmes

Tanzania’s geothermal potential is estimated at 5,000MW across more than 50 sites. TGDC is currently focusing on geothermal prospects in Ngozi, Songwe, Kiejo-Mbaka and Lake Natron. The aim is initially to generate 200MW across the four sites.

In June, TGDC invited bids from contractors to provide drilling services for three slim wells at the Ngozi in the Mbeya region. The deadline for submissions is 24 July.

In April, TGDC invited expressions of interest from consultants to provide supervision services for a detailed surface study at Lake Natron in the Arusha region. And in October, bids were invited from contractors to drill a minimum of two shallow wells at Songwe. It has been estimated that the Songwe prospect could initially support a 20MW power plant along with direct use applications such as crop drying and balneotherapy. Kiejo-Mbaka, located in the southern volcanic region, could initially support a 15MW power plant.

The wider plan for Ngozi is to develop a 70MW IPP over two phases. The first phase will have a capacity of 30MW. The project is estimated to cost US$144 million. 

Following the model used in Kenya, TGDC will sell the steam from the wells drilled at Lake Ngozi to a consortium comprising the government of Tanzania, a strategic investor and one or more development partners. The consortium will then generate electricity to be sold to Tanzania Electric Supply Company under a PPA for integration in the national grid. TGDC says it has a grant from the GRMF to support the drilling programme.

In June 2022, the GRMF also provided funding for a drilling programme in Luhoi, Tanzania.

Zambia opportunities

Meanwhile, in Zambia, the local Kalahari GeoEnergy is spearheading efforts to exploit the Bweengwa River geothermal resource area.

A feasibility study was completed in April 2022 showing a commercial and technically viable capacity of 6.5MW. But additional data was subsequently acquired during a drilling programme and a follow-up independent review with further modelling is now due for completion in July.

Kalahari GeoEnergy is currently undertaking the engineering for a small demonstration binary organic Rankine cycle plant that will power an existing milk collection centre. 

“This will allow stakeholder capacity building,” the firm’s CEO Peter Vivian-Neal tells ConstructAfrica. “Our current intention is to undertake the production well drilling from Q2 2024 and develop wellhead generation as the drilling proceeds. In this way, we would anticipate ~8MW in the period Q4 2024-Q2 2025.”

Drilling at Bweengwa River in 2020
Drilling at Bweengwa River in 2020

Representatives of Kalahari GeoEnergy have visited Kenya to see firsthand the possibilities for other direct applications of geothermal energy, including a tour of the Oseria flower farm and the Olkaria spa. Oseria is Africa’s biggest exporter of roses to Europe and the US and uses geothermal energy to control the temperature in its greenhouses.

Malawi exploration

In November 2021, Malawi’s Ministry of Natural Resources, Energy and Mining granted Kalahari GeoEnerg a reconnaissance licence for the Chiweta geothermal target in the northern region of Malawi.

It was tasked with verifying earlier studies and conducting assessments to define targets for an exploratory drilling programme aimed at proving the existence of a geothermal system and the viability of commercial power generation and direct application uses.

Vivian-Neal says that Kalahari GeoEnerg has since been granted an exploration licence. “We have commissioned an environmental study and aim to have the geophysics completed this year,” he adds.

A prefeasibility study was conducted in 2017 by Italy’s ELC-Electroconsult with World Bank funding that estimated a highly probable electric potential of 10.5MW. 

Overcoming challenges

IRENA states in its Geothermal Development in Eastern Africa report published in November 2020 that various challenges have hindered the advancement of geothermal projects in the region including limited public finances, difficulties in raising finance for the exploration phase due to regulatory gaps, limited awareness about the potential for direct use applications, and a lack of a local skilled geothermal workforce.

While geothermal is finally gaining more traction in East Africa, IRENA recommends that to fast-track development governments should establish geothermal departments within energy ministries, establish transparent and predictable licensing procedures to attract private developers and investors, and allow for PPAs to support the early entry of private players.

It also recommends clear policies for developing direct use geothermal projects and emphasises the importance of creating awareness of the opportunities and associated benefits among decision makers, communities and industries. National geothermal heat masterplans aligned to industrial and rural development strategies, it says, would help accelerate the development of direct use projects.

Geothermal has the potential to transform the energy landscape of East Africa and catalyse the industrialisation of the region, eliminating the need for fossil fuels and helping countries towards the UN Sustainable Development Goals. It is time for geothermal to get the attention it deserves.

Top photo: Olkaria geothermal hub (Source: KenGen twitter @KenGenKenya)

Sources for the other photos are KenGen and Kalahari GeoEnergy

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