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CONFIDENTIAL
Disclaimer:
Geothermal Resources Council (GRC) – Annual Meeting
1 October 2012, Reno, Nevada, USAEddy Njoroge, MD & CEO, KenGen
Geothermal Development in Kenya
1
Conclusion4
OUTLINE:
Kenya Medium-Term Geothermal Programme3
The Geothermal Journey in Kenya2
Preamble – Kenya’s Energy Sector1
2
HIGHLIGHTS ON AFRICA : ENERGY SECTOR…
Source: IEA, World Energy Outlook 2011 and AFREPEN Nairobi
Main Energy Sources
129 GW• Major 5 countries - Egypt, Tunisia, Algeria, Libya, Morocco
(population ~ 170 million)(electricity consumption per capita ~ 1,120kWh)
NorthAfrica Mainly Gas52 GW
SouthAfrica Mainly Coal44 GW
• South Africa only(population ~ 50 million)
(electricity consumption per capita ~ 5,350kWh)
1
Sub- SaharanAfrica
Mainly Hydro
33 GW• >50 countries including Islands
(population ~ 790 million)
(electricity consumption per capita ~ 140kWh)
Huge geothermal potential ~ 20GW
3
KEY HIGHLIGHTS: KENYA1
Key Facts
Source: http://en.wikipedia.org/wiki/List_of_African_countries_by_GDP_(PPP)_per_capita;
Kenya
• Size ~ 582,000 km²
• Electricity Access Rate- Urban ~ 56%- Rural ~ 12%
• Has ~ 40 million people.
• Electricity Consumption p.a ~ 7,000GWh• Consumption per capita ~ 170kWh/Yr
• Rich in Natural Resources (under exploration)- Geothermal ~ 10,000MW- Minerals (Gold, etc) ~ ?- Coal ~ ?- Oil & Gas ~ ?- Wind ~ ?
- Overall ~ 22%
4
PREAMBLE: KENYA’S ENERGY SECTOR…1
Ministry of Energy (MoE)(responsible for policy matters)
ELECTRICITY(single-buyer model)
Energy Regulatory Commission(ERC)(responsible for regulating the entire energy sector)
Source: KenGen;
KPC(Transport)
KPRL(Refinery)
NOCK (Marketer)
Private Marketers
PETROLEUM
KETRACO – Kenya Electricity Transmission Company LtdREA – Rural Electrification AuthoirityKPLC – Kenya Power & Lighting Company LtdGDC – Geothermal Development Company LtdIPPs – Independent Power ProducersKPC – Kenya Pipeline Company LtdKPRL – Kenya Petroleum Refinery LtdNOCK – National Oil Company of Kenya
GDC(Geo-
Resource Assess- ment)
IPPs(Power Gene- ration)
KenGen(Power Gene- ration)KE-
TRACO( New Trans-
mission)
REA (Rural Elec-
trification)
KPLC(Dis-
tribution & Existing Trans-
mission
GenerationTransmission & Distribution
KenGen have ~80% installed capacity market share
Nuclear Electricity Project (NEP)
5
INSTALLED CAPACITY AND DEMAND GROWTH: KENYA
Source: KenGen; Kenya Power
1
National Installed (1,708MW)
51%
Kenya
Thermal (542 MW)
Hydro (808MW)
Geothermal(207MW)Wind&Bagasse(31MW)
2012
51%
34%
13%2%
2012
1,050
828
200520042003 2011
1,221
1,150
0
1,100
1,250
900
1,000
1,200
850
20072006 2008 2009 2010
950
8-10%
Demand Growth (1,221MW)
6
Peak Demand (MW)
Source: Update of Kenya’s Least Cost Power Development Plan 2010-2030
Kenya has significant natural power potential in form of:
(i)Geothermal(~ 10,000MW);
(ii)Hydro (~1,500MW);
(iii) Wind (~4,400 MW); and
(iv) Potentially Coal,Oil and Gas.
Vision 2030 ~ 15,000MW
In 2018 Kenya must have at least 50% electricity penetration to reach the Vision 2030 target
Vision 2030 demand forecast of 8-10 %
PEAK DEMAND FORECAST TO MEET VISION 2030 ASPIRATIONS
2026/272018/19 2029/302023/242014/152009/10
1
7Source: Update of Kenya’s Least Cost Power Development Plan 2010-2030
PROJECTED CAPACITY EXPANSION MIX
4,812
1,600
4,200
17,754
4,679
Total Capacity
NuclearHydro
263
Geo- therm
al
WindImports (Hydro)
2,200
Thermal (Coal,
Gas & Oil)
National Capacity Expansion (17,764MW) - 2030
1
Kenya has signed the
first 400MW from Ethiopia
Geothermal to contribute ~
30% of power requirements
8
Conclusion4
OUTLINE:
Kenya Medium-Term Geothermal Programme3
The Geothermal Journey in Kenya2
Preamble – Kenya’s Energy Sector1
9Source: TMO; http://www.geothermal-energy.org/226,installed_generating_capacity.html
2 KENYA’S SPACE IN THE GEOTHERMAL WORLD
0.1%
Chi
na
0.2%
Por
tuga
l (Th
e A
zore
s)
0.3%
Gua
tem
ala
0.5%
Papu
a N
ew G
uine
a
Italy
New
Zea
land
Icel
and
5.3%
1.9%
5.8%
1.9%
7.8%
5.0%
0.5%0.8%
Cos
ta R
ica
Turk
ey
1.5% 0.8%
El S
alva
dor
Rus
sia
(Kam
chat
ka)
Ken
ya
0.8%
Japa
n
Nic
arag
ua
Ethi
opia
0.1%
Fran
ce (G
uade
loup
e)
Arge
ntin
a
0.0%
Ger
man
y
0.0%
Aus
tria
0.0%
Aus
tralia
0.0%
Thai
land
0.1%
Mex
ico
8.9%
Indo
nesi
a
11.1%
Philip
pine
s
17.7%
USA
28.8%
• World Geothermal Installed Capacity ~ 10,800MWe
Kenya is 9th with ~ 207 Mwe (1.92%)
10
1976-85 1986-98
• From 1992, no major works was undertaken until 1999
• 23 wells were drilled
• 45 MW (Olkaria I) commission ed between 1981-1985
• Most financing was from World Bank
• Drilling continued in Olkaria II Steam field ~ 30 wells drilled by 1992
• Concession given to Orpower 4 in Olkaria III field in 1998
Source: TMO; BDS Division
1956-59 1967-70 1971-76
• Two Exploratory wells drilled to a depth of ~950m
• GoK & UNDP entered into an undertake geothermal resource assessment
This decision was the turning point in Geothermal Development in Kenya …
• Six wells were drilled with positive results at Olkaria.
GEOTHERMAL: DEVELOPMENT IN KENYA TO-DATE2
11
• Olkaria II 3rd Unit 35MW commissioned
Current total Geothermal Capacity for
Kenya is ~207MW
Source: TMO; BDS Division
GEOTHERMAL: DEVELOPMENT IN KENYA TO-DATE (Cont.)2
1999-2006
• Discovery wells drilled in 1999 in Olkaria IV field
• Production drilling & commissioning Olkaria II 70MW in 2003
• Appraisal drilling started in 2006
2007 - date
• Production drilling started in Olkaria I&IV (~60wells drilled with over ~ 400MW capped)
• Olkaria I & IV 280MW planned for mid quarter of 2014
• Approximately ~US$420m committed by DFIs over the years for geothermal in Olkaria
• Currently DFIs have committed ~US$920m for Olkaria I & IV 280MW alone.
12Source: KenGen
2 KENYA’S GEOTHERMAL JOURNEY FROM 1956 to DATE
172162
144
128
114106103
1011009996949187
79
6759
504641
3631272421
15119743
1975
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1988
1990
2011
2012
1991
1992
1993
1994
1996
1997
1998
1999
2007
2008
2009
2010
1956
1973
1974
1978
Little activity for ~15yrs. No funding for geothermal.
Accele
rated
activ
ities
over
the la
st ~6
yrs
1 2 3
1
2
3
1981-85: Olkaria I – 45MW commissioned
2003: Olkaria II – 70MW commissioned
2010: Olkaria II 3rd Unit – 35MW commissioned
~ 170 wells drilled
13
OLKARIA I 45MW: COMMISSIONED BETWEEN 1981-1985
14
OLKARIA II 105MW: COMMISSIONED IN 2003 (70MW) AND EXTENDED IN 2010 (35MW)
15
GEOTHERMAL ALTERNATIVE USES: OSERIAN GREENHOUSES
16
GEOTHERMAL ALTERNATIVE USES: DIRECT USE – KenGen SPA
17
Conclusion4
OUTLINE:
Kenya Medium-Term Geothermal Programme3
The Geothermal Journey in Kenya2
Preamble – Kenya’s Energy Sector1
18
Reforming Institutional & Regulatory framework3
* - Local and Foreign financing to be usedSource: KenGen; TMO; BDS
Geothermal Development Company (GDC)*
Geothermal Prospects
BogoriaOlkaria Menenga i
Paka Silali
Geothermal Resource Exploration & Assessment
Government meeting upfront exploration and drilling investment
KENGEN & IPPs
Kenya Power (Off-Taker) Off-Taker 2 Off-Taker 3 ……
Power Purchase Agreement
19
Continuing to prove resource fields3
Source: KenGen; TMO; BDS
1. Olkaria Block (1,200MW)(Currently developing 280MW)
2. Menengai Block (1,600MW)
3. Bogoria-Silali Block(3,000MW)
> 14 sites
20
PROJECTED GEOTHERMAL PROGRAMME TO 2012-20303
* - Local and Foreign financing to be usedSource: KenGen; TMO; BDS
MW
No. of drilled Wells
Rigs–Own
Rigs - Hired
700
150
15
3
2,340
550
15
-
5,000
1400
15
-
Next 3 yrs 8 yrs 13 yrs 18 yrs
2015 2020 2025 2030
• KenGen has acquired 3 drilling rigs and hiring 5 more
• GDC has acquired 4 drilling rigs
21
Menengai Phase I 400MW: – 2nd Big Block after Olkaria3
Source: GDC; TMO
• Seven (7) wells successfully drilled – target 120 wells;• Five (5) wells successfully tested with ~ 27MWe;• Four (4) drilling rigs on site - two more under procurement;• 19 investors shortlisted for the first 400MW;• Financing ~ US$ 850 million ( including the six rigs) - AFDB, AFD, WB, EIB, GoK)
22
Menengai Phase II & Bogoria-Silali Phase I3
Source: GDC; TMO
• Preparations under way• Targets to drill 210 wells• Commissioning targeted for year 2021
MENENGAI PHASE II ~ 800MW:• Preparations under way• Targets to drill 210 wells• Commissioning targeted for year 2019
BOGORIA-SILALI PHASE I ~ 800MW:
23
Continuing to prove resource fields – private sector participation
3
Source: KenGen; TMO; BDS
Geothermal Private Power
Developers
Orpower 4 (48MW)1997
• Started with 13MW in 1998• Added 35MW in 2009• Adding another 50MW by 2013
24
Continuing to prove resource fields – private sector participation
3
Source: KenGen; TMO; BDS
Geothermal Private Power
Developers
Akira Site Concession
Suswa Site Concession2005
2007
• Not much has been achieved
• Not much has been achieved
Longonot Site Concession 2009 • Not much has
been achieved
25
Committing Resource Assessment Funds3
Source: TMO; F&C
Kenya Funding Approach– US$ million908
33
Total2012
380
2010
10
2008
160
2006
45
2005
80
2004 2011
200
New tranche for further drilling~ US$330m from GoK
~ US$380m from concessionary funding
26Source: KenGen;
OLKARIA IV – BIRDS-EYE VIEW3
27Source: KenGen;
Geothermal Steam Drilling – [GoK, KenGen] (June 2007- Aug 2012)
1
1Kenya (GoK)
~US$330m
Local Infrastru cture & resettle- ment of PAPs[Lot D – KenGen]
5
5Kenya (Local Companies)US$36m
Consul- tancy & Adminis-
tration [Lot Zero –
KfW, KenGen]
2
2New Zealand (SKM)
US$30m
Power Plant Cons-
truction[LotB1&B2 KfW, JICA, AfD, EIB KenGen]
6
6 S.Korea (Hyundai) & Japan (Toshiba/Toyota Tsusho)
US$382m
Sub- station & Trans- mission[Lot C -
EIB, KenGen]
4
4India (KEC )
US$ 27m
Steam Field
Develop- ment
[Lot A – IDA, KfW, KenGen]
3
3China (Sinopec)
US$ 138m
Olkaria I&IV 280MW Geothermal Project (June 2014)
Multi-financing (KenGen, GoK, EIB, AfD, KfW, JICA, IDA ~ US$ 1 billion)7
Tariff ~ 7 Uscts/kWh. One of the most competitive renewable project in Kenya
International Collaboration – Financing & Engineering3
28
Kenyan Case: Olkaria I&IV 280MW Geothermal Project3
Source: KenGen; TMO; BDS
US$ ‘million Financing Breakdown
ActivityOlkaria I
(140MW) Olkaria IV (140MW) Total GoK KenGen IDA JICA KFW EIB AFD
Total Funds
Drilling Costs 142 186 328 313 15 328
Steam Field 100 68 168 7 107 54 168
Power Plant 201 194 395 201 76 118 395 Substation & Transmission 22 13 35 3 32 35
Consultancy 16 14 30 30 30
Administration 20 21 41 29 12 41 Resettlement Action Plan - 10 10 10 10
Board of Consultants 1 1 1 1 1
IDC 24 33 57 57 57
Total 526 540 1,065 316 103 120 201 99 108 118 1,065
All commitments achieved and government guarantees
issued
29
Pioneering Portable Geothermal Wellhead Plants3
Video
30
Kenyan Case: 5MW Pilot Portable Geothermal Wellhead Plants
3
Wellhead
Control system and panels
4
Generator & Turbine2
Steam Separator1
Cooling towers3
31Source: KenGen;
Step 1: • Feasibility study for the next 560MW Olkaria geothermal project completed
Key Activities
Step 2: • Continue commissioning the Phase 1 (70MW) of Wellhead Generators
Step 3: • Commenced drilling 80 wells for the next 560MW geothermal project• 139 wells targeted• 560MW target commissioning by 2016
IMMEDIATE KEY STEP ON GEOTHERMAL DEVELOPMENT3
32
Special Purpose
Vehicle (SPV)
Fuel Supplier(KenGen)
FSA – Fuel (includes steam) Supply AgreementPPA – Power Purchase AgreementPRG – Partial Risk GuaranteeMIGA – Multilateral Investment Guarantee Agency GoK – Government of KenyaDFIs – Development Financial Institutions
Off-TakerLong-term PPA
Explicit Guarantee
GoK Comfort LetterWorld Bank - PRG
World Bank - MIGA
Lenders• DFIs• Commercial Banks
Debt
Investors• Local• Foreign
Equity (with KenGen portion)
Long
-term
FS
A
Explicit Guarantee
Operations & Maintenance
(O&M) ContractorO&M Contract
Engineer, Procure & Construct (EPC)
Contractor
EPC Contract
5 PLAN: PPP FRAMEWORK Option 1.
Source: KenGen; TMO
… for Geothermal plants…
EoI advertised
33
Conclusion4
OUTLINE:
Kenya Medium-Term Geothermal Programme3
The Geothermal Journey in Kenya2
Preamble – Kenya’s Energy Sector1
34
Conclusion5
The National Goal is to develop 5000MW of Geothermal by 2030
35
THANK YOU
36
DISCUSSION…