Ormat Wins Geothermal Generation Deal in Kenya’s Rift Valley

Ormat Technologies Inc.’s (ORA) international unit won a contract to build and operate the first well-head generator at the Menengai geothermal field in Kenya, which holds potential capacity of at least 1,600 megawatts.

The so-called modular power-generation unit, which will provide 5 megawatts to 10 megawatts, will start operating by August 2013 and the government will assume ownership after 15 years, said Silas Simiyu, managing director of Kenya’s state-run Geothermal Development Co. The cost to set up the facility will be about $10 million to $20 million, Simiyu said in an interview today in Nairobi, the capital.

Kenya, Africa’s largest producer of geothermal power with installed capacity of 212 megawatts, is trying to exploit steam produced by hot underground rocks in the Great Rift Valley where shifting tectonic plates provide a key source of the energy. East Africa’s largest economy has set a goal of producing 5,000 megawatts of geothermal energy by 2030 and estimates it has the ability to derive 10,000 megawatts.

Ormat Technologies is a Reno, Nevada-based maker of geothermal power plants that operates a 48-megawatt project in Olkaria, about 75 kilometers (47 miles) northwest of Nairobi.

Kenya is betting that its own investment of $380 million to search for geothermal steam will pay off with commercially viable discoveries and attract private-sector investors to finance, build and manage power plants in the Rift Valley. It’s also secured money from the African Development Bank, World Bank, European Investment Bank and French Development Agency.

23 Megawatts Found

Geothermal Development Co. has tapped 23 megawatts after sinking five wells in the Menengai field, 180 kilometers northwest of Nairobi, using two drilling rigs paid for by the Kenyan government, Caleb Indiatsi, deputy manager of corporate planning, told a conference in the city today. The French Development Agency is funding the purchase of two more rigs due to arrive next month, while the African Development Bank will finance another two expected for delivery by May 2013, he said.

The first phase of development in Menengai envisions building a 400-megawatt facility by 2016 that’s able to offset 2 million tons of carbon-dioxide emissions annually from energy consumption and power 500,000 households, 300,000 small businesses and provide 1,000 gigawatt-hours to industries.

More immediately, Kenya plans to acquire more well-head generators to start producing electricity once steam fields are ready as it awaits construction of full-fledged power plants, which can take several years to put up, Simiyu said.

To contact Bloomberg News staff for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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