June 21 (Bloomberg) -- Geothermal Power Tanzania Ltd. plans to invest as much as $350 million to drill steam fields in the country’s south and build its first geothermal plants with the capacity to generate up to 140 megawatts by 2018.
The company began drilling two wells in Tanzania’s southwestern Mbeya region this year and found there’s potential to create power from steam within at least two systems in the area, Chairman Graeme Robertson said in an interview today.
Tanzania, which doesn’t currently produce any geothermal energy, lies in the same Rift Valley fault system as Kenya, Africa’s biggest geothermal-power producer with an estimated untapped resource of as much as 10,000 megawatts. Geothermal energy harnesses steam and hot water from underground to power turbines in facilities that generate electricity.
“In Kenya, it has taken about 20 to 30 years to develop geothermal power into actual power generation,” Robertson said by phone from Mauritius’s capital, Port Louis. “Tanzania is endeavoring to fast track geothermal development.”
Recurring power outages and unreliable electricity supplies are hurdles to growth in East Africa’s second-biggest economy, according to the International Monetary Fund. Tanzania is trying to increase renewable energy supplies and reduce its reliance on rain-dependent hydro power as it targets electricity-generation capacity of 1,722 megawatts by 2015 from 1,064 megawatts in 2010, according the Washington-based lender.
“The country is facing a lot of drought because of climate change, which means we need an energy mix so we are not so dependent on hydro power and non-renewable,” Jacob Mayalla, a principal geologist at the Ministry of Energy, said yesterday in an interview in the commercial hub, Dar es Salaam.
Geothermal Power, which has six prospecting licenses in Tanzania, may initially install a wellhead generator to provide 2 megawatts of power by the middle of next year. So-called wellhead generators produce power once steam fields are ready, much quicker than awaiting construction of full-fledged plants.
The company then plans to deploy generations units capable of producing 5 megawatts to 10 megawatts within two years and eventually 25-megawatt units, Robertson said. “The actual potential will depended on the flow rates,” he said.
Geothermal Power is exploring options to raise funds including approaching development lenders such as the World Bank and African Development Bank, Robertson said.
Geothermal Power Tanzania Ltd. is 70 percent owned and managed by Mauritius-based Geothermal Power Ltd. The rest is held by Tanzania’s National Development Corp. and Interstate Mining & Minerals Ltd. in Tanzania, according to its website.
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