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GDC bets on partnerships to boost steam power generation

The Geothermal Development Company is planning to scale up its partnership model of steam development for faster realisation of power generation from the underground source.

GDC, which has so far applied the approach in its geothermal power developments including the 105MW Menengai Phase I Project, said it remains a preferred method because it is faster, less capital intensive and shares risks between those involved.

Under the arrangement, the State-owned agency takes care of upfront risks, and then invites the private sector to construct power plants.

Company managing director and chief executive Johnson ole Nchoe said apart from increasing the pace of development, the approach results into lower tariffs after completion.

“The steam development model has been proven in the faster conclusion of the 320MW Olkaria I & IV geothermal project where GDC developed the steam field through grants and concessional loans and availed 412MW of steam at the well-head.

In the past, geothermal projects in Kenya have taken way over 10 years from conceptualisation to power generation because the same company undertook to handle the whole value chain from drilling to power plant construction,” Mr Ole Nchoe said.

The 45 MW Olkaria I project for example took 30 years from 1955 to 1985 while the 105 MW Olkaria Project started in 1986 with the first two 70MW units taking 17 years, and the final 35MW unit taking 23 years while  phase I of the 100 MW Olkaria III project took 11 years.

It took GDC 10 years to complete the 105MW Menengai Phase I Geothermal Project.

KenGen, which constructed two power plants with a combined capacity of 280MW, and several well head generation units, which utilise steam developed by GDC pays, the firm Sh3 billion annually .

The approach, which taps into private funds for power production in the capital intensive geothermal development allows the Independent Power Producers to use metered steam from the wells drilled by GDC hence ensuring monitored use of the geological resource.

Plans are at advanced stage to sell steam to three independent power producers who will build and operate a 35MW geothermal power plant in Menengai for 25 years.

Within that period, they will be paying GDC an estimated annual revenue of Sh1.7 billion.

Already one of the IPPs, Quantum Power is at site clearing the ground in readiness for groundbreaking. The other two IPPs-Sosian Energy and OrPower 22 are at the verge of moving to site in readiness of the upcoming groundbreaking ceremony.

GDC also vouches for the approach as it leaves the firm as the custodian of the wells throughout the contract period and even after the 25-year contract period when the IPPs exit. GDC can then continue earning revenue from the steam wells through another IPP.

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