Last week, KenGen, Kenya’s part-state-owned generation company, commissioned 140MW of geothermal capacity with an additional capacity of 140MW expected by year end (See http://www.businessdailyafrica.com/KenGen-adds-140MW-geothermal-power-to-grid/-/539546/2404578/-/cv387mz/-/index.html).
The company expects to increase its installed geothermal capacity to ~600MW by year end. With an estimated potential of 10,000MW, Kenya has set an ambitious target as part of its draft national energy strategy of installing 1,887 MW of geothermal capacity by 2017 and 5,500MW by 2030.
Source: http://studioinfernophotography.wordpress.com/2012/03/14/olkaria-geothermal-power-plant-10th-march-2012/
In this brief series of articles, I review the status of various power generation technologies in Africa, discussing their current status of deployment, their cost competitiveness and their long term potential to contribute to powering the continent.
Geothermal provides low carbon electricity with minimal variable costs. It is cost competitive with natural gas and coal in the region, although it has high capital costs which have hindered wider deployment.
Capital costs range from $4.4M -6.2M per MW or 5-7 times the cost of a conventional gas plant (EIA). However, taking into account fuel costs and full cycle costs of the plant, geothermal is cost competitive against most technologies.
So what’s holding investment? The capital cost intensity of geothermal means that it requires substantial upfront investment –a substantial part of the capex is to drill wells and is not risk less with a failure rate of 20%. Moreover, lack of an enabling framework for investment (outside Kenya) means fewer exploration and surface studies, appraisal drilling and feasibility studies etc.
In Africa, geothermal has the potential to provide an additional low-carbon baseload source of electricity to countries reliant on hydro at competitive costs. We see its potential – Kenya is investing heavily and it’s likely that it will have up to 1,000MW by 2020. Beyond Kenya we see one or two large scale projects in Ethiopia.
Notes / Sources:
EIA – Overnight capital costs; Annual Energy Outlook 2014 - Levelised Costs for New Generation sources, 2019
Geothermal Energy in Africa, http://www.geo-t.de/downloads/gpl_informationsheet-v4.pdf
Norton Rose & Fulbright, Geothermal energy in East Africa, May 2013
The company expects to increase its installed geothermal capacity to ~600MW by year end. With an estimated potential of 10,000MW, Kenya has set an ambitious target as part of its draft national energy strategy of installing 1,887 MW of geothermal capacity by 2017 and 5,500MW by 2030.
Picture of Olkaria Geothermal Power Plant (http://studioinfernophotography.wordpress.com/)
Source: http://studioinfernophotography.wordpress.com/2012/03/14/olkaria-geothermal-power-plant-10th-march-2012/
Potential for geothermal energy in Africa - and list of operational projects / under construction
Geothermal generation technologies use steam or hot water from natural underground reservoirs to generate electricity. According to the U.S.-East Africa Geothermal Partnership (EAGP), East Africa has an estimated 15,000 MW of potential geothermal capacity. Most of the resource potential is clustered in five countries – Ethiopia, Kenya, Djibouti, Rwanda, Tanzania, and Uganda.
As shown below, much of the potential is clustered in the Great Rift Valley in Eastern Africa, an area of active continental rift zone that is in the process of splitting into two tectonic plates.
As shown below, much of the potential is clustered in the Great Rift Valley in Eastern Africa, an area of active continental rift zone that is in the process of splitting into two tectonic plates.
Geothermal provides low carbon electricity with minimal variable costs. It is cost competitive with natural gas and coal in the region, although it has high capital costs which have hindered wider deployment.
Capital costs range from $4.4M -6.2M per MW or 5-7 times the cost of a conventional gas plant (EIA). However, taking into account fuel costs and full cycle costs of the plant, geothermal is cost competitive against most technologies.
Cost competitiveness of geothermal and comments on its long term potential inn Africa
Geothermal's levelised cost (the price at which electricity must be generated to break even over the lifetime of the project) in the US is approximately $48/MWh compared to coal at $96/MWh or conventional gas at $66/MWh and hydro at $84/MWh. Although these are US-centric cost estimates, East Africa site specific costs are broadly comparable which highlights the commercial viability of geothermal.
So what’s holding investment? The capital cost intensity of geothermal means that it requires substantial upfront investment –a substantial part of the capex is to drill wells and is not risk less with a failure rate of 20%. Moreover, lack of an enabling framework for investment (outside Kenya) means fewer exploration and surface studies, appraisal drilling and feasibility studies etc.
In Africa, geothermal has the potential to provide an additional low-carbon baseload source of electricity to countries reliant on hydro at competitive costs. We see its potential – Kenya is investing heavily and it’s likely that it will have up to 1,000MW by 2020. Beyond Kenya we see one or two large scale projects in Ethiopia.
Notes / Sources:
EIA – Overnight capital costs; Annual Energy Outlook 2014 - Levelised Costs for New Generation sources, 2019
Geothermal Energy in Africa, http://www.geo-t.de/downloads/gpl_informationsheet-v4.pdf
Norton Rose & Fulbright, Geothermal energy in East Africa, May 2013
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