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EIB Olkaria I and IV GeoThermal Extension (Kenya)

[ tags: Africa , Kenya , Co-financing , Equity , Loan , Mitigation , Multilateral , Energy , Renewable Energy , Loan , Renewable Energy , Other , Renewable Energy ]
Snapshot
Financing Types Stakeholders Amount Share Sector
LoanEIBEUR 119 million11.8%Renewable Energy
OtherOther financiersEUR 888.7 million88.2%Renewable Energy
Total:EUR 1.007 billion
Project Summary

The project involves the expansion of the electricity generating capacity of the Olkaria geothermal steam field by extending the existing Olkaria I power station by two 70 MWe units (units IV and V) and implementing two 70 MWe units at the Olkaria Domes field (Olkaria IV power station) including required infrastructure, transmission lines and substations. The project area is located some 85 km northwest of the Kenyan capital Nairobi, in an area where the Olkaria I, II and III power stations are already in operation.

The 280 MW project includes 50 production and reinjection wells, associated infrastructure, such as development of the respective well-field and steam gathering system, feeder transmission lines, substations, and water supply and access roads. 

The project supports various goals such as renewable energy development and combating climate change as well as the development policy of the country, in particular the Kenyan Electricity Expansion Project.

Financing

The total project cost is estimated to be EUR 1,007 million (including contingencies), of which the EIB finances up to 120 million. The project is co-financed by the Government of Kenya, AFD JICA, KfW, World Bank and the balance by Kenya’s major power generating company, KenGen.

Lessons Learned

An economic, social, environmental and institutional impact assessment report has been developed by AFD. To download the document, click here.

An environmental and social impact assessment (ESIA) has been established for both power stations. The studies, including public consultation and respective monitoring plans, have been approved and respective licenses issued by NEMA (National Environmental Management Authority).

The Olkaria IV part requires resettlement of several Maasai communities. A Resettlement Action Plan (RAP) has been established, which includes the participation of the project affected communities. The execution of the RAP is implemented according to the WB guidelines.

The extraction of steam from geothermal sources releases CO2 into the atmosphere - estimated annually to be 157 kt/CO2e. Given that the electricity produced displaces alternative generation from diesel and coal-fired power plants existing or planned, the project results in an overall annual emissions reduction of 630 kt CO2e.

This project also improves security of supply (geothermal power is unaffected by annual hydrological conditions); reduces national dependence on imported fossil fuels for electricity generation; avoids emissions associated with conventional thermal generation; provides additional operational flexibility with the greater Olkaria geothermal generation park; meets growing electricity demand at a competitive cost and with a limited impact on the environment.

The project forms part of the Kenyan Electricity Expansion Project which calls for a massive increase of electricity access within Kenya, which in turn requires substantial expansion of the existing generating capacity.

Preparations of the project have started, particularly with regard to drilling of production wells and tender documents preparation. Implementation requires some 36 months including commissioning. Commercial power generation is expected for mid 2013.

The project implementor, Kenya Electricity Generating Company Ltd. (KenGen), is a majority (70%) Government owned company, active in hydro-, geothermal and thermal electricity generation. The company was established in 1998 as a successor to the Kenya Power Company (KPC), as a consequence of the electricity sector reform, which divided electricity generation from transmission and distribution (KPLC – Kenya Power and Lighting Company). KenGen was attributed the generating facilities of KPC and KPLC. This included the geothermal power stations of the Olkaria field, i.e. Olkaria I (45 MWe, 1981) and Olkaria II (70 MWe, 2003). The Olkaria II Extension unit (35 MWe, 2008) is implemented by KenGen itself. The transmission part is separated into a wholly government-owned state corporation – Kenya Transmission Company Ltd (Ketraco). With regard to the substations and transmission lines, KenGen acts as the project implementor. Following commissioning, the assets are transferred to either Ketraco or KPLC.

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