KENYA MOVES TO GEOTHERMAL, CHEAPER POWER

Power prices set to fall as State opts for geothermal
Zedy Sambu and Johnstone Ole Turana, March 22, 2010 (Business Daily)

"The reality of cheaper electricity drew closer after the government announced plans to kick-off power generation on low-cost mini geothermal plants following failure by private investors to invest in mega electricity projects.

"Energy minister Kiraitu Murungi says generation of small-capacity plants that are cheaper to develop will help in the phasing out of the expensive diesel-driven emergency thermal power by next year…[T]he national power grid is supported by 250 megawatts of the emergency power — which has in part led to the 60 per cent jump in electricity bills over the past year…after poor weather cut the contribution of low-cost hydro power to the national grid, prompting the government to hire expensive temporary suppliers in August…"

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"Figures from the energy ministry indicate that geothermal power can be delivered to consumers at less than Sh4.20 per kilowatt hour, which is much lower than the Sh15 per kilowatt hour that power consumers are now paying…The new geothermal plants will be operated by KenGen as the government owned Geothermal Development Corporation (GDC) prepares to transfer 20 generation wells to the [private] power generators…The new power plants are expected to start producing power in the next six months…

"The high explorations costs discouraged private investors from geothermal power
generation with a significant number opting for the expensive thermal type due to its low set up costs…Geothermal Development Company (GDC) [said 20 geothermal wells] have the potential to produce 120 megawatts…Though the wells were meant for mega power plants, GDC reckons that it has developed a new technology to enable production of between five and eight megawatts on a temporary basis…The short-term move is aimed at weaning the country from its increased dependence on thermal power as it prepares to build cheaper power plants including geothermal, wind and hydro power over the next decade…"

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"A drop in hydro-electric power’s contribution to the national grid has in the past year seen electricity bills rise…driven by fuel cost charges…[that, because there is less power on the national grid,] have risen from Sh3.92 in March 2009 to Sh7.49 this month, sparking uproar in Parliament… on claims that power firms are profiting from the crisis.

"The expected drop in power price will be a relief to the 1.2 million consumers, most of whom have suffered significant losses in purchasing power due to inflation and stagnant incomes…It also offers relief to industrialists who have been complaining about expensive electricity, arguing that it is blunting their competitive edge…The government is planning to terminate 60 per cent of the [emergency] power next month following improved rainfall…The plans to cut back on thermal power is set to upset private power producers who have steeped up their activity in the local supply market in recent months as Kenya emerged as a ripe business opportunity…"