NAIROBI (Reuters) - Kenya’s main electricity producer, KenGen, has invited parties to submit bids for the development of 560 MW geothermal power plants, the company said on Thursday.
The company said it planned to develop the power plants in phases of 140 MW each at Olkaria within the east African nation’s Rift Valley under a joint venture arrangement in which successful bidders would build, and later transfer, the facilities back to the firm after 10 to 20 years.
“The successful bidder or consortium would be the majority shareholder,” KenGen said in a call for the bids in the Kenyan newspaper, the Daily Nation.
Kenya is the first African country to drill geothermal power, tapping vast reserves of steam energy in the country’s Rift Valley region, which remains geologically active.
The country has the potential to produce 7,000 MW and is targeting production of at least 5,000 MW of geothermal power by 2030.
Although expensive to drill initially, development of cheaper geothermal power means the country will come to rely less on thermal power, prone to the vagaries of high international prices, and rain-fed hydroelectric dams.
The cost of energy is a key factor in the east African nation’s inflation levels.
Kenya’s peak electricity demand has risen to about 1,200 MW, compared with 780 MW in 2002, driven by economic growth. KenGen produces 1,141 MW and the rest is generated by independent power producers which mostly rely renewable energy such as wind power.
KenGen said in February it planned to raise $12 billion to build six geothermal power plants that should generate 585 MW by 2016, as it pushes to diversify its power sources.
The company on Wednesday posted an 11 percent rise in its full year pretax profit to 4.045 billion shillings, helped by increased output from new plants.
East Africa’s biggest economy has embarked on capital-intensive alternative power generation projects, in a bid to reduce dependency on unreliable rain-fed hydroelectric dams and thermal power prone to erratic rainfall.