Development challenge: Secure a reliable, sustainable, and affordable power supply to meet current and future demand. Kenya’s electricity supply has long been heavily dependent on large hydropower, accounting for almost half of the country’s installed capacity. It has become increasingly unreliable due to climate change impacts and short-term, high-cost, fossil-fueled thermal generation. Moreover, Kenya has not yet been able to meet its rapidly growing demand for energy.
Development solution: Increase renewable energy supply by generating geothermal energy at an affordable cost in appropriate public-private partnerships. Kenya has significant geothermal resources, estimated between 7,000 to 10,000 megawatts (MW). Its National Energy Policy set an ambitious goal of moving from 660 MW of geothermal energy in 2017 to 1,600 MW by 2020 and 5,000 MW by 2030.
Program solution and results: Attaining Kenya’s geothermal development targets will require investment at a level beyond what the government can make available. While the private sector may be interested in developing the power supply (downstream), a combination of significant capital investment needs and high resource risks translates into reduced private interest in exploration and field development (upstream). In response, the Kenyan government established the Geothermal Development Company to carry out surface exploration, exploratory and production drilling, and sales of steam to third parties, including independent power producers. The Menengai field is the first developed under this model combining public and private financing, along with risk mitigation instruments, to improve the project’s commercial viability. The Climate Investment Funds and the African Development Bank provided resources to support the first phase of the Menengai project.