New ray of hope for Nakuru electricity generation plants

Geothermal Development Company wells at Menengai Crater in Nakuru county. The new plants at the site will have a combined capacity of 105MW. [Boniface Thuku, Standard]

 

The Government is looking for a bank to back three firms awarded the tender to construct new electricity generation plants in Nakuru County.

The selected bank will issue a letter of credit to the three independent power producers, bringing the geothermal power project back on track after years of waiting.

Quantam Power East Africa Menengai, OrPower 22, and Sosian Menengai were selected three years ago to put up the power stations that are expected to generate power using steam from Geothermal Development Company (GDC) wells at Menengai.

The three companies were expected to invest a combined Sh30 billion in the plants that were scheduled to start operations in December 2015.

Past reports have attributed the delays to the Government's failure to give risk guarantees to shield the IPPs from such factors as lack of a market for the electricity generated and political threats.

Among the recent power projects that have run into headwinds and which had government guarantees are the Kinangop Wind Park and Lake Turkana Wind Power (LTWP) projects.

Cheaper power

The Kinangop project failed to take off after community protests while LTWP has not been able to feed the national grid following non-completion of a transmission line.

The firms were initially supposed to get a letter of support from the National Treasury but this has not been forthcoming.

The power producers will develop separate geothermal power plants with a combined capacity of 105 megawatts (MW) or 35MW each. The companies have agreements for the supply of geothermal steam with GDC as well as a power purchase agreement with Kenya Power.

GDC yesterday said in a press advertisement that it was looking for a commercial bank to issue a standby letter of credit to the three companies, which is expected to see them start the construction of the power plants and eventually feed the national electricity grid with additional cheaper geothermal power.

“The transaction will involve the issuance of a standby letter of credit in favour of the IPPs - QPEA GT Menengai, OrPower 22, and Sosian Menengai Geothermal,” said GDC.