The Climate Investment Funds’ Clean Technology Fund (CTF) has approved a Sh2.9 billion concessional loan to Kenya to cofinance up to two geothermal projects to increase the country’s power capacity, particularly drawing on untapped geothermal resources in the Rift Valley. The programme would be implemented with support from the African Development Bank (AfDB), with the geothermal projects to be structured as independent power producers (IPPs).
The CTF for geothermal generation would build on the energy advancements already under way in the development of the country’s Menengai Geothermal Field.
To create a sustainable energy future, Kenya’s government recognised that it needed to sustain a stable investment climate for private sector participation in the energy sector, expanding transmission and distribution networks to deliver power to customers, maintain cost-reflective tariffs and reduce inefficiency in the sector to support more affordable end-user tariffs.
A key government measure in this regard was to promote IPP schemes selected through international competitive bidding processes to enhance investment flows from the private sector into the power sector. AfDB CTF coordinator Joao Duarte Cunha noted that the infusion of capital would serve to build investor confidence and improve bankability of these resources. “The success of the IPPs developed in this programme can serve as a beacon for other countries looking to achieve similar green energy goals.”
Transformation of the geothermal energy sector was a core part of Kenya’s economic growth plan for its expanding and increasingly urbanising population. In its 2030 vision, the country identified energy and electricity as key elements of its economic transformation, with geothermal energy as the lead technology. It was estimated that by 2020, the country’s projected installed energy capacity would triple from 2 177 MW to 6 766 MW, with geothermal contributing around 2 000 MW.