Companies
Menengai power plant set up to start after Sh18bn funding
Friday December 29 2023
Geothermal well discharging steam at Menengai Geothermal Development Company project in Nakuru County on June 7, 2023. FRANCIS MUREITHI | NMG
UK-based renewable power company Globeleq has reached financial closure for its $117 million (Sh18.34 billion) geothermal plant in Menengai, paving the way for start of the construction in the coming weeks.
The firm disclosed the financial break-through on Thursday, ending delays that had seen the company miss its target of starting the construction of the 35-Megawatt plant in the second half of 2023.
Globeleq, inked a financing deal with three financiers who include African Development Bank (AfDB), in December 2022, but financial closure dragged after the Kenyan government delayed fulfilling certain undisclosed conditions.
Read: Globeleq’s 35-megawatt power plant delays on State red tape
Start of the plant’s construction will make Globeleq the second of the three power producers to deliver by the plant by 2025, after Moi family owned Sosian Energy that completed its plant last year.
“I would also like to thank our partner GDC, the senior lenders at AfDB, Finnfund and Southern African Trade and Development Bank, our engineering procurement and construction contractor, Toyota Tsusho Corporation, and our off-taker, Kenya Power, for the achievement of this important milestone,” Mike Scholey, Globeleq CEO said.
“We are excited to be starting construction on our first geothermal power plant and look forward to other opportunities in the region.”
The Treasury signed the letter of support for Globeleq’s project in July this year, overcoming one of the hurdles that had delayed financial closure.
A letter of support insulates a private investor and the investor’s lenders from certain elements of country and political risk, helping a firm to secure funding for the particular project.
Globeleq acquired a license for the plant from Quantum Power, setting the stage for the UK firm to set up its second clean energy plant in Kenya.
The firm owns a 52-megawatt solar power plant in Malindi, which has been supplying power to the national grid since 2021.
Read: Globeleq plans battery at 52MW Malindi plant
Globeleq broke ground for the project in June this year and had hoped to start the construction of the plant this month, staying on course to start supplying electricity to the national grid by 2025.
Completion of Globeleq’s power plant will significantly boost the share of geothermal energy in the national grid and fuel the shift to 100 percent clean electricity mix.
Geothermal power accounted for 45.3 percent of the power mix as at the end of August, followed by hydro at 22.4 percent, wind (16.2 percent) and at 3.5 percent. Thermal plants accounted for 7.8 percent.
Ormat Technologies is the third power producer with a licence to build a similar plant in the Menengai region but the project hangs in the balance as the firm is yet to reach financial closure with lenders.
The three were tapped by the government of Kenya in 2014 to build geothermal plants, each of 35 megawatts on a public-private partnership.
→ (email protected)
