* Needs to add 1,800 MW capacity to grid
By George Obulutsa
NAIROBI, Nov 23 (Reuters) - Kenya needs $1.02 billion in the
next three years to tap its geothermal power potential, seen as
an answer to over-reliance on drought-hit hydroelectric power,
Energy Minister Kiraitu Murungi said on Monday.
Drought has slashed capacity at Kenya's main dams, forcing
shutdowns and leading to reliance on costly diesel-powered
generators, which in turn have pushed up energy bills.
East Africa's biggest economy has relied on hydro energy to
provide up to 90 percent of its electricity requirements. The
country produces about 1,300 MW of power.
East Africa's largest economy needs to add another 1,800
megawatts (MW) in new power generation to its grid to meet
growing demand, Murungi said.
About 200 MW comes from geothermal sources now, although the
government estimates it has the potential to produce 7,000 MW.
The government aims to raise production by 2,000 MW by 2014.
Murungi told a conference that Kenya's Geothermal
Development Company (GDC) would need at least 12 rigs by 2010-11
for the drilling of 72 wells each year and the acquisition of at
least 100 well head generators over the next three years.
"The financial resources required to realise this strategy
include $324 million for procurement of the rigs, and $700
million for the well head generators," he said.
Murungi added that GDC, and main power producer KenGen, had
secured funds and awarded a tender for two rigs and were seeking
money for another two.
GEOTHERMAL COSTLY
He said the main obstacle in investing in geothermal was the
high costs involved. For instance, it costs $6.2-$6.5 million to
drill a well and a well-head generator costs between $7 million
and $8 million.
"It has been difficult to attract private sector investment
into the geothermal sector due to the extremely high front-end
costs," he said.
Murungi said Kenya needed to ramp up power production to
meet growing demand.
"To address the current supply-demand imbalances and provide
reserve margin of at least 20 percent, we need close to 1,800 MW
in new generation capacity," he said.
The country is seeking to expand generation of electricity
from other renewable sources. This includes a 300 MW wind farm
in northeastern Kenya due to be commissioned by 2012..
KenGen is already setting up wind turbines to produce 5.1
MW. Murungi said there were plans to increase this by another 30
MW. The government says wind power has the potential to produce
2,000 MW in Kenya.
Kenya has spent 630 million shillings ($8.43 million) in
Kenya's dry areas on solar power for hospitals, schools and
health centres in the last four years and has set aside 500
million shillings more in the 2009/10 budget, Murungi said.
He said the country also has the potential to produce more
than 300 MW from sugarcane by-products, but only one sugar
producing company has been feeding 23 MW to the grid.
(Editing by David Clarke)
((Email: nairobi.newsroom@reuters.com +254 20 2224 717; Reuters
Messaging: george.obulutsa.reuters.com@reuters.net))
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($1=74.75 Kenyan Shilling)
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