The East African hotbed called the Rift Valley is already validated in the global geothermal sector by successful operations in Kenya and beyond nearby borders, and is poised to be one of the fastest growing and sustained geothermal markets in the world in the coming decades.
The Dewhurst Group’s Kerry McCallum, Geothermal Exploration Engineer, agrees. “The East African geothermal sector is in many ways more active than the U.S. at the moment,” he told GEA. The Dewhurst Group, a GEA member, is similarly new to the East African market and knew little about the corresponding programs prior to participating in the EAGP.
McCallum laid out two reasons the Dewhurst Group is convinced of major opportunities: First, “economic growth is driving demand for power in all sectors within the region,” he said. Second, “vast un-exploited geothermal resources exist and there is a willingness from regional governments to realize the benefits reaped by having geothermal power in their energy portfolio.“
“These factors create excellent market conditions for the geothermal industry and adventurous U.S. companies willing and able to provide goods and services,” McCallum said.
“Innovative early-stage funding mechanisms such as the Geothermal Risk Mitigation Facility, or GMRF, greatly bolster chances for success,” McCallum added. “GMRF also enhances interest and attracts investment by U.S. firms desiring to expand into East African markets.”
What is the Perspective of the Geothermal Market in Africa?
McCallum called the ARGeo conference a “world class exposition,” Saying that virtually every aspect of geothermal development was covered by papers and seminars. “Witnessing so many delegates from nearly every East African country including the world’s newest country, South Sudan, was remarkable,” he told GEA. “Gathering all of these groups together under one roof is a real credit to ARGeo organization and demonstrates their enthusiasm for promoting geothermal power development.”
“The conference successfully revealed the extent to which the East African community is striving to develop and expand the geothermal industry,” he said.
McCallum also shared a geothermal power theme song that was played during intermissions at the conference. “It is an instant hit,” he said. (Click here to hear the song on YouTube).
Since the conference trip, the company has submitted several formal proposals for work in East Africa and has been in contact with many of the officials and representatives in attendance.
“For a rapidly expanding small business like ours, this conference and EAGP’s support has been invaluable,” for gaining a foothold in that market, he said; and Hirsch is an “excellent ambassador for the U.S. geothermal industry,” with knowledge of local customs and an extensive contact network.
Shevenell of ATLAS GeoSciences similarly said that EAGP was instrumental during the conference, making introductions and arranging meetings with relevant people and entities.
“[Hirsch] has also been very helpful since the conference in follow-up on a number of business possibilities I have been pursing in Uganda and Kenya,” Shevenell added. “His knowledge of the region and significant contact base are greatly aiding U.S. companies in establishing relationships in the East African region. Entering the East African market would be significantly more difficult without the efforts that [Hirsch] has made to assist in U.S. company involvement.”
Mwangi told GEA, “The ARGeo conferences are improving in terms of quantity and quality of papers, presentations and level of interaction of business people and government officials.
“The participation of U.S. companies in previous ARGeo conferences has been very low,” he said. “However, due to the EAGP initiative, about 10 U.S. papers were presented in the ARGeo-C4. These papers received very high interest from participants and also added flavor to the entire conference,” while Kuster Company and Geothermal Development Associates also had exhibition booths.
Where Are the Markets Headed in the Future?
GEA’s International Initiatives Coordinator Alison Holm, who works closely on EAGP initiatives, prepared the following statement on the state of the East African geothermal markets as of early 2013:
“East Africa is poised to be one of the fastest-growing and sustained geothermal markets in the world in the coming decades, representing a huge export market for U.S. geothermal companies. Kenya is leading the region's efforts with a goal of bringing 5000 MW of new geothermal capacity online by 2030. Planned geothermal development in Kenya alone is projected to result in an $18 billion capital investment in the sector by 2030. Kenya currently has numerous rigs operating within its borders and expects to bring in an additional three rigs in the first half of 2013.
“Ethiopia and Rwanda are also actively pursuing new geothermal development, including an expansion to the Aluto Langano plant in Ethiopia, a planned 40 MW new plant at Tendaho (Ethiopia), and a 10 MW pilot plant at Karisimbi (Rwanda). Uganda has awarded geothermal exploration concessions to six local companies. Tanzania is following suit and exploring its own geothermal opportunities.
“There is widespread recognition among East African political leaders that geothermal presents a reliable, cost-effective, and sustainable energy development solution. The region is experiencing rapid increases in energy demand coupled with an insufficient and unreliable energy supply, due to the use of expensive, polluting thermal power plants and limited, drought-prone hydropower. The region's 15,000+ MW of potential geothermal resources are an attractive solution that is now being aggressively pursued.”
Mwangi provided a perspective on needs of the market. “My experience so far has been that many initiatives tend to cover the exploration part of geothermal development but fail to proceed to exploration drilling.” He favored the UNDP approach in Olkaria, in which the surface exploration proceeded to exploration drilling to a stage at which steam was proven. “It was therefore easier to finance the project after that,” he said.
“Given that many other countries are in [a] hurry to develop the geothermal resources, it is important that the time it takes to approve and implement projects is shortened.”
“Since the funds currently available to EAGP are limited, I think part of the current project would be to clearly define the critical areas of assistance and to lobby for more funds to move the projects to a critical level where both public and private sectors can then move them forward to completion.
“I am aware that there are some geothermal related activities that are being coordinated through USAID, such as the VEGA project on direct use; USTDA; and EXIM Bank; in addition to the EAGP. I would suggest that future attempts be made to consolidate all the U.S.-based geothermal activities through one entity in order to avoid confusion and duplicated particularly when dealing with recipient governments and implementing agencies,” Mwangi suggested.
To learn more about the East Africa Geothermal Partnership and receive programmatic updates, including information on business opportunities for U.S. companies in East Africa, contact Alison Holm at Alison@geo-energy.org.
Lead image: Africa landscape via Shutterstock
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