Baseload, Geothermal

Iceland Backs Global Geothermal Initiative

Issue 6 and Volume 15.

The Global Geothermal Development Plan initiative, which could amount to US$500 million, will offer financing for geothermal feasibility assessments and test drilling, and will be the largest to date for promoting the use of geothermal energy in developing countries.

An agreement to co-finance the first phase of the project was signed in November 2012 between the Nordic Development Fund (NDF) and Iceland. The Icelandic government and the Fund will each contribute €5 million to the project over a five-year period.

The Icelandic International Development Agency (ICEIDA) will be the lead agency for this project phase. The objective is to advance the use of geothermal power in thirteen countries (Djibouti, Ethiopia, Uganda, Eritrea, Kenya, South Sudan, Tanzania, Malawi, Mozambique, Burundi, Rwanda, Zambia and Somalia) of East Africa’s Great Rift Valley. Energy poverty in these areas is high, but some consider that the Great Rift Valley could offer 14,000 MW of geothermal potential.

With the support of the Nordic Development Fund, Iceland will assist the East African states in geotechnical investigation of promising sites, and in detailed geophysical, seismic, environment and chemical tests including test drilling and assessments. The World Bank will collaborate with Iceland, other partners and funding agencies to establish a flexible financing facility that can share the costs and risks of specific drilling programmes in the target countries. Drilling is the most costly part of the exploration and the primary barrier to utilisation of geothermal energy. But if drilling yields positive results, said Iceland’s foreign ministry, it will be possible to harness geothermal energy for electricity production and utilise it to further economic development, with the active participation of the private sector.

Iceland is the world leader in geothermal energy production due to its volcanic activity. One third of electricity and 95% of home heating in the nation is geothermal in origin. Iceland and the Great Rift Valley are both situated over a thinning of the Earth’s crust due to tectonic plates pulling apart, which facilitates access to molten rock for geothermal power generation.

Other Developments

Meanwhile, Kenya’s Business Daily newspaper reports that US company OrPower has borrowed KES18.5 billion (about $210 million) to develop a 100 MW geothermal project in Naivasha. And in September Kenya Electricity Generating Company (KenGen) invited bids for the development of geothermal power plants with a capacity of 560 MW.

The company plans to develop the power plants in phases of 140 MW each under a joint venture arrangement in which successful bidders will build and later transfer the facilities back to KenGen after 10 to 20 years. In February, KenGen said it planned to raise capital to build six geothermal power plants to produce 585 MW by 2016 as it pushes to diversify its power sources, Business Daily said.

Kenya’s government aims to produce 5 GW of geothermal power by 2030.