Infrastructure

KenGen Invests Sh32.2bn in Olkaria VII Geothermal Plant

The new plant is expected to add 80.3MW to the national grid.

Updated on

August 27, 2024

The geothermal complex at Olkaria in Naivasha. PHOTO | FILE

KenGen is investing Sh32.2 billion in the construction of the Olkaria VII Geothermal Power Plant, marking a major expansion of the country’s renewable energy sector.

The new facility, located within the Olkaria geothermal field in Naivasha, is expected to add 80.3 megawatts (MW) to the national grid.

The proposed plant is a key part of KenGen’s strategy to enhance its renewable energy portfolio by adding 3,000MW of clean energy over the next decade.

Olkaria VII will increase KenGen’s geothermal capacity from 799MW to 879.3MW, pushing it closer to the milestone of 1,000MW for the Olkaria zone.

“KenGen intends to develop Olkaria VII Geothermal Power Plant in the Olkaria field. The estimated equivalent output of the steam available for Olkaria VII is 80.3MWe (megawatts estimate),” the company said in regulatory filings.

KenGen has allocated 19 wells for the Olkaria VII project, having evaluated seven potential sites within the Olkaria field. The chosen location is situated 220 metres from the southern boundary of Hell’s Gate National Park.

“The development of the Olkaria geothermal power plant will play an important role in the stabilisation of the power situation in the country,” the company said.

The new plant is expected to help stabilize Kenya’s electricity supply and reduce reliance on costly thermal power sources, set for phase out by 2035.

“Failure to implement the Olkaria VII geothermal power project as planned would result in a deficit of 65 to 100MW,” KenGen warned in its report.

West Japan Engineering Consultants Inc.’s Environmental and Social Impact Assessment projects substantial financial gains from the Olkaria VII project.

“The proposed project will achieve CO₂ emission reduction by replacing electricity generated by fossil fuel-fired power plants,” the consultancy said, adding that it could yield up to Sh3.77 billion annually in carbon credits.

KenGen currently earns carbon credits from six power projects: Olkaria IAU, Olkaria II, Olkaria IV, Tana, Kiambere, and Ngong.

The company’s latest investment underscores its pivotal role in shaping Kenya’s energy future and advancing the country’s renewable energy goals.

Olkaria VII is one of four geothermal projects KenGen is developing, which collectively aim to increase its geothermal output by 326MW.

Other projects include Olkaria I Rehabilitation (6MW), Olkaria IV and IAU Uprating (40MW), and Olkaria Public-Private Partnership project (140MW).

When completed, these power plants will raise the total installed geothermal capacity in the greater Olkaria zone close to 1,000MW.

KenGen, whose revenue rose 14% to hit Sh53.964 billion in the year to June 2023, is betting on increasing its generation capacity both by building new plants and upgrading existing ones to grow its earnings.