Geothermal energy in Kenya

Geothermal energy production, potential, costs and benefits, and comparison to coal

Geothermal sources constitute about 28% of electricity supply in Kenya, but the amount fluctuates and is rising. As National Geographic noted, “On some days right now, half the power used in Kenya comes from inside the earth.”

To meet its energy needs to date, Kenya has relied on a mix of biomass, hydropower, wind, solar, and geothermal energy sources. Energy usage in Kenya is approximately 69% biomass, 22% petrol, and 9% electricity.

As of June 2019, Kenya had an installed electricity capacity of 2,712 MW. Of electricity usage, renewable energy sources constitute 85–90%.

While current geothermal capacity is about 777MW, according to the Geothermal Association of Kenya, there is potential for about 10,000MW across Kenya’s Rift Valley, a geological fault line. The Olkaria Geothermal Field is online thus far, while development of Menengai, Bogoria, Silali areas is underway. (Already, Kenya is #1 in geothermal energy generation on the continent of Africa.)

Overall, Kenya’s electricity generation continues to grow at a fast pace, thus far almost entirely in renewable energy sources. “Generation almost tripled from 1990 to 2013, with fuel oil and geothermal taking a growing share of the electricity mix.”

Since 2014, Kenya’s increasing use of geothermal energy has caused the cost of electricity to industrial and domestic consumers to drop dramatically, helped triple the number of Kenyans with access to electricity, and reduced greenhouse gas emissions.

“Since 2010, the proportion of the 44 million population with power has reportedly surged from one in five to three in five,” largely due to geothermal energy, according to reporting from April 2019.

While requiring significant capital investment, geothermal energy is low-carbon, does not require external fuel sources, becomes comparatively cheap over time, is reliably available throughout the day and year, and yet can be operated flexibly without incurring significant additional costs (instead simply venting extra steam).

“As a result of the government’s investment in geothermal energy, since August 2014 the cost of power to industrial and domestic consumers has fallen by over 30 per cent,” noted the World Bank in 2015.

In contrast, coal electricity generation requires greater upfront capital costs, would emit six to nine times the amount of carbon, and would get increasingly more expensive if operated at a lower capacity level, which would be dictated by demand. This is calculated as the levelised cost of electricity (LCOE).

Given global trends and domestic policy changes, financing and regulatory structures also favour geothermal and other renewables over coal. Increasingly, international funding has turned towards low-carbon investments such as Kenya’s promising geothermal sector, and away from coal. The regulatory structure for geothermal is also much more defined than for coal, particularly following Energy Act 2019 reforms.

Overall, geothermal electricity will continue to be cheaper than potential coal plants. In the most likely scenarios for Kenya’s energy demand over the next two decades, geothermal is estimated to cost US USD 10 cents/kWh, while coal would cost at least USD 29.5 cents/kWh, according to a conservative calculation from New Climate Institute, or perhaps most realistically 75 cents per kilowatt-hour (KWh) according to a detailed economic analysis of Lamu coal plant, itself drawing from the data in the government’s power plan.

According to a recent New Climate Institute report, “Total installed geothermal capacity at the end of 2016 was about 630 MW, an increase of about 380 MW from the reported 250 MW of geothermal power generation in June 2013. In 2016/2017, installed [electricity] capacity was 2,333 MW, with geothermal accounting for 44% of the generation mix, hydro 33%, thermal 21% and imports 2%.”

The report noted, “Electricity generation from geothermal energy reduced GHG emissions and lessened the vulnerability of the sector to climate change.”

“Geothermal plants aren’t pristine: carbon dioxide, methane, and hydrogen sulfide all bubble out of the hot water. But one kilowatt-hour of geothermal power, according to World Bank data, emits roughly one-sixth to one-ninth of the carbon emitted by coal.”

Some argue that geothermal energy development in Kenya has moved slowly, and has been mired by the financial constraints of a model that requires significant upfront capital investments that take some time to lead to results. According to one estimate, USD $4.5 billion (double the price tag of Lamu coal plant) is needed implement already-earmarked projects over the next few years.

“Attracting the private investments needed to develop the country’s geothermal resources at a swifter pace remains a challenge, hindered by a number of financial, political, social and environmental risks.”

Nevertheless, as the government’s own least cost power analysis concluded, “Geothermal will remain the most [competitive] technology with respect to development of base load capacity in the medium to long term.”