Geothermal Exploration and development in

Cyrus Karingithi [email protected] [email protected] Geothermal Power Project, , Kenya

Disclaimer:

No part of this report may be circulated, quoted, or reproduced for distribution without prior written approval from KenGen. All the information contained herein was prepared for information to the German Parliamentarians visiting Kenya OVERVIEW OF POWER SUB-SECTOR TODAY ~75% Market IberaAfrica Geothermal Development Share (108MW) Company(GDC) established in 2009 to accelerate Geothermal KenGen Orpower 4 Resource Assessment 1630 MW (127MW)

EPP Rabai (89MW) (30MW) Generation IPPs Tsavo (74MW) (488MW) Mumias (26MW) Energy RURAL Ministry of Regulatory (9MW) Energy & Commission Thika (87MW) UETCL • Wind (510MW) Petroleum (ERC) • Thermal (responsible (Imports) Upcoming (responsible for (163MW) for regulating (938MW) • Geothermal policy matters) the energy (247MW) Kenya sector) • Biomass Power (18MW)

Transmission KETRACO Customer & Distribution

REA New Energy Bill being enacted to align the sector to the New Constitution… Source: KenGen; 1 GEOTHERMAL POTENTIAL IN KENYA

> 10,000MW in over 23 sites

• Suswa, • Longonot, • Olkaria, • Eburru, • , • Arus-Bogoria, Menengai Block (1,600MW) • Baringo, (Drilling Ongoing) • , 105 MWe tender • , awarded to private • , developers • Badlands, Olkaria Block(1,200MW) • Silali, (i)Installed 636 MW • Emuruangogolak, (ii) Developing 560MW (the first 140MWe • Olkaria V advertised) • Barrier • Mwananyamala Private developers • Homa Hills already licensed at Olkaria, Akiira and • Nyambene Ridges Longonot fields • Chyulu Hills

Source: TMO; Internet Sources; Argeo 2 GEOLOGY, GEOCHEMISTRY, GEOPHYSICS, ENVIRONMENT STUDIES & HEATFLOW MEASUREMENTS

Hot Springs Geysers

Sulfur

Fumaroles Hot Ground

3 3 Geothermal Conceptual Model

• Geothermal Energy is “heat from the earth”.

• A hole (well) is drilled to an average 3km to tap the steam underneath.

• Geothermal power is the conversion of energy from that steam to electricity.

Source: TMO; Internet Sources 4 A model of the reservoir in Olkaria

5 GOVERNMENT AS A CO-FINANCIER OF GEOTHERMAL PROJECTS

Expensive Least expensive

Commercial Joint Ventures BOT/BOOT/ DFIs ( World Bank Capital Markets AfD, ADB,AfDB Government Banks & PPPs Concessions ,JICA, EIB, KfW

DFIs SUPPORT – 210MW

 No resettlement needed

 All NEMA approvals granted

Source: KenGen; www.centralbank.go.ke 6 NATIONAL PEAK DEMAND + Suppressed peak demand Peak Demand (MW) – approximately 8% growth 2347

2152 1,334

Up to 2005, KenGen could alone meet 1,221 1,210 national peak 1,188 1,200 demand 1,141 1,151 1,107 KenGen Effective 1,050 Capacity 1,010 1,001 916 983 972 940 912 912 912 867 870

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2017

Source: KenGen; Kenya Power 7 KENYA’S GEOTHERMAL JOURNEY FROM 1956 to DATE

~ 400MW of Steam 1981-85: Olkaria I – 45MW 302 Available 1 commissioned 220

+117% 2003: Olkaria II – 70MW 2 commissioned Little activity for ~15yrs. 172 162 No funding for geothermal. 3 2010: Olkaria II 3rd Unit – 35MW 144 commissioned 128

103 114 2014: Olkaria IAU & IV– 301MW 106 4 99 100 101 commissioned 94 96 87 91 79 67 59 46 50 41 36 31 27 21 24 15 9 11 3 4 7

2011 1956 1973 1974 1975 1978 1979 1980 2012 2017 1981 1982 1983 1984 1985 1986 1987 1988 1988 1990 1991 1992 1993 1994 1996 1997 1998 1999 2007 2008 2009 2010 2014 1 2 3 4

Source: KenGen 8 CURRENT TRUE PEAK DEMAND

Required Capacity 3003 Current national installed capacity ≈ 30% Reserve Margin 660 2370MW

Suppressed Peak Demand 343

…due to transmission and distribution system weaknesses… 2000MW

Current Peak … true peak …

2017 9 GOVERNMENT TARGET ON TARIFF EVOLUTION WITH NEW CAPACITY THAT WILL DISPLACE FUEL COMPONENT:

8000 Cumulative MW 25 Industrial/Commercial Tariff (US$cts/kWh) Domestic Tariff Progression (US$cts/kWh) 6762 7000 19.78

20 6000 17.73 5017 47% reduction on Domestic tariff 5000 14.14 13.46 15

12.49 4000 11.03 11.19 10.43 9.03 3000 10 2342 9 2000 1664 37% reduction on 5 Cumulative Capacity Installed Cumulative Industrial tariff Progression Tariff 1000

0 0 0 6 12 18 24 30 36 40

Source:MoEP 10 POWER DEMAND DRIVERS BY YEAR 2017/18

MW

Iron & Steel 2,000 Smelting Industry • Economic activities in counties

Standard Gauge 1,171 • Mining and Process and Light Rail industries

• ICT Parks 675 • Electrification of Rail;

• Powering resort cities Lapsset 350 and new economic zones.

Total 4,196

Source: Ministry of Energy, Sector LCPDP Plan 2011-2030 11 40-MONTH GOVERNMENT 5000+MW STRATEGY

NEW CAPACITY ADDITIONS (MW) TIME IN MONTHS 6 12 18 24 30 36 40 TOTAL

Hydro 24 ------24 Thermal 87 163 - - - - - 250 Geothermal 90 176 190 50 205 150 785 1,646 Wind - - 20 60 300 250 - 630 Coal - - - - 960 - 960 1,920 LNG - - - 700 350 - - 1,050 Co-Generation - - 18 - - - - 18 Total 201 339 228 810 1,815 400 1,745 Cumulative Additions 201 540 768 1,578 3,393 3,793 5,538

61% is Renewable Capacity and KenGen is a key player in this 12 strategy… 12 KENGEN: A LEADER IN POWER GENERATION IN THE REGION

• In our 63rd Anniversary;

• 74% Government-owned

• ~70% installed capacity market share

• ~80% sales market share

• Securities Exchange member since 2006

• ~ 1,630MW (~ 84% from Green Sources);

• ~ 2,400 Staff Compliment;

• ~ US$ 3.67 billion Asset Base;

• ~ US$ 360 million Annual Turnover;

• An ISO 9001:2008 & ISO 14001:2004 Company Source: SBP Office OUR GENERATION PORTFOLIO

Generation Portfolio (MW) Generation Portfolio (%) – excludes TTP*

1638 1,6% 26 100% Wind 534 Geothermal 32.6%

258 Thermal 15.8% 820 Predominantly Hydro that makes power more expensive during dry Hydro 50.1% hydrology

Hydro Thermal Geo- TTP Wind Total 2017 thermal

TTP* - Temporary Thermal Power 14 A GREEN KENGEN WITH GEOTHERMAL BASE-LOAD CAPACITY

Generation Mix Movement 110 1,182MW 1,643MW 3331 MW 100 1 2018 1.6 5 Wind 13 90 2010 31.3 80 22 2009 2004 70 49 Geothermal • A green 2008 17.4 60 KenGen by 2018 with 50 2007 ~50% of installed 40 Thermal 2006 18 portfolio from 65 30 geothermal… 49.7 2005 20 • Carbon credits will also boost 28 Hydro 2004 10 revenues

0 2003 2010 2016 2024 15 OUR STRATEGY TO 2030 KenGen Today ~ 1,638MW

Horizon 1 Horizon 2 Horizon 3 Great (2008-2012) (2013-2018) Beyond 2018 company 10 yrs+ 5-10 yrs Explore expansion opportunities Next 5 yrs • Drive expansion beyond Kenya Create sustainable While stabilizing Stabilise situation power growth in • Establish a strong African supply, in Kenya Kenya footprint KenGen must prepare for • Deliver optimal future • Leader in technology and sustainable • Improve efficiency to boost supply projects on time and innovation growth in budget (e.g., geothermal, • Deliver ongoing future wind) projects timely • Manage peak demand • Grow supply ahead of and emergency power demand to establish reserve margin Good • Prioritise and kick-start future projects • Optimise project portfolio company Time Capacity addition ~500MW >1,500MW Year 2030 ~9,000MW Total Capacity KenGen 2007 (918MW) ~1,500MW ~3,000MW

Source:TMO 16 OUR GROWTH STRATEGY

Targeting 980 MW …estimated additional geothermal 3331 capital by 2024 outlay ~ US$ 5bln… 600

… ~50MW early leasing generation 350 on tender… 140 2101 140 100 140 140 1651 70 70 280 1,239 20

MW Coal - Olkaria 8 Olkaria 7 Olkaria V Olkaria VI Wellheads Wellheads 2019 Meru Wind Meru 2013 2017 Olkaria I U6 Olkaria I&IV Ngong Wind Ngong Total 2024 Total Source: TMO; BDS Division 17 COMMITTED GEOTHERMAL PROGRAMME

Capacity Estimated Comm year Status No. Plant (MW) Cost MUSD Olkaria IV unit 2014 Commissioned 150 491 1 1&2 Olkaria I unit 2014 Commissioned 150 491 2 4&5 Commissioned 3 Wellhead 83.5 130 2016

4 Olkaria I Unit 6 Construction to 70 194 2020 start 2018 2020 Construction 158 491 5 Olkaria V started 2017 2021 Drilling & JV 140 491 6 Olkaria VI Partner/Financing Sub-Total 751.5 2,165

18 OLKARIA I&IV 300MW PROJECT: Utilizing a Cross-Continental Collaboration both engineering and financing

Tariff ~ 7 Uscts/kWh. One of the most competitive renewable project in Kenya

Olkaria I&IV 300MW Geothermal 1 Kenya (GoK) Project (September 2014) Multi-financing (KenGen, GoK, EIB, AfD, KfW, JICA, IDA ~ US$ 1 billion) 7 2 New Zealand (SKM)

Steam Sub- Consul- Local Power 3 China (Sinopec) Field station & Plant tancy & Infrastru Develop- Trans- Cons- Adminis- cture & ment mission truction tration RAP 4 [Lot A – [Lot C - [LotB1&B2 [Lot Zero – [Lot D – India (KEC ) IDA, KfW, EIB, KfW, JICA, KfW, IDA, KenGen] KenGen] AfD, EIB KenGen] KenGen] KenGen] US$ 138m US$ 27m US$30m 5 Kenya US$382m US$36m (Local Companies) 3 4 6 2 5

6 S.Korea (Hyundai) & Geothermal Steam Drilling – [GoK, KenGen] Japan (Toshiba/ (June 2007- Aug 2012)~US$330m 1 Toyota Tsusho)

Source: KenGen; 19 Olkaria IV: 150MW – Commissioned

20 Olkaria I UNIT 4 & 5: 150MW – Commissioned

21 New Discoveries: 30 MW Well (among the largest Geothermal Wells in the World)

Direct Cash Savings by Striking one 30MW Well

USD 35 Million!

Source: KenGen; TMO; BDS 22 GEOTHERMAL STAKEHOLDER MANAGEMENT

• Creating mechanisms to deal Stakeholder with local community issues Management

• Environmental & Social Impact Management

• Dealing with regulatory authorities and government institutions

Source: KenGen; 23 KenGen/PARK INTERACTION

• Hells Gate National park since 1984

• KWS-MoU since 1994

• ESIAs always undertaken

• Mitigation measures implemented continuously

Meeting between Consultants, KenGen and KWS

Loops on animals routes

24 STAKEHOLDER MANAGEMENT

1. Elaborate Resettlement Action Plan (RAP) and all inclusive Stakeholder Committees

2. Education 3. Health 4. Water 5. Transport 6. Roads 7. Environmental conservation

Built Schools

25 STAKEHOLDER MANAGEMENT

Stakeholder Coordination Committee

RAPIC - Operates Independently

RAP Economic Environmental Employee Sub- Implementation Benefits Management Committee Committee Committee Committee

26 TRANSFORMING LIVES

27 TRANSFORMING LIVES

28 TRANSFORMING LIVES

Old School

29 TRANSFORMING LIVES

New School

30 KENGEN OLKARIA GEOTHERMAL SPA

31 THE ONGOING WELLHEAD 70MW PROJECT…

Wellhead Generation

32 OUR INNOVATION IN GEOTHERMAL

Directional Drilling • This reduces drilling cost by optimizing time, civil and rig-move expenses.

Source:KenGen, TMO 33 PROPOSED KenGen INDUSTRIAL PARK

34 THANK YOU…

God Bless Kenya

35