Fast Tracking Geothermal development, Case study: Field in Cyrus Karingithi [email protected] [email protected] Olkaria 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 0 OVERVIEW OF POWER SUB-SECTOR TODAY ~75% Market IberaAfrica Geothermal Development Share (108MW) Company(GDC) established in KenGen 2009 to accelerate Geothermal Orpower 4 Resource Assessment 1612 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) (247MW) the energy 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 Fast trackedAccelerated Development, geothermal KenGens Experience development

3 GEOLOGY, GEOCHEMISTRY, GEOPHYSICS, ENVIRONMENT STUDIES & HEATFLOW MEASUREMENTS

Hot Springs Geysers

Sulfur

Fumaroles Hot Ground

4 Community and Land issues eg. Olkaria IV RAP

• RAP - sub project to140MW Olkaria IV Project.

• RAP proposal an outcome of ESIA report by GIBB Africa Consultants; 4 villages within the project area required resettlement based on a census of Sept 2009.

• Census identified 5 categories of PAPs: i. Land and Asset Owners ii. Land Owners iii. Land Tenants iv. Landlords v. Housing Tenants

• Census update of 2012 determined that:

. A total of 1,181 were PAPs. . Estimated RAP cost, USD 15Million

5 Optimised Development -Olkaria Expansion-560 MWe

6 Geophysical measurements MT/TEM/Gravity/seismology,

7 Infrastructure required – Access Roads, Well pads, Water supply

8 Well siting in Olkaria Geothermal Field

9 Stakeholder management – way leaves / kws

10 Infrastructure required – Access Roads, Well pads, Water supply

11 Require heavy machinery and capital Inv

12 KENGEN RIGS

13 Infrastructure required – Access Roads, Well pads, Water supply

14 Geochemistry and Environment monitoring

15 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 16 Infrastructure support and well discharge testing - geochemistry

17 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 18 A model of the reservoir in Olkaria

19 3 An illustration of a Geothermal Power Plant

Substation & Transmission Line

Cooling Towers Separators

Turbines & Generator Sets Steam Pipeline(Field)

Production Well Injection Well (Water and Steam) (Water)

Source: TMO; BDS Division; Internet Sources 20 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 2016

Source: KenGen; Kenya Power 21 KENYA’S GEOTHERMAL JOURNEY FROM 1956 to DATE

~ 400MW of Steam 1981-85: Olkaria I – 45MW 287 Available 1 commissioned 220

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

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

3 4 7

2011

1990 1956 1973 1974 1975 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1988 1991 1992 1993 1994 1996 1997 1998 1999 2007 2008 2009 2010 2012 2014 2016 1 2 3 4

Source: KenGen 22 CURRENT TRUE PEAK DEMAND

Required Capacity2,347 Current national installed capacity ≈ 30% Reserve Margin 536 2152MW

Suppressed Peak Demand 343

…due to transmission and distribution system weaknesses… 1,811MW

Current Peak … true peak … 1,468

2016 23 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) 7000 6762 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 10 3000 2342 9 2000 1664

37% reduction on 5 Cumulative Cumulative Installed Capacity Industrial tariff Progression Tariff 1000

0 0 0 6 12 18 24 30 36 40

Source:MoEP 24 POWER DEMAND DRIVERS BY YEAR 2016/17

MW

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

Standard Gauge 1,171 and Light Rail • Mining and Process 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 25 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 26 strategy… 26 OUR GENERATION PORTFOLIO

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

1651 1,6% 26 100% 30 Wind 517 Geothermal 31.3%

258 Thermal 17.4% 820 Predominantly Hydro that makes power more expensive during dry Hydro 49.7% hydrology

Hydro Thermal Geo- TTP Wind Total 2016 thermal

TTP* - Temporary Thermal Power 27 A GREEN KENGEN WITH GEOTHERMAL BASE-LOAD CAPACITY

Generation Mix Movement 110 1,182MW 1,643MW 3,289 MW 2018 100 1 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 2006 18 Thermal portfolio from 65 30 geothermal… 49.7 2005 20 • Carbon credits will also boost 28 Hydro 2004 10 revenues

0 2003 2010 2016 2019 28 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 7 Olkaria 8 Olkaria

Olkaria V Olkaria

Olkaria VI Olkaria

Wellheads Wellheads

2019

Meru Wind Meru

2013 2013

2016

Olkaria I U6 I Olkaria

Olkaria I&IV Olkaria Ngong Wind Ngong

Source: TMO; BDS Division 2024 Total 29 OLKARIA I&IV 280MW 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 280MW 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

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

Source: KenGen; 30 Olkaria IV: 150MW – Commissioned

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

32 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; 33 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

34 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

35 STAKEHOLDER MANAGEMENT

Stakeholder Coordination Committee

RAPIC - Operates Independently

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

36 TRANSFORMING LIVES THRO RAP OF PAPS

37 TRANSFORMING LIVES THRO RAP OF PAPS

38 TRANSFORMING LIVES THRO RAP OF PAPS

Old School

39 TRANSFORMING LIVES THRO RAP OF PAPS

New School

40 KENGEN OLKARIA GEOTHERMAL SPA

41 THE ONGOING WELLHEAD 70MW PROJECT…

Wellhead Generation

42 OUR INNOVATION IN GEOTHERMAL

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

Source:KenGen, TMO 43 PROPOSED KenGen INDUSTRIAL PARK

44 THANK YOU…

God Bless Kenya

45