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Globeleq’s 35-megawatt power plant delays on State red tape
The 35MW geothermal power plant in Menengai, Nakuru County which is being undertaken by Sosian Menengai Geothermal Power Limited, QPEA GT Menengai and Orpower Twenty-Two contracted by Globeleq Africa Limited in this photo taken on June 8, 2023. PHOTO | BONIFACE MWANGI | NMG
Construction of a 35-megawatt geothermal power plant in Menengai by UK-based Globeleq has been delayed due to government red tape.
Globeleq disclosed that the State is yet to fulfil certain undisclosed conditions, delaying the financial closure of the deal that the independent power producer (IPP) signed with three lenders last year.
The firm is one of the three IPPs approved to build three plants, each of 35 megawatts on a public-private partnership. The others are Ormat Technologies and the Moi family-owned Sosian Power.
Globeleq inked a financing deal with the African Development Bank (AfDB), the Eastern and Southern African Trade and Development Bank (TDB) and Finnfund for a $72 million debt funding for the project in December last year.
The plants are key to Kenya’s quest for a clean grid to cut the use of dirty thermal plants besides lowering the cost of electricity, with geothermal power in the Rift Valley seen as the biggest driver of the shift.
“Financing agreements were signed in December 2022. However, financial closing under the financing agreements is yet to occur as this is subject to the government fulfilling a few outstanding conditions precedent,” Globeleq told Business Daily on Wednesday.
“If these conditions precedent are delivered in early September, then construction activities can start by the end of the month.”
The government issues a letter of support to insulate a private investor and its lenders from risks such as political unrest. The State must also approve the power purchase agreement that the IPP enters into with Kenya Power.
Globeleq broke ground for the project in June and had hoped to start the construction of the plant this month, staying on course to start supplying electricity to the national grid by 2025.
The firm early this year inked a deal with Toyota Tsusho Corporation to build the plant, which will be its first geothermal plant in the country.
Globeleq acquired a license for the plant from Quantum Power, setting the stage for the UK firm to set up its second clean energy plant in Kenya.
The firm owns a 52-megawatt solar power plant in Malindi, which has been supplying power to the national grid since 2021.
Sosian Power in July became the first of the three IPPs to start supplying electricity to the national grid, with an initial 22 MW which then hit its maximum last month.
Geothermal energy accounted for the biggest share of the electricity generated as at May with a share of 45.21 percent followed by hydro (21.05 percent), wind (16.08 percent) and solar at 3.92 percent.
