Project Case Study
Enabling investment in geothermal power in East Africa
Removing policy and regulatory barriers to investment in geothermal power generation in East Africa
Geothermal energy can provide clean, renewable and affordable electricity. It is estimated that in the East African Rift there is more than 10,000MW of potential capacity that could be developed from geothermal energy – more than double the existing capacity across the five East African countries.
However, the high upfront capital cost and risk in resource exploration, long lead times and the nature of technical expertise required make it a less attractive option for public investment. Leveraging investment and expertise from the private sector is critical to developing geothermal power in East Africa.
The East Africa Geothermal Energy Facility (EAGER) – was an independent advisory initiative that provided high-quality, on-demand advice to public and private stakeholders involved in developing geothermal energy for power generation in Ethiopia, Kenya, Rwanda, Tanzania and Uganda. The facility aimed to catalyse private and public investment regionally in clean and reliable geothermal power helping countries increase the generating capacity needed for increased development. It also aimed to help avoid millions of tonnes of carbon emissions from alternative fossil fuelled power generation.
EAGER’s work across the East Africa region was designed to help provide solid foundations for geothermal energy development, thereby de-risking the sector for private sector participation and its ability to secure project finance. This work included developing effective legislative and regulatory regimes, concession award and monitoring processes, and transaction documentation support – but did not directly involve private sector entities or infrastructure financing.
EAGER’s flexible facility model approach provides responsive, client-driven support using highly specialist teams to deliver targeted packages of assistance.
- Policy advice relating to power and energy markets and the role of geothermal energy;
- Legal and regulatory advice that provided a framework for geothermal power generation;
- Capacity building in public institutions enabling implementation of geothermal policy and regulations;
- Advice to help introduce geothermal specific power purchase agreements (PPAs); and
- Dissemination of best practice on geothermal power generation.
- EAGER was awarded an A+ in its 2018 DFID annual review;
- Estimated 2,777MW of new geothermal capacity added to the grid;
- Development of a model exploration strategy for fault-controlled systems. This is the first risk/cost management strategy for exploration in East Africa;
- In Kenya – support to GDC, the Energy Regulatory Commission and KenGen to bolster off-peak demand and protect geothermal’s position as a baseload generation energy source. Support for introduction of time-of-use tariffs for large commercial consumers of electricity.
- In Ethiopia – support to the Ethiopian Energy Agency in developing the country’s draft geothermal legislation and regulation. Support to Ethiopian Electric Power, with its PPA negotiations with international private sector developers, representing the first time the country has actively engaged with the private energy sector for any generating technology.
- In Tanzania – support to the Geothermal Development Company and the Geothermal Resources Department to increase capabilities in order to better understand the geothermal resource potential and options for its utilisation in each country, and to effectively award and monitor concessions.