Lack of funds to implement capital intensive geothermal projects has forced authorities in Kenya to shift gear to coal power plants in efforts to achieve a generation target of 5 000 MW by 2017.

After it became apparent mega geothermal projects might not be implemented on schedule due to financing challenges, the government in now seeking for private investors to construct two coal power plants.“The government has identified coal as one of the sources of energy that will drive the development of strategic initiatives in the Vision 2030,” said a statement by the Ministry of Energy and Petroleum.

As part of the new drive, the government has put out expression of interest seeking for private investors to develop the Lamu Coal Power Plant that will have a capacity to generate 900 – 1 000 MW through an independent power producer (IPP) framework. The plant will be located along the Indian Ocean coastline in Lamu County.Interested investors will develop the power plant based on either a BBO (build, own and operate) or BOOT (build, own, operate and transfer) and sell the electricity generated to Kenya Power under a contractual arrangement of a power purchase agreement.Besides the Lamu power, which will use imported coal, the Kenyan government intends to invest in another coal plant of the same capacity in Kitui. The Kitui plantwill use coal from the controversy ridden Mui Basin coal project.

The decision to invest in coal power plants comes after it dawn on the government that several planned geothermal plants might stall due to financial constraints. Kenya, east Africa’s largest economy, requires a staggering $4,5-billion over the next three years to implement earmarked geothermal projects.To generate at least 5 000 MW from geothermal by 2030, the country requires a mind boggling $20-billion.Government projections indicate that power demand will reach 15 000 MW by 2030. To meet the demand, the country must raise the current capacity of 1 664 MW to 18 000 MW.
“It is anticipated that electricity demand will rise sharply as new county governments take shape and numerous energy intensive economic activities spring up in the counties,” said the statement.Kenya is currently implementing a devolved system of government consisting of thenational government and 47 county governments.According to the statement, interested investors must possess a proven track record in design, financing, construction, maintenance and operation of coal fired power plants and electricity generation facilities.

To be pre-qualified, interested bidders must provide evidence of financing at least one power project with a total cost of a minimum of $500-million and demonstrate ability to raise at least $1-billion at competitive rates.Bidder must also provide evidence of design and construction of at least one coal plant with a minimum capacity of 600 MW and operation and maintenance experience of a 450 MW plant for five years. On its part, the Kenyan government will acquire the land for the project whilestate-owned Kenya Electricity Transmission Company will build a 400 kV transmission line to evacuate power from then power plant.