Hurdles to Financing Geothermal Development in ARGeo Countries with Special Focus on Kenya

Abstract

The eastern Africa countries traversed by the East Africa Rift, have similar energy production and consumption characteristics. Most of them are dependent on biomass and fossil fuels as a primary energy sources. The over-dependency on thermal and hydropower makes their electricity not only expensive but also unreliable due to the ever-escalating oil prices and erratic weather conditions. Studies indicate that geothermal reservoirs with temperatures over 200oC exist beneath the rift. This resource has not been fully tapped by these countries, in spite of proven long-term success stories in other countries around the world. At present, only Kenya has active geothermal operations as part of the country’s electricity generation infrastructure with a total installed geothermal capacity currently standing at 128 MWe. In this country, geothermal has proved to be reliable and economical, running at 98% availability. The rest of the countries have not made much progress in the exploration and development of this enormous, untapped resource in the East African Rift. Review of these countries’ energy development plans indicates that the main cause of lack of exploitation of geothermal energy is limited financial resources and expertise, largely arising from limited conducive legal frameworks and political will. This paper reviews the current status of geothermal development in Djibouti, Eritrea, Ethiopia, Uganda, Kenya, Tanzania and Zambia (generally referred to as ARGeo countries) and investigates the major hurdles that have curtailed any significant use of the resource. Kenya is taken as an example to see how it has tried to overcome some of these hurdles to become the largest user of geothermal energy in the region.