The buzz surrounding East African geothermal energy has been increasing in recent years . Although Kenya is the clear 'leader of the pack'; Ethiopia, Rwanda, Tanzania and now Djibouti are all taking steps to harvest the, as of yet un derdeveloped , power resource. T he potential is undeniably huge, and if successfully developed could significantly boost social and economic growth and help to ensure long-term energy security in the region. That said, a lthough the industry is receiving a great deal of support from development banks and other international organisations, we believe that funding insecurity remains a key risk and could hinder the sector's development in the short-to-medium term.
News that Djibouti is in talks with the World Bank (WB) to discuss plans to begin geothermal energy exploration in the country adds to the growing list of countries in t he East African region that are hoping to exploit the untapped geothermal potential in the Great Rift Valley. The negotiations , which took place in April 2013, were reportedly concerning a loan from the WB to fund geothermal projects in Djibouti.
The Great Rift Valley in East Africa is tectonically active , with high enthalpy levels suitable for geothermal electricity generation. Some experts believe there could be up to 15GW of geoth ermal potential available to exploit across the region (with some countries having more than others - as highlighted by the map) . However, at present only Kenya and Ethiopia have installed geothermal capacity (170M W in Kenya and 7MW in Ethiopia , according to EIA data from 2010 ).
|East African Geothermal Resources|
Geothermal: An Attractive Resource
On paper, geothermal energy is hugely attractive, especially for a region that is currently relying on costly thermal imports and weather-dependent hydropower to meet its electricity demand . Furthermore, this demand is set to increase rapidly over the coming decade, spurred on by positive macroeconomic and demographic fundamentals and progresses with electrification rates (which are currently dismally low). The East African power sector in general is suffering acutely from inefficiencies and a lack of investment, and developing domestic geothermal power would no doubt boost energy security , whilst helping to support economic and social development.
The benefits of geothermal energy are numerous: it generates a reliable, indigenous 'base-load' energy supply and it is cost-effective in the long-term thanks to the high levels of natural potential present in the Rift Valley. As such, it is understandable that so many countries in the region are turning to the resource ( see our online service, November 22 2012, 'KenGen Remains Focused On Geothermal', April 8 2013, 'Geothermal Pilot Project Highlights Rift Valley Appeal' and February 18 2013, 'Breaking Ground For Geothermal' ).
The industry is also receiving a great deal of support from development banks and international financial institution s, which view the exploitation of geothermal as a crucia l element in combating poverty . For example, the UNEP has implemented a programme called the 'African Rift Geothermal Facility' (ARGeo), which has been initiated in six countries (Ethiopia, Eritrea, Djibouti, Kenya, Uganda, and Tanzania), to help encourage development within the sector. By providing services such as knowledge sharing databases, technical assistance and risk minimisation policy frameworks, it aims to facilitate investment for geothermal projects. In addition to this, the WB and the AfDB have been providing ongoing funding support for exploration projects, and we expect them to continue to play a key role in the development of the region's renewables sector going forward.
Risks To Limit Potential
Despite the vast natural resources and the ongoing support from external financers, we still flag funding insecurity as a pertinent risk. Geothermal is certainly economically viable in the longer term, however start up-costs are notably high and we have witnessed delays with numerous projects over the last year.
Experience from Kenya indicates that several different parties need to work in conjunction with one another to support projects, such as the government, utilities, project sponsors and adevelopment institutions, to ensure that the risks to the projects are spread across a bigger variety of participants.