tirsdag 13. april 2010

Kenya looks to Asian investors to build out geothermal, takes another $97M

When drought struck Kenya last year, the lights went out too.
The country depends on hydroelectric energy for 65 percent of its electricity. So when water became scarce, people started burning diesel to make up the difference. The cost of using fossil fuels was astronomical, single-handedly sinking whole communities into poverty.
To ensure that drought never takes this huge toll again, the Kenyan government is building up its geothermal resources. In February, it took in $1.3 billion from multinational banks for this purpose. And now it’s borrowing $97 million more from China’s Exim bank to build another 140-megawatt geothermal plant.
Kenya estimates that it’s capable of generating 7,000 megawtts of geothermal energy — 10 to 15 times the country’s total demand. This could go a long way toward cheapening energy for average consumers. And that’s the number one priority in countries like Kenya — finding clean, renewable energy solutions that are price competitive with existing options.
If Kenya successfully pulls off its geothermal roadmap, it will become the dominant provider of geothermal power in Eastern Africa — the same way South Africa has become the regional powerhouse for cheap coal.
The $97 million loan is part of an escalating competition between China and Japan for market share in rapidly developing regions of Africa. Just last month, Japan lent $320 million to Kenya for geothermal projects. If the country does become the regional power provider for Eastern Africa — exporting it to its less-developed neighbors — both China and Japan stand to profit. The question is who will benefit the most?
Fortunately, the investment in Kenyan geothermal should improve the quality of life for the country’s citizenry while simultaneously generating healthy returns for shareholders. But will Kenya ever be able to kick its reliance on foreign aid? Depending on repayment rates and revenues derived from energy exports, Kenya’s continuous loans could put it on a credit treadmill, with income and interest turning it into a permanent employee of the banks.
Another question is where the U.S. stands in all this. Will American geothermal companies working internationally — like Ram Power or Vulcan Power, for instance — be eligible for contracts in countries like Kenya even though they are being supported by Asian interests? There’s a lot of money to be made if so.
In the U.S., geothermal saw a 26 percent jump in new plant projects between 2008 and 2009. Current construction will account for 7,000 megawatts of new geothermal power, about one-fifth of California’s energy demand. But there are only so many regions suited for geothermal development in the U.S., pressuring companies to cultivate new opportunities overseas.
Tags: Geothermal
Companies: Ram Power, Vulcan Power

1 kommentar:

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