A geothermal plant. PHOTO | FILE
NATION MEDIA GROUP
Rising demand for electricity in East
Africa has created power generation opportunities for multinational
energy firms with governments licensing various projects to increase
their ability to produce power.
An investors’ guide to
East Africa’s energy sector describes the energy sector as lucrative
since the demand for electricity is growing at approximately 5 percent
annually.
The governments of Kenya, Rwanda, Tanzania
and Uganda have prioritised energy development and diversification with
the main focus on electricity generation, transmission and distribution
to all parts thereby enabling their people to have access to electricity
for use in various economy-inclined initiatives.
“East
Africa has the lowest access to electrical power and smallest per
capita generation, as compared to the other regions in the African
continent. The demand for electricity in East Africa and the potential
for development of power infrastructure creates substantial
opportunities for investors, globally,” says the expansive report
prepared by UK firm Research and Markets.
It observes
that East Africa's infrastructure development lags behind that of the
Southern African region and that of West Africa but challenges of
financing make it even harder for the countries to exploit the large
potential for harnessing water, coal and underground hot gases for
electricity generation.
The report observes that this
provides a crucial opportunity for private companies to come in a
Build-Operate-Transfer (BOT) arrangement or through loans by equity
funds that help governments fund exploitation ventures.
BY-PRODUCTS
In
Kenya, several projects for geothermal power exploitation are ongoing
at Longonot, Olkaria and Menengai Crater in Nakuru county where they
expect to add about 280 megawatts soon. The ventures have also seen
notable by-products being produced like the planned sulphuric acid plant
at Menengai and the upcoming medicinal spa in Naivasha. (READ: Geothermal plants to ease pressure from bills)
Menengai
Crater, a dormant Volcano covering an area of approximately 90 square
kilometres has a capacity to generate 1,000 megawatts at minimal costs
since all it requires is sinking of pipes several kilometres under to
tap the hot gases that are piped to generation plant for the process to
kick off. (READ: The 5,000 megawatt question)
The
report notes that inter-government partnerships like the planned
Kenya-Ethiopia electricity project as well as ongoing electricity
generation projects have become a real business issue “and not just a
development agency issue”.
“There exists potential for
intraregional energy and trade integrations and this will create
opportunities to reduce costs for manufacturers as well as homes and
ensure greater reliability and sustainability of power supply throughout
the region.”
The UK firm called for enhanced all-out
investments by governments in cross-border interconnections to expand
electricity trade notably the Gibe III project in Ethiopia that is
expected to generate enough electricity at a much lower cost for export
to Kenya.
“If cross-border interconnectors develop and
ensure more power flows more readily across the region, then they could
position Ethiopia, Rwanda, Sudan, Uganda and Tanzania as net exporters
of electricity, while Kenya and Burundi could operate as net importers,”
it says.
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