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Lincoln Towindo recently in Nairobi, Kenya
KENYA’s Olkaria Geothermal Power Plant is a marvel of engineering ingenuity and a testament to the country’s commitment to clean energy.
Situated within Hell’s Gate National Park, about 120 kilometres from Nairobi, it stands as Africa’s largest geothermal facility, producing around 800 megawatts (MW) of power.
Olkaria is at the centre of Kenya’s renewable energy sector, contributing significantly to the country’s energy independence.
Located along the Kenyan stretch of the Great Rift Valley, it taps into the region’s vast geothermal resources for power generation.
The Great Rift Valley, which stretches over 6 000km from Jordan to Mozambique, was formed around 25 million years ago when the Somalian and Nubian tectonic plates drifted apart. This movement caused the land between the two fault lines to sink, bringing magmatic fluids closer to the Earth’s surface.
Beneath the valley, water easily seeps into the ground and comes into contact with rocks heated by this underlying magma, forming a mix of superheated water and steam at depths of 1 to 3km.
The steam, reaching temperatures of 300°C, creates ideal conditions for geothermal energy production.
At Olkaria, steam is extracted from underground through a complex network of pipes and directed to power stations. There, it drives turbines that generate electricity, providing a sustainable source of power.
Genesis
Kenya’s exploration of geothermal energy began nearly 70 years ago.
In 1956, two wells were drilled in the Rift Valley in an early attempt to harness geothermal power.
However, the wells were unsuccessful due to poor rock permeability, stalling further exploration efforts.
The 1970s oil crisis reignited Kenya’s search for alternative energy sources.
With financial and technical support from the United Nations Development Programme (UNDP), the World Bank, and the Japan International Cooperation Agency (JICA), Kenya resumed geothermal exploration.
In 1971, a successful well was drilled, leading to the commissioning of the first three power plants between 1981 and 1985, which had a combined capacity of 45 MW.
Today, Olkaria is managed by KenGen, a utility company that is 70 percent owned by the Kenyan government. The company contributes more than 80 percent of the country’s electricity needs, coming from sources such as geothermal, hydropower and wind.
Olkaria alone supplies about 60 percent of Kenya’s electricity, making it a cornerstone of the nation’s energy market.
Globally, Kenya ranks sixth in geothermal energy production.
Geothermal power, like other renewable sources, produces no harmful emissions during electricity generation, reinforcing Kenya’s leadership in sustainable energy on the African continent.
Untapped potential
Despite its success, much of Kenya’s geothermal potential remains untapped.
KenGen has drilled over 320 wells, each capable of generating at least 10MW, yet expanding production faces challenges common across Africa. Limited financing, weak grid infrastructure, regulatory hurdles, unattractive tariffs and the absence of long-term energy strategies have slowed progress.
Despite being home to 17 percent of the world’s population, Africa has received less than 2 percent of global investments in renewable energy over the past two decades.
According to the Renewable Energy Transition in Africa report, annual investments in the continent’s energy systems must double by 2030, reaching approximately US$40-65 billion per year.
In comparison, only US$60 billion was invested over the past 20 years.
This disparity underscores the urgent need to boost renewable energy financing in Africa.
Speaking at the Accelerated Partnership for Renewables in Africa (APRA) Investment Forum in Nairobi, Kenya, last week, experts underscored the importance of scaling up investments in clean energy.
APRA, established at the 2023 African Climate Summit, aims to accelerate renewable energy deployment across the continent, promoting energy access and green industrialisation. Member countries include Kenya, Ethiopia, Namibia, Ghana, Rwanda, Sierra Leone and Zimbabwe.
The initiative is supported by Denmark, Germany, the UAE and the United States, with the International Renewable Energy Agency (IRENA) serving as its secretariat.
Experts at the forum identified several challenges hindering Africa’s clean energy transition, including lack of financing, unattractive tariffs, and weak utility creditworthiness.
Developers also face regulatory hurdles, poor grid infrastructure, and exchange rate volatility, which further deter investors.
Contributing to the ministerial debate, Ministry of Energy and Power Development chief director Mr Benson Munyaradzi, who was representing Energy Minister Edgar Moyo, said Zimbabwe was working on de-risking greenfield energy projects.
“We have licensed over 2 000MW worth of greenfield renewable energy projects, but only a few have reached financial closure due to risks,” he said.
“To address this, we are providing off-taker guarantees and streamlining regulations to allow developers to engage directly with users, making projects more bankable.”
He said the biggest concern for lenders is the financial instability of utilities, often burdened by unpaid bills from consumers.
“If utilities are not creditworthy, developers struggle to secure loans, as there is a risk the utility may fail to repay,” he added.
He said currency fluctuations also pose significant risks, complicating investor efforts to repatriate profits in US dollars.
Mr Martin Nagell, adviser to UAE-based renewables developer Masdar, said ensuring utilities’ financial stability was key to attracting investments.
“If the government is not in a position to create cost-reflective tariffs, I think it’s impossible”, he said.
Governments, he said, must levy cost-reflective tariffs, because subsidies often force utilities to operate at a loss, making it impossible to attract meaningful investment.
Mr Mads Vestergaard Sørensen, head of Danish company Renergy Solar, said his company’s 40MW solar project in Kenya was delayed due to a government moratorium on new power purchase agreements (PPAs).
“It is frustrating because capital is tied up, and delays expose us to financial risks as we renew permits before reaching bankability,” he said.
He said smaller developers struggle to survive as a result of regulatory uncertainties.
He was, however, optimistic that things were changing across much of the continent.
“I believe things are changing,” he said.
“As more major energy companies enter the market in the next five years, competition will increase, but with the continent’s growing population and unmet energy needs, there will be ample opportunities for all.”
IRENA director-general Francesco La Camera said there was an urgent need for African countries to diversify their energy mix to build resilience against climate shocks.
“Climate change will continue to affect hydropower resources, even if CO2 emissions are reduced,” he said.
“Expanding renewable energy sources like solar, wind, geothermal, and sustainable biofuels, along with energy storage systems, is essential.”
He said a diversified energy mix provides flexibility, enabling countries to shift between sources when one is compromised.
“This approach ensures greater resilience compared to centralised systems and better prepares nations for
climate-related challenges,” he concluded.
APRA has set a goal to increase Africa’s renewable energy capacity to 300 GW by 2030.
The investment forum provided a platform for showcasing energy projects and attracting investments aligned with sustainable development and climate action goals.
Kenya’s success with the Olkaria Geothermal Power Plant demonstrates that Africa’s vast renewable energy potential is not just theoretical — it can be realised with innovation and strategic investment.
The path forward for other African nations is clear: there is need to address key investor concerns —such as regulatory hurdles, creditworthiness of utilities, and policy stability to unlock the continent’s renewable energy potential.
The story of Olkaria is a powerful testament that with the right policies and partnerships, Africa can transform its energy landscape — one project at a time.
Online Reporter