Kenya looks to geothermal power, drought hits dams

By George Obulutsa

NAIROBI (Reuters) - Kenya needs $1.02 billion in the next three years to tap its geothermal power potential, seen as an answer to over-reliance on drought-hit hydroelectric power, Energy Minister Kiraitu Murungi said on Monday.

Drought has slashed capacity at Kenya's main dams, forcing shutdowns and leading to reliance on costly diesel-powered generators, which in turn have pushed up energy bills.

East Africa's biggest economy has relied on hydro energy to provide up to 90 percent of its electricity requirements. The country produces about 1,300 MW of power.

East Africa's largest economy needs to add another 1,800 megawatts (MW) in new power generation to its grid to meet growing demand, Murungi said.

About 200 MW comes from geothermal sources now, although the government estimates it has the potential to produce 7,000 MW. The government aims to raise production by 2,000 MW by 2014.

Murungi told a conference that Kenya's Geothermal Development Company (GDC) would need at least 12 rigs by 2010-11 for the drilling of 72 wells each year and the acquisition of at least 100 well head generators over the next three years.

"The financial resources required to realise this strategy include $324 million for procurement of the rigs, and $700 million for the well head generators," he said.

Murungi added that GDC, and main power producer KenGen, had secured funds and awarded a tender for two rigs and were seeking money for another two.