Post IPO Transformation of KenGen

CONFIDENTIAL
Geothermal Resources Council (GRC) – Annual Meeting
Geothermal Development in Kenya
Eddy Njoroge, MD & CEO, KenGen
1 October 2012, Reno, Nevada, USA
Disclaimer:
No part of this report may be circulated, quoted, or reproduced for distribution without prior written
approval from KenGen. All the information contained herein was prepared for information only.
OUTLINE:
1 Preamble – Kenya’s Energy Sector
2 The Geothermal Journey in Kenya
3 Kenya Medium-Term Geothermal Programme
4 Conclusion
1
1 HIGHLIGHTS ON AFRICA : ENERGY SECTOR…
129 GW
North
Africa
• Major 5 countries - Egypt, Tunisia, Algeria, Libya, Morocco
(population ~ 170 million)
(electricity consumption
per capita ~ 1,120kWh)
52 GW
SubSaharan
Africa
Main Energy
Sources
Mainly Gas
Mainly Hydro
• >50 countries including
Islands
(population ~ 790 million)
33 GW
Huge geothermal
potential ~ 20GW
(electricity consumption
per capita ~ 140kWh)
South
Africa
• South Africa only
(population ~ 50 million)
(electricity consumption
per capita ~ 5,350kWh)
Source: IEA, World Energy Outlook 2011 and AFREPEN Nairobi
44 GW
Mainly Coal
2
1
KEY HIGHLIGHTS: KENYA
Key Facts
• Size ~ 582,000 km²
• Has ~ 40 million people.
• Electricity Consumption p.a
• Consumption per capita
170kWh/Yr
Kenya
~ 7,000GWh
~
• Electricity Access Rate
- Urban ~ 56%
- Rural ~ 12%
- Overall ~ 22%
• Rich in Natural Resources (under exploration)
- Geothermal
~ 10,000MW
- Minerals (Gold, etc) ~ ?
- Coal
~ ?
- Oil & Gas
~ ?
- Wind
~ ?
Source: http://en.wikipedia.org/wiki/List_of_African_countries_by_GDP_(PPP)_per_capita;
3
1 PREAMBLE: KENYA’S ENERGY SECTOR…
Ministry of Energy (MoE)
(responsible for policy matters)
Energy Regulatory Commission(ERC)
(responsible for regulating the entire energy sector)
ELECTRICITY
PETROLEUM
(single-buyer model)
Transmission
& Distribution
KPC
KPRL
NOCK
(Transport)
(Refinery)
(Marketer)
Private
Marketers
REA
(Rural
(DisElec( New Trans- tribution &
Existing
trification)
mission)
KETRACO
KETRACO
REA
KPLC
GDC
IPPs
KPC
KPRL
NOCK
– Kenya Electricity Transmission Company Ltd
– Rural Electrification Authoirity
– Kenya Power & Lighting Company Ltd
– Geothermal Development Company Ltd
– Independent Power Producers
– Kenya Pipeline Company Ltd
– Kenya Petroleum Refinery Ltd
– National Oil Company of Kenya
Source: KenGen;
Generation
KPLC
Transmission
Nuclear
Electricity
Project
(NEP)
KenGen
GDC
IPPs
(Power
Generation)
(GeoResource
Assessment)
(Power
Generation)
KenGen have ~80% installed
capacity market share
4
1 INSTALLED CAPACITY AND DEMAND GROWTH: KENYA
Demand Growth (1,221MW)
National Installed (1,708MW)
2%
Wind&Bagasse(31MW)
13%
Geothermal(207MW)
1,250
1,221
1,200
1,150
34%
Thermal (542 MW)
1,100
8-10%
1,050
1,000
950
51%
51%
Hydro (808MW)
900
850
828
0
2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Kenya
Source: KenGen; Kenya Power
5
1 PEAK DEMAND FORECAST TO MEET VISION 2030 ASPIRATIONS
Peak Demand (MW)
Vision 2030 demand forecast of 8-10 %
In 2018 Kenya must have
at least 50% electricity
penetration to reach the
Vision 2030 target
Kenya has significant natural
power potential in form of:
(i)Geothermal(~ 10,000MW);
(ii)Hydro (~1,500MW);
(iii) Wind (~4,400 MW); and
(iv) Potentially Coal,Oil and
Gas.
Vision 2030 ~
15,000MW
2009/10
2014/15
2018/19
Source: Update of Kenya’s Least Cost Power Development Plan 2010-2030
2023/24 2026/27
2029/30
6
1 PROJECTED CAPACITY EXPANSION MIX
National Capacity Expansion (17,764MW) - 2030
17,754
4,200
263
1,600
Geothermal to
contribute ~
30% of power
requirements
2,200
4,812
4,679
Kenya has
signed the
first 400MW
from Ethiopia
Imports
Geo- Thermal
(Coal,
(Hydro)
therm
Gas & Oil)
al
Source: Update of Kenya’s Least Cost Power Development Plan 2010-2030
Wind
Hydro
Nuclear
Total
Capacity
7
OUTLINE:
1 Preamble – Kenya’s Energy Sector
2 The Geothermal Journey in Kenya
3 Kenya Medium-Term Geothermal Programme
4 Conclusion
8
2
KENYA’S SPACE IN THE GEOTHERMAL WORLD
28.8%
• World Geothermal Installed Capacity ~ 10,800MWe
17.7%
Kenya is 9th with ~ 207 Mwe (1.92%)
11.1%
8.9%
7.8%
5.8% 5.3%
5.0%
Argentina
Thailand
Australia
Austria
Germany
Ethiopia
France (Guadeloupe)
China
Guatemala
Papua New Guinea
Turkey
Russia (Kamchatka)
Nicaragua
Portugal (The Azores)
Source: TMO; http://www.geothermal-energy.org/226,installed_generating_capacity.html
Costa Rica
1.9%
0.8% 0.8% 0.5%
0.3%
1.5%
0.1% 0.1%
0.0%
0.8%
0.5%
0.2%
0.1%
0.0%
0.0% 0.0%
El Salvador
Kenya
Japan
Iceland
New Zealand
Italy
Mexico
Indonesia
Philippines
USA
1.9%
9
2
GEOTHERMAL: DEVELOPMENT IN KENYA TO-DATE
1956-59
• Two
Exploratory
wells drilled
to a depth of
~950m
1967-70
1971-76
• GoK & UNDP
• Six wells were
entered into
an undertake
geothermal
resource
assessment
drilled with
positive
results at
Olkaria.
1976-85
• 23 wells
were drilled
• 45 MW
(Olkaria I)
commission
ed between
1981-1985
1986-98
• Drilling
continued in
Olkaria II
Steam field ~
30 wells
drilled by
1992
• From 1992,
• Most
This decision
was the
turning point
in Geothermal
Development
in Kenya …
Source: TMO; BDS Division
financing
was from
World
Bank
no major
works was
undertaken
until 1999
• Concession
given to
Orpower 4 in
Olkaria III
field in 1998
10
2
GEOTHERMAL: DEVELOPMENT IN KENYA TO-DATE (Cont.)
1999-2006
2007 - date
• Discovery
• Production drilling
wells drilled
in 1999 in
Olkaria IV
field
• Production
drilling &
commissioning
Olkaria II 70MW
in 2003
• Appraisal
drilling
started in
2006
Source: TMO; BDS Division
started in Olkaria I&IV
(~60wells drilled with
over ~ 400MW capped)
• Olkaria II 3rd Unit
• Approximately
~US$420m
committed by
DFIs over the
years for
geothermal in
Olkaria
35MW commissioned
• Olkaria I & IV
280MW planned
for mid quarter of
2014
Current total
Geothermal
Capacity for
Kenya is
~207MW
• Currently DFIs
have committed
~US$920m for
Olkaria I & IV
280MW alone.
11
KENYA’S GEOTHERMAL JOURNEY FROM 1956 to DATE
A
ov c c e
er ler
th ate
e
la d a
st ct
~6 ivi
yr tie
s s
2
1981-85: Olkaria I – 45MW
1 commissioned
172
162
144
2003: Olkaria II – 70MW
2 commissioned
Little activity for ~15yrs.
No funding for geothermal.
2010: Olkaria II 3rd Unit – 35MW
3 commissioned
87
96
91 94
128
114
103 106
99 100 101
79
67
59
36
~ 170
wells
drilled
2
2012
2011
2010
2009
2008
2007
1999
1998
1997
1996
1994
1993
1992
1991
1990
1988
1988
1987
1986
1985
1984
1983
1982
1981
1980
1
Source: KenGen
50
15
1979
1978
1973
7
1975
4
9 11
1974
3
1956
27
21 24
31
41
46
3
12
OLKARIA I 45MW: COMMISSIONED BETWEEN 1981-1985
13
OLKARIA II 105MW: COMMISSIONED IN 2003 (70MW) AND
EXTENDED IN 2010 (35MW)
14
GEOTHERMAL ALTERNATIVE USES: OSERIAN GREENHOUSES
15
GEOTHERMAL ALTERNATIVE USES: DIRECT USE – KenGen SPA
16
OUTLINE:
1 Preamble – Kenya’s Energy Sector
2 The Geothermal Journey in Kenya
3 Kenya Medium-Term Geothermal Programme
4 Conclusion
17
3
Reforming Institutional & Regulatory framework
Geothermal Development
Company (GDC)*
Government
meeting upfront
exploration and
drilling investment
Geothermal Resource
Exploration & Assessment
Olkaria
Geothermal Prospects
Menenga
Paka
i
Silali
Bogoria
KENGEN & IPPs
Power Purchase Agreement
Kenya Power
(Off-Taker)
Off-Taker 2
Off-Taker 3 ……
* - Local and Foreign financing to be used
Source: KenGen; TMO; BDS
18
3
Continuing to prove resource fields
> 14 sites
3.
Bogoria-Silali
Block(3,000MW)
2.
Menengai Block
(1,600MW)
1.
Olkaria Block
(1,200MW)
(Currently developing 280MW)
Source: KenGen; TMO; BDS
19
3 PROJECTED GEOTHERMAL PROGRAMME TO 2012-2030
2020
2015
Next 3 yrs
8 yrs
2025
2030
13 yrs
18 yrs
MW
700
2,340
5,000
No. of drilled Wells
150
550
1400
Rigs–Own
15
15
15
Rigs - Hired
3
-
-
•
KenGen has acquired 3 drilling rigs and hiring 5 more
•
GDC has acquired 4 drilling rigs
* - Local and Foreign financing to be used
Source: KenGen; TMO; BDS
20
Menengai Phase I 400MW: – 2nd Big Block after Olkaria
3
•
•
•
•
•
Seven (7) wells successfully drilled – target 120 wells;
Five (5) wells successfully tested with ~ 27MWe;
Four (4) drilling rigs on site - two more under procurement;
19 investors shortlisted for the first 400MW;
Financing ~ US$ 850 million ( including the six rigs) - AFDB, AFD, WB, EIB, GoK)
Source: GDC; TMO
21
3
Menengai Phase II & Bogoria-Silali Phase I
MENENGAI PHASE II ~ 800MW:
• Preparations under way
• Targets to drill 210 wells
• Commissioning targeted for year 2021
Source: GDC; TMO
BOGORIA-SILALI PHASE I ~ 800MW:
• Preparations under way
• Targets to drill 210 wells
• Commissioning targeted for year 2019
22
3
Continuing to prove resource fields – private sector
participation
Orpower 4 (48MW)
1997
• Started with 13MW in 1998
• Added 35MW in 2009
• Adding another 50MW by 2013
Geothermal
Private
Power
Developers
Source: KenGen; TMO; BDS
23
3
Continuing to prove resource fields – private sector
participation
Suswa Site Concession
Geothermal
Private
Power
Developers
Akira Site Concession
Longonot Site
Concession
Source: KenGen; TMO; BDS
2005
• Not much has
been achieved
2007
• Not much has
been achieved
2009
• Not much has
been achieved
24
3
Committing Resource Assessment Funds
Kenya Funding Approach– US$ million
908
New tranche
for further
drilling
~ US$330m from GoK
~ US$380m from
concessionary funding
380
200
10
160
45
Source: TMO; F&C
33
80
2004
2005
2006
2008
2010
2011
2012
Total
25
3 OLKARIA IV – BIRDS-EYE VIEW
Source: KenGen;
26
3
International Collaboration – Financing & Engineering
Tariff ~ 7 Uscts/kWh. One
of the most competitive
renewable project in Kenya
Olkaria I&IV 280MW Geothermal
Project (June 2014)
1 Kenya (GoK)
Multi-financing (KenGen, GoK, EIB, AfD, KfW, JICA, IDA ~ US$ 1 billion)
7
Steam
Field
Development
Substation &
Transmission
Power
Plant
Construction
Consultancy &
Administration
[Lot A –
IDA, KfW,
KenGen]
[Lot C EIB,
KenGen]
[Lot Zero –
KfW,
KenGen]
US$ 138m
US$ 27m
[LotB1&B2
KfW, JICA,
AfD, EIB
KenGen]
3
4
US$382m
6
US$30m
2
Geothermal Steam Drilling – [GoK, KenGen]
(June 2007- Aug 2012)~US$330m
1
Source: KenGen;
Local
Infrastru
cture &
resettlement of
PAPs
[Lot D –
KenGen]
US$36m
5
2 New Zealand (SKM)
3 China (Sinopec)
4 India (KEC )
5 Kenya
(Local Companies)
6 S.Korea (Hyundai) &
Japan (Toshiba/
Toyota Tsusho)
27
3
Kenyan Case: Olkaria I&IV 280MW Geothermal Project
US$ ‘million
Activity
Financing Breakdown
Olkaria I Olkaria IV
(140MW) (140MW) Total
GoK KenGen
Drilling Costs
142
186
328
Steam Field
100
68
168
Power Plant
201
194
395
Substation &
Transmission
22
13
35
Consultancy
16
14
30
Administration
Resettlement Action
Plan
20
21
41
29
-
10
10
10
1
1
1
24
33
57
526
540
Board of Consultants
IDC
Total
Source: KenGen; TMO; BDS
IDA
JICA
KFW
313
7
107
EIB
15
328
54
168
201
76
3
1,065 316 103
Total
AFD Funds
118
395
32
35
30
12
41
All
commitments
achieved and
government
guarantees
issued
1
57
120
30
201
99
108
118
10
1
57
1,065
28
3
Pioneering Portable Geothermal Wellhead Plants
Video
29
3
Kenyan Case: 5MW Pilot Portable Geothermal
Wellhead Plants
3
Cooling towers
1
Steam Separator
2
Generator & Turbine
Control system and panels
4
Wellhead
30
3 IMMEDIATE KEY STEP ON GEOTHERMAL DEVELOPMENT
Key Activities
Step 1:
• Feasibility study for the next 560MW Olkaria geothermal project completed
Step 2:
• Continue commissioning the Phase 1 (70MW) of Wellhead Generators
Step 3:
• Commenced drilling 80 wells for the next 560MW geothermal project
• 139 wells targeted
• 560MW target commissioning by 2016
Source: KenGen;
31
FSA – Fuel (includes steam) Supply Agreement
PPA – Power Purchase Agreement
PRG – Partial Risk Guarantee
MIGA – Multilateral Investment Guarantee Agency
GoK – Government of Kenya
DFIs – Development Financial Institutions
5 PLAN: PPP FRAMEWORK Option 1.
… for Geothermal plants…
Explicit
Guarantee
Operations &
Maintenance
(O&M) Contractor
Engineer, Procure
& Construct (EPC)
Contractor
O&
MC
ont
E
t
ntrac
o
C
PC
GoK Comfort Letter
Explicit
Guarantee
World Bank - PRG
World Bank - MIGA
Special
Purpose
Vehicle (SPV)
Long-term PPA
Off-Taker
Equity
(with KenGen portion)
Debt
Investors
Lenders
• Local
• Foreign
Source: KenGen; TMO
rac
t
Long-term FSA
Fuel Supplier
(KenGen)
• DFIs
• Commercial Banks
EoI
advertised
32
OUTLINE:
1 Preamble – Kenya’s Energy Sector
2 The Geothermal Journey in Kenya
3 Kenya Medium-Term Geothermal Programme
4 Conclusion
33
5 Conclusion
The National Goal is to develop 5000MW
of Geothermal by 2030
34
THANK YOU
35
DISCUSSION…
36