Kenya’s Geothermal Investments Contribute to Green Energy Growth, Competitiveness and Shared Prosperity

February 23, 2015


Kenya is stepping up its ambitious green-energy centered power development program to increase electricity supply by 5,000 megawatts by 2018.

  • Kenya is investing in 280 megawatts of geothermal energy as part of its accelerated green energy growth program
  • The new geothermal power lowers electricity bills by over 30%, reducing the cost of doing business
  • The World Bank Group and other development partners are making a significant contribution to increasing electricity access to Kenyans, raising prospects for growth and shared prosperity

NAIVASHA, February 23, 2015—Kenya’s rapid investment in geothermal power in recent years is increasingly paying dividends through the supply of reliable, clean energy and by lowering the cost of electricity to consumers.

Geothermal power, which is generated from natural steam from the earth, some from as far as three kilometers underground, is a renewable source of energy and, unlike hydro, its output is not affected by vagaries of weather. Kenya’s government has recently stepped up geothermal development in new fields, including Menengai, run by the Geothermal Development Company.

" As a result of the government’s investment in geothermal energy, since August 2014 the cost of power to industrial and domestic consumers has fallen by over 30% "

Albert Mugo

Chief executive of the Kenya Electricity Generating Company (Kengen).

Geothermal’s contribution to the national energy mix increased to 51% last week, following the commissioning of two new plants with a combined capacity of 280 megawatts: Olkaria 1 and Olkaria 4 in the Rift Valley.

Supported by the World Bank Group, Olkaria is one of the largest single geothermal investment projects in the world and geothermal is now the largest source of electricity for Kenya, ahead of hydro which has dominated the country’s power supply for decades. In 2010, geothermal accounted for a mere 13% of Kengen’s power mix.

Other partners in the Olkaria project include the Japan International Cooperation Agency, the European Investment Bank, Agency France de Developpement and Germany’s KFW.

The World Bank Group is the largest development financier of geothermal power in Kenya and has been engaged in geothermal development since the 1970s. Through its International Development Association (IDA), the Bank has provided funding for feasibility studies, exploration, geothermal steam development and construction of power plants. The International Finance Corporation (IFC) has supported power generation by private investors, while the Multilateral Investment Guarantee Agency (MIGA) has provided investor risk mitigation.

“I have seen first-hand how getting affordable electricity to ordinary Kenyans can transform lives,” said Diarietou Gaye, the World Bank’s country director for Kenya. “Kids can learn at school and do homework at night. Businesses can flourish and create new jobs. That's why we are investing in the energy sector, which is a key infrastructure investment in the fight against poverty.”

Under its new Country Partnership Strategy for Kenya, the World Bank Group is supporting the government to generate more geothermal power to increase electricity access to all consumers and enhance opportunities for growth and shared prosperity.

Kenya’s plan, according to Kengen officials, is to increase geothermal capacity by another 460 megawatts by 2018 to reduce the volume of hydro power in its mix to 28% by 2018. This will significantly reduce the exposure of Kenya’s electricity consumers to the consequences of drought, which considerably reduces power supply from the hydro power stations and forces the country to resort to costly diesel generated power.

The accelerated investments in Olkaria demonstrate the government’s resolve to increase supply of clean energy, provide reliable power and lower cost to domestic and industrial consumers, with the aim of improving the quality of people’s lives and reducing the cost of doing business for the private sector.

Collaboration within the World Bank Group and partnership with other development partners has helped Kenya make significant progress in increasing the supply of reliable and low-cost electricity, said Lucio Monari, the Bank’s Energy Sector Manager in Eastern and Southern Africa.