A firm with Kenyan links has signed to sell geothermal power to the Ethiopian government in a transaction valued in billions of shillings.
Berkley Energy, an investment firm which has an office in Nairobi, is one of the companies involved in the 1,000 megawatts (MWs) Corbetti Geothermal Project.
Some of Berkley Energy’s directors include Eddy Njoroge, former managing director of power producer KenGen, who is part of the investment committee.
During President Barack Obama’s recent visit Corbetti Geothermal signed a power purchase agreement with the Ethiopian government at a price reported to be 7.53 US cents per kilowatt hour.
“We are really happy to be part of that and to make sure that Ethiopia is in the forefront of the renaissance that we are having in Africa of new renewable energy,” said Mr Njoroge.
The project is expected to cost $4 billion (Sh400 billion) and will be built in two stages which will see the first 500MW online in five years. The project’s managers plan to raise 25 per cent of the required investment in equity financing with the rest being debt.
The project is expected to benefit from the American programme, Power Africa, spearheaded by Mr Obama. The power purchase agreement was one of the deals signed during his visit.
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Other Kenyans working with Berkley Energy include Kagwe Njoroge, an investment analyst, Rachel Mutahi and Paul Kizito.
Berkley Energy also has offices in Singapore, Mauritius, London and New Delhi. The firm manages Renewable Energy Asia Fund and the Africa Renewable Energy Fund.
It is partnering with Reykjavik Geothermal of Iceland in the Ethiopian geothermal project. Corbette is among the first projects to include external investors in a country that has restricted foreign direct investments.
Ethiopia has been aggressive in expanding its energy generation capacity in the recent past with the target of 37,000MW by 2037.
The ambitious energy plan saw the country lock horns with Egypt when it started diverting the Blue Nile to build the $4.7 billion Renaissance Dam. The dam will provide an estimated 6,000MWs of power in the country with over 90 million people.
The country’s heavy reliance on hydro-energy has left it vulnerable during periods of drought.
Rapid economic growth has also seen power demand outpace supply making lack of reliable energy a challenge.
Kenya is also in the process of harvesting geothermal power with a target of 5,000MW by end of 2017.