UN Supported African Enterprise to Set Up Major Geothermal Facility in East Africa's Rift Valley
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2009 may be the year when geothermal energy finally comes into its own in developing countries in Asia and Africa. After meeting with some initial success in Kenya, where, over the past 3 years, sites have been drilled to identify local hotspots, the Global Environmental Facility (GEF), along with the United Nations Environment Program (UNEP), will fund a new entity—the African Rift Geothermal Development Facility (ARGeo)—to tap into the Rift Valley's vast, unexplored geothermal potential, according to SciDev.Net's Laura Garca. Touting its creation at the Poznan climate talks a few weeks ago, UNEP's Achim Steiner declared that the enterprise would help fight climate challenge and bring energy to billions.
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Some initial progress in Kenya but high costs and risks could impede success
So far, two sites have already been drilled near Nairobi, Kenya, but the problem has been overcoming the high initial costs and risks involved (particularly in a developing country). Indeed, as Eliza noted in a recent post, it can cost up to 3 million dollars to produce 1 megawatt of electricity from geothermal sources—over 30 percent what it costs to produce electricity from coal. Yet Monique Barbut, GEF's CEO, says that they have found a way to produce geothermal energy cost-effectively.
ARGeo will receive $18M to expand drilling sites up and down Rift Valley
According to Steiner, the Rift Valley could have the potential to generate at least 4,000 megawatts of electricity. ARGeo will use seed money provided by GEF, UNEP, the World Bank and a host of private/public sector investors to expand its drilling activity up and down the Rift Valley, which spans from Mozambique to Djibouti. The enterprise will also help encourage private investments from other countries.
Eritrea, Ethiopia, Tanzania, Uganda, KenGen (a Kenyan company), Germany and Iceland will be the first countries to participate in the new scheme. They will be starting with $18 million from the GEF and hope to rapidly scale up their activities as more funds begin to flow in. At this point, it's still too early to tell how the global economic downturn will affect ARGeo's future funding situation—what with the developed world beginning to rein in funds intended for developing world projects—but it's important to realize that geothermal will only represent one fraction (though a sizable one) of East Africa's renewable energy potential.
Indonesia is one of several Southeast Asian countries seeking funding to tap into the estimated 27,000 megawatts of geothermal energy locked below ground. The country has only managed to generate 850 megawatts but, thanks to investments from a few companies and private investors, will soon be able to increase its capacity.