Private power company Globeleq has signed financing agreements with development finance institutions the African Development Bank (AfDB), Finnfund and the Eastern and Southern African Trade and Development Bank (TDB) for $72-million debt funding for the 35 MW Menengai geothermal project in Nakuru county, Kenya.

Globeleq is providing equity, project development and construction management experience. Construction of the project is expected to start during the first quarter of 2023, once financial close has been reached.

Globeleq will operate and maintain the power plant once it has reached commercial operations in 2025.

Menengai is a greenfield geothermal project and part of the first phase of the wider Menengai complex, which is the second large-scale geothermal field being developed in Kenya after Olkaria. The project also benefits from a signed and effective letter of support issued by the government of Kenya.

Further, steam will be supplied to the project by Kenya State-owned Geothermal Development Company (GDC) under a 25-year project implementation and steam supply agreement. Once operational, electricity will be sold to national distributor Kenya Power under a power purchase agreement for the same timeframe.

The project will deliver clean and cheap baseload power to the national grid and enable GDC to monetise the available steam resources from the Menengai steam field, Globeleq said.

"As an active participant in the Kenyan energy sector for many years, the Menengai geothermal project is our first geothermal project. It fully aligns with our focus on quality investments which utilize renewable energy sources to create clean, reliable and cost-effective energy for the country and be an active part of the solution to the climate crisis.

"We are very excited to collaborate with our partner GDC in bringing this important project to fruition and look forward to further developing the Menengai geothermal complex," says Globeleq CEO Mike Scholey.

"AfDB is proud to have led the financing of the Menengai project. The project showcases a suite of products that the bank can bring to support our member countries to harness their geothermal energy potential. AfDB provided $29.5-million as senior debt and mobilised $22.4-million co-financing, having earlier invested $145-million to develop the Menengai steam field," adds AfDB power, energy, climate and green growth VP Dr Kevin Kariuki.

"We also facilitated $20-million concessional financing from the Clean Technology Fund to support the sustainability of the tariff and, for this specific project, we will provide a Partial Risk Guarantee of $4-million to enhance its bankability. We look forward to a successful financial close and the commissioning of the plant," he points out.

"We are delighted to participate in this impactful transaction as part of this consortium of lenders. The cost-effective power generated through this project will create significant forex savings and increase the supply of green baseload power for several thousands of homes and businesses. TDB is a strong supporter of the energy sector in its member states, tackling short-term needs by financing the trade of energy commodities and long-term climate ambitions via renewable energy projects, including in wind, solar, run-of-the-river hydro and now geothermal power," notes TDB CEO Michael Awori.

"This investment is yet another step in Finnfund's commitment to make €1-billion of new investments in climate finance by 2030. The Menengai geothermal project will provide clean and affordable power to the Kenyan grid and will be a domestic source of energy, which can generate base load and will have important social and economic impacts. We are proud to be investing in the power sector in Kenya with our partners," adds Finnfund associate director Helena Teppana.