MIGA Facilitates Clean Energy Project in Kenya
WASHINGTON, DC, December 19, 2007—The Multilateral Investment Guarantee Agency (MIGA), a World Bank Group member, said today it has provided political risk coverage for a power plant designed to alleviate severe power shortages in Kenya and offset greenhouse gas emission at the same time. The $88.3 million guarantee will support investments into a geothermal power plant with a combined capacity of 48MW in the Olkaria geothermal fields of the Rift Valley, 50 kilometers northwest of Nairobi.
Geothermal energy is a renewable energy source. Power plants that use geothermal energy to generate electricity do not burn hydrocarbons as fuel, so their greenhouse gas emission levels are very low, or even non-existent.
Christopher Ang, Underwriter at MIGA, explains: “Geothermal power plants release about 1 to 3 percent of the carbon dioxide (CO2) emissions of a fossil fuel plant. At 95 percent capacity, the Olkaria III Geothermal Power Plant—developed, owned and operated by OrPower 4, Inc., a subsidiary of Ormat Technologies, Inc.—will produce more than 5.6 GWh of electricity. Compared to a diesel plant generating the same amount of energy, this would avoid several million tons of CO2 emissions over the life of the project.”
The MIGA-supported project is set to provide clean energy from an indigenous energy source to the Kenyan people. Severe power shortages have hampered economic growth in Kenya. Only about 15 percent of the total population has access to electricity, with frequent blackouts and a large number of customers waiting for connections.
The base-load geothermal power plant, operating on a Build-Own-Operate basis, will address the power shortages in the country using one of the most advanced technologies available—the Ormat Energy Converter unit—to harness geothermal energy resources. Electricity generated by the plant will be sold under a 20-year power purchase agreement with the national power transmission and distribution utility—the Kenya Power & Lighting Company Limited.
Indigenous renewable energy sources can contribute to reducing dependency on energy imports and increase security of supply. The project will not only reduce Kenya’s exposure to fossil fuel price fluctuations, but also lower its dependence on imported thermal energy and help the country diversify away from the use of hydropower for electricity generation.
MIGA’s guarantees are protecting the investments of the foreign investor against the risks of transfer restriction, war and civil disturbance, expropriation, and breach of contract.
“MIGA is committed to helping investors and developing countries reduce the harmful practices associated with global warming by supporting investments in renewable energy, energy conservation and increased efficiency,” says Executive Vice President of MIGA, Yukiko Omura. “We are pleased that our political risk insurance was able to facilitate the use of renewable energy sources in Kenya and reduce the adverse impacts of climate change.”