Indonesian energy giant in hot pursuit of Kenyan geothermal power project

Pertamina Geothermal Energy (PGE), a subsidiary of Indonesia's state-owned energy company Pertamina, is looking to expand its footprint into Kenyan geothermal power projects. The firm inked a memorandum of understanding with Africa Geothermal International Limited (AGIL) to develop the Longonot geothermal concession, during the recent visit of Indonesian president Joko Widodo to Kenya. The deal is estimated to be worth US$700m. The company also reportedly signed a separate agreement with the government-backed Geothermal Development Company to explore a partnership which could be worth as much as US$1.5bn.

Back in 2009, AGIL was granted a concession for the geothermal site at Longonot, which is located approximately 60 km northwest of Nairobi. By 2018, drilling activities began, and the company has since drilled 34 wells. Data from these wells indicates that about 140 MW is ready for exploitation. AGIL has also formalised a power purchase agreement with the national utility, Kenya Power. Overall, the site offers a development potential of up to 500 MW.

Kenya is the seventh-largest producer of geothermal energy in the world. A third of its total installed electricity generation capacity (950 MW out of 3,000MW), is derived from geothermal plants that use the heat and steam within the sub-surface of the earth to generate electricity. The government of Kenya estimates that there's 10,000 MW of untapped geothermal energy across roughly two dozen locations in the country.

Kenya’s geothermal potential stems from its location on the East African Rift System, a tectonic boundary that brings heat from the Earth's core closer to the surface, creating prime geothermal hotspots. The Rift Valley provides a particularly cost-effective setting for geothermal extraction. Engineers typically have to drill between 3,000m to 4,000m to establish a geothermal well. But in parts of Kenya, the depth required as little as 900m. Given its emission-free nature, geothermal energy is carbon free and thus allows Kenya to access affordable climate financing for expanded electrification. Indonesia, which also boasts considerable geothermal potential, PGE manages 13 sites with a combined capacity of 1,877 MW. Julfi Hadi, the company’s CEO, remarked that the AGIL agreement aligns with its ambition to become a global geothermal player. He added that Africa is a new economic growth epicentre and that the Longonot project is an attractive prospect due to its location and geological position.

 

References

‘AGIL to drill its first geothermal well in Longonot, Kenya’, Renewable Energy Magazine, 01 February 2018

‘Kenya taps the earth's heat’, International Monetary Fund, December 2022

‘Kenya electricity capacity crosses 3,000MW mark’, Business Daily, 11 January 2023

‘Energy-electrical power systems’, International Trade Administration U.S. Department of Commerce, 19 August 2023

‘Pertamina Geothermal Energy and Africa Geothermal International Limited have signed a partnership for geothermal development in Kenya, primarily in Longonot’, Think GeoEnergy, 21 August 2023

‘Indonesia's Pertamina Geothermal explores partnership with Kenyan firms’, Reuters, 22 August 2023

‘Pertamina Geothermal Energy explores collaboration with AGIL to develop Longonot concession in Kenya’, Pertamina, 22 August 2023

‘Our business’, Pertamina Geothermal Energy, Accessed 24 August 2023

‘Geothermal power in Indonesia’, Wikipedia, Accessed 25 August 2023