Company embarks on USD 2 bln geothermal project
Tullu Moye Geothermal Operations Private Limited Company has embarked on the development a 520 MW geothermal project in the Oromia Regional State with an outlay of two billion dollars.
The Tulu Moye Geothermal project is located in the Oromia Regional State, East Arsi zone, near Eteya town. Tulu Moye Geothermal Operations plans to develop 520 MW of electricity in four phases. Reykjavik Geothermal (RG), an Icelandic company, and Meridiam, a US firm, are shareholders of Tullu Moye Geothermal Operations.
The power purchasing agreement (PPA) was signed by the Ethiopian Electric Power (EEP) and the Ministry of Finance and Economic Cooperation along with Corbetti Geothermal project on December 2017. The two geothermal projects, the first independent power producers in Ethiopia, would have an installed capacity of generating 1,000 MW. The total investment costs are estimated to be four billion dollars.
The CEO of TM Geothermal Operations Private Limited Company, Darrell Boyd, told The Reporter that his company has embarked on the new geothermal project. “In many ways we have started the project. We have done environmental and social studies. We have been making assessment for the past couple of years. Geothermal studies have been going on for many years. In terms of real investment in the project area will begin in October,” Boyd said.
According to Boyd the company is closely working with the local kebele and woreda administrations on the preparation work. According to the CEO, the company has to build access road and drill water wells. Engineering work is expected to commence in October.
Tullu Moye agreed to sell the power it will generate from the geothermal power plant to EEP. Power tariff has always been a challenge in Ethiopia as the state power monopoly charges the public minimal rates. “The power tariff is competitive. It is a challenge. We will have to do things on time in a very efficient manner. We have to procure things well. We have to deliver returns to our shareholders and investors,” Boyd said.
With regards to peace and stability Boyd said that there are no security concerns in the area. “When I first came to Ethiopia after twenty years people told me that it is not safe, we need permission to travel to the project area etc. But in the last four months there are no such concerns and restrictions. We have a better access in the past couple of months.”
Tullu Moye Geothermal Operations will invest two billion dollars over eight years’ development and construction period. The project will be undertaken in four phases. The first phase with 50 MW installed capacity will cost USD 250 million. “We have to rich financial close by the end of next year. Initial wells will be drilled, prove the resource viability and sustainability. After confirming the commercial viability and sustainability commencement of delivery for phase1 for the first 50 MW will be by the end of 2021,” Boyd told The Reporter.
The US government hailed the Tullu Moye geothermal project. The US Trade and Development Agency has awarded Tullu Moye Geothermal Operations Plc a grant of USD 1.1 million to coordinate a feasibility study supporting development of the first 50 MW of a planned 520 MW project in Ethiopian main rift valley. The agreement was signed on August 27 by CEO of TM Geothermal Operations Private Limited Company Darrell Boyd and Katrien Hinderdael, USTDA country manager for East African at the Sheraton Addis. On the occasion Troy D. Fitrell, chargé d'affaires of the US Embassy, stated that there is no way to develop Ethiopia without having access to electricity. “It has to be sustainable, reliable and affordable. Ethiopia is blessed with geothermal, hydro, solar and wind resources. There is no success for Ethiopia in the future without accessing these resources,” Fitrell said. He said geothermal is a reliable, sustainable and affordable energy resource. “It is cheaper than other most alternative energy sources.”
Darrell Boyd who acknowledged the US government’s support to Tullu Moye geothermal project said that the project will help Ethiopia unlock its geothermal potential. With the potential to generate 10,000MW of electricity Ethiopia is one of the leading countries with geothermal resources in the region.
The guest of honor, Frehiwot Woldehanna (PhD), state minister of Water, Irrigation and Electric stated that geothermal is the major untapped energy resource next to hydro. “We have not been able to exploit this natural energy resource. As geothermal exploration work is very expensive the USTDA support is significant. This kind of support facilitates the quick development of the sector,” Frehiwot said. “We are very grateful for the line of support that we are getting from the US government.”
Frehiwot said since there is a huge untapped geothermal resources in the rift valley two companies may not be enough the exploit the resources adding that the government expects more independent power producers to come and unlock the potential. According to him, the power projects are awarded through open international tenders.
Katrien Hinderdael, country manager for East African USTDA, said that the Ethiopian government has shown a keen interest to develop renewable energy resources. “We want to see projects where there is a business opportunity for American companies. We are looking at power sector energy, transportation and ICT open for business proposals. We always look for opportunity to support companies. There is so much business opportunity in the Ethiopian market,” Hiderdael said.
The pioneer IPP projects in Ethiopia, Corbetti and Tullu Moye, are supported by USTDA and Power Africa. RG is the developer while Meridiam, Berkley Energy, and Africa Infrastructure are the investors in the projects. Ethiopian born Canadian, Nejib Abbabiya, is the initiator of these projects through his company, Rift Valley Geothermal. Renowned Icelandic geothermal scientists are working on the geothermal projects in the Ethiopian rift valley, which is part of the great East African rift system.