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Close to USD 3 billion geothermal projects in pipeline

Close to USD 3 billion geothermal projects in pipeline

Israeli and British companies have started talks with the Ethiopian government to develop geothermal electric power generating plants in the South East rift valley system, it was learnt. 

The bigger of the two is the US based Israeli company, Omart, which has started negotiation with the Ethiopian Electric Power (EEP) to build geothermal electric power plants in four localities near Shasheme town-Dunga, Fango, Boku and Dofan. The four geothermal power plants will have a total installed generating capacity of 450 MW of electricity. The total cost of the project is estimated at two billion dollars. Omart is engaged in geothermal power plants development projects in neighboring Kenya and the US.

Mekuria Lemma, Strategy and Investment Director with EEP, told The Reporter that Omart has been undertaking exploration work in its license area. The company has secured exploration license from the then Ministry of Mines, and conducted various exploration works in the four localities. According to Mekuria, the company has spent close to 30 million dollars on the exploration project. Mekuria said after confirming the viability of the geothermal reserve, executives of Omart began negotiating with EEP on Power Purchasing Agreement (PPA) three months ago. 

“We held two rounds of meetings in Addis Ababa. We will have the third round in September. Unless unforeseen conditions occur we hope to sign the PPA in three months time,” Mekuria told The Reporter.

EEP and Omart are negotiating on the power tariff. “We are discussing how much we could buy the electric power per KWH,” Mekuria said. Once the PPA is signed Omart will start drilling geothermal wells. The agreement is expected to be singed end of this year.    

In related news, the British energy firm, Cluff Geothermal, has secured an exploration license from the then Ministry of Mines. Cluff has been prospecting for geothermal energy reserve in the South East Rift System near Fentale. The company is planning to build a geothermal electric power generating plant with an installed generation capacity of 150 MW.

Satisfied by the exploration work Cluff has started talks with EEP. “We are at an early stage of negotiation. We gave them a draft PPA. They are evaluating the draft PAA and we are expecting comments from them,” Mekuria told The Reporter.

Cluff Geothermal is anticipating building 150 MW of geothermal electric power generating plant at a cost of 800-900 million dollars in two phases. The first phase will have an installed generation capacity of 50 MW. The second phase power plant will generate 100 MW.

Ethiopia has an immense geothermal energy potential of up to 10,000 MW. However, so far, it managed to generate only seven MW from geothermal sources at Aluto Langano geothermal power plant-owned and operated by EEP. With a grant secured from JICA, EEP is in the process to drill 22 geothermal wells at Aluto Langano that could boost the generation capacity to 35 MW. 

The Ethiopian government signed the historical first PPA with Reykjavik Geothermal (RG), an Icelandic company, in June 2015. RG is now in the final process to develop 500MW of geothermal power generating plant with an outlay of two billion dollars in Corbetti locality.