The Globeleq Menengai Geothermal project in Kenya is set to receive a financial boost from the African Trade & Investment Development Insurance.
This support will be provided via the Regional Liquidity Support Facility (RLSF), a credit enhancement tool designed for renewable energy Independent Power Producers (IPPs) that supply electricity to state-owned utilities. This is the first project in Kenya to receive RLSF coverage.
The 35MW project valued at US $117M will be implemented in partnership with Globeleq Africa Limited, an operator of electricity generation in Africa, will cover the risk of payment default by public entities, including Geothermal Development Bank (GDC) and Kenya Power and Lighting Company (KPLC), by RLSF. GDC will supply steam for the project under a 25-year power implementation and steam supply agreement, while the generated electricity will be sold exclusively to KPLC under a corresponding power purchase agreement.
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Globeleq Menengai Geothermal project
Funding for the project will also come from several key players, including the African Development Bank (AfDB), the Eastern and Southern African Development Bank (TDB), the Finish Fund for Industrial Cooperation (Finnfund), and equity from Globeleq, the project owner.
Jonathan Hoffman, Interim CEO of Globeleq, highlighted the importance of the RLSF in providing essential liquidity support against payment defaults, thus encouraging investment in major renewable power projects in Africa.
The RLSF initiative is a collaboration between ATIDI, the KfW Development Bank, and the Norwegian Agency for Development Cooperation (Norad). It aims to foster cooperation among ATIDI member countries in identifying, developing, and implementing renewable energy projects. ATIDI CEO Manuel Moses emphasized the partnership’s role in promoting sustainable development and renewable energy in Kenya and the broader region.
Kenya, hosting ATIDI’s headquarters, became the tenth ATIDI member state to sign the RLSF Memorandum of Understanding (MoU), joining other countries like Benin, Burundi, Côte d’Ivoire, Ghana, Madagascar, Malawi, Togo, Uganda, and Zambia. The RLSF MoU encourages leveraging member states’ natural resources to produce clean energy and strengthen power generation and transmission capacities.
To date, RLSF policies have supported seven renewable energy projects across Burundi, Malawi, Uganda, and Kenya, with total financing amounting to USD 323.7 million and a total installed generation capacity of 171.3 MW, and USD 20.6 million worth of cover under the RLSF portfolio.
Kenya’s power sector, driven by a vibrant private sector and abundant renewable resources like hydro, wind, and geothermal energy, stands to benefit significantly from this initiative. The Kenyan government aims to boost the country’s electricity generation capacity from 3,078 MW in 2023 to 5,000 MW by 2030, with geothermal projects playing a crucial role in this expansion and in achieving the nation’s renewable energy objectives. Thanks to the RLSF initiative, Kenya is progressing towards its target of 100 percent clean energy by 2030.
