AFD support to geothermal development

1. AFD support to geothermal development Kampala, Uganda September 20, 2011 Maitane Concellon Programme Officer Energy & Climate AFD Nairobi

2. The AFD Group 1 • A public Development Financial Institution (DFI), operating in nearly 70 countries • 4 complementary entities • AFD (Development Financial Institution) • PROPARCO (dedicated to private sector) • FFEM (French Global Environment Fund) • CEFEB (Training Institute) • 7 Billion € committed in 2010 (half in Africa) • Diversified tools: concessionnal loans/near market condition loans; sovereign/non sovereign loans; loans to the private sector; guarantees; technical assistance and grants

3. AFD Energy Strategy 2 Sustainable Energy Efficient, (C) lean, Renawable Energy Security Generation, Interconnections, Regulation, PPP Energy Access Grid, Off-grid, Biofuels

4. Main lines of intervention in EAC 3 • Development of renewable energy • Bujagali in Uganda: 250 MW Hydro Power on Nile river (Commissioning April 2012) • Olkaria I & IV: 280 MW of geothermal power generation in Kenya • Support to the development of geothermal energy in Ethiopia • Interest in financing the Ruzizi III hydropower plant • Access to energy in rural and suburban areas • Rural and urban electrification projects in Kenya • Connection Revolving Fund in Kenya allowing connection of low-income households • Promoting energy efficiency and demand-side management • Distribution of energy-saving bulbs to low-end residential customers in Kenya • Renewable Energy and Energy Efficiency credit line for private sector investment in Kenya, Tanzania and Uganda • Strengthening infrastructure and regional integration • Mombasa – Nairobi 400 kV transmission line • Nairobi Power Transmission Ring • Regional interconnection: Ethiopia – Kenya 500 kV DC line

5. AFD’s support to geothermal in EAC 4 • Financing of geothermal generation facilities • Contribution to a 35 MW extension of Olkaria II by KenGen (AFD) • Construction of a 280 MW power generation plant in Olkaria I & IV by KenGen (AFD) • Financing of a 48 MW extension at Olkaria III generation plant by Orpower (Proparco) • Financing for geothermal exploration and drilling • Support to exploration through the financing of 2 drilling rigs for the GDC (AFD) • Contribution to the development of 400 MW at Menengai (AFD, under appraisal) • Capacity Building and Technical Assistance • Update of GDC’s Strategic Plan and Business Plan (AFD) • Development of GDC’s health and safety procedures (AFD) • Considering financing of a regional training center in Kenya dedicated to geothermal energy for mutualisation of equipment, expertise and knowledge (AFD, under appraisal)

6. Diverse financing mechanisms 5 AFD Group commitments in EAC Total: 241 million EUR • Focusing mostly in Kenya for the moment but also intending to support the development of geothermal in Ethiopia and Rwanda • Willing to share experiences and explore opportunities for support with other countries in the region (Uganda, Tanzania, etc)

7. Objective: development of 280 MW power generation plant with KenGen AFD financing: € 150 M - co-financing with WB, EIB, KfW, JICA (total cost of the project € 982 M) Scope of financing: drilling, steam gathering network, power plant, transmission network Key requirements: Field modeling (resource optimization/reservoir simulation studies) Feasibility study for the power plant and the steam gathering network Environmental Impact Assessment study Power Purchase Agreement Geothermal Advisory Committee Investment and Financing Plan Economic & financial analysis of the project Implementation Schedule Project Steering Committee and Project Implementation Unit EIA license A case study: Olkaria I&IV 6

8. Objective: 400 MW wellfield development with GDC AFD financing: € 52 M for the purchase of 2 rigs and € 70 M contribution for drilling materials/consultancy and steam gathering network Co-financing with ADB and WB - Total project cost approx. € 600 M Scope of financing: production drilling, steam gathering network and feasibility study for the power plant Key requirements: Surface exploration, exploration and appraisal wells completed Feasibility study for the steam gathering network Environmental Impact Assessment study Geothermal Advisory Committee Investment and Financing Plan Economic & financial analysis of the project Implementation Schedule Project Steering Committee and Project Implementation Unit EIA license A case study: Menengai 7

9. Mobilising ressources for geothermal development in Africa 8 • Strong interest in supporting geothermal development in Africa – from small-scale to large scale interventions possible • Need to ensure strong Government commitment, sound national energy policies, sustainability of the sector (tariffs, financials of public utilities…) • Inclusion of geothermal in national least-cost energy development plans • Resources are limited, needs are huge – need to diversify financing and optimize complementarity between investors/donors to leverage existing resources • Grants from donors for early stages to demonstrate potential (site identification, resource exploration), feasibility studies, capacity building • Development banks for infrastructure investment (wellfield development /power plant) - requires strong Gov commitment and sound public finance/debt sustainability situation • Private sector for wellfield development and power plant construction • strong risk mitigation policies/cost sharing required for resources assessment and well field development • strong sovereign guarantees/investment promotion policies required even at later stages of the value chain (well development and power plant development) • not a costless option for Governments either

10. ASANTE SANATHANK YOUMERCI