Japan’s government will provide financial assistance for geothermal power projects in Africa, with Japanese trading houses and plant builders eyeing new business opportunities in this underdeveloped area of the continent’s infrastructure.
Prime Minister Shinzo Abe will announce the aid initiative next week at the sixth Tokyo International Conference on African Development, to be held in Nairobi.
Most of Africa’s geothermal potential is concentrated in the east, in Kenya, Ethiopia and other nations. But less than 5% has actually been developed, owing to the high cost of drilling down to heat reservoirs and building the plants themselves. Test bores are said to be successful less than half the time.
The Japanese government will provide both financing and know-how for African geothermal projects from the initial stage, hoping to improve the odds of success in exploration. Grants will cover a portion of pre-construction-stage costs, which can run to $100 million. For starters, the government will appropriate more than 1 billion yen ($9.97 million) for grant provision as part of a supplementary budget for the current fiscal year.
In addition, Tokyo will make low-interest loans from the Japan International Cooperation Agency and other financing available for African geothermal projects that have reached the construction stage. The Abe government announced in May that it would provide $200 billion through such channels to support infrastructure exports. Some of this will go to projects in Africa.
Japanese groups Toshiba, Mitsubishi Hitachi Power Systems and Fuji Electric already hold a significant share of the global geothermal power business. Africa holds potential for further growth.
The continent’s biggest concentration of geothermal power capacity is located in the Olkaria region of Kenya, about 100km northwest of Nairobi. Japanese players are eyeing the possibility of orders for additional capacity there in conjunction with a buildup expected to bring the total from nearly 600,000kW now to more than 1 million kilowatts.
Trading house Toyota Tsusho and Toshiba, which won a 2011 contract for geothermal power facilities in Olkaria, may provide additional capacity. Other pairs of contenders include Mitsubishi Corp. and Mitsubishi Hitachi Power, and Marubeni and Fuji Electric. Meanwhile, Toyota Tsusho and national utility Kenya Electricity Generating are planning feasibility studies for geothermal installations beyond that region.
Geothermal energy offers a renewable source of power for a continent with a growing need for electricity. Generating costs can run about as low as with coal or nuclear power, according to Japan’s Ministry of Economy, Trade and Industry.