•Globeleq Interim CEO Jonathan Hoffman, said the deal provides critical liquidity support against payment default allowing companies like Globeleq to invest with confidence.
•The RLSF MoU aims to encourage collaboration between ATIDI and its member states in identifying, developing, and implementing renewable energy projects.
Image: FILE
Kenyas 35 MW Globeleq Menengai Geothermal project has received a boost after the African Trade & Investment Development Insurance declared financial support for the project.
The support will be channeled through Regional Liquidity Support Facility (RLSF), a credit enhancement tool for renewable energy Independent Power Producers (IPPs) that sell electricity to state-owned utilities.
The project, the first to be considered for RLSF cover in Kenya, is valued at $117 million (Sh15 billion) with financing being provided by the African Development Bank (AfDB), the Eastern and Southern African Development Bank (TDB), the Finish Fund for Industrial Cooperation (Finnfund), and equity from the project owners, Globeleq.
In the plan the proposed RLSF policy will cover the risk of payment default by the national utility, Kenya Power & Lighting Company (KPLC) and Geothermal Development Corporation (GDC).
Steam will be supplied to the project by GDC under the terms of a 25-year power implementation and steam supply agreement, whilst the electricity generated will be sold exclusively to KPLC under a power purchase agreement for the same duration.
Globeleq Interim CEO Jonathan Hoffman, said the deal provides critical liquidity support against payment default allowing companies like Globeleq to invest with confidence.
“The Regional Liquidity Support Facility is a critically important product that gives companies the comfort around payment from customers that they need in order to invest in major renewable power projects in Africa such as our Menengai geothermal project in Kenya,” said Hoffman.
It is a joint initiative by ATIDI, the KfW Development Bank, and the Norwegian Agency for Development Cooperation (Norad), available in ATIDI member countries that sign the RLSF Memorandum of Understanding.
The RLSF MoU aims to encourage collaboration between ATIDI and its member states in identifying, developing, and implementing renewable energy projects.
ATIDI CEO Manuel Moses expressed pride in collaborating with Globeleq, KPLC, GDC, and the Government of Kenya on this project.
He emphasized the partnership's role in promoting sustainable development and renewable energy in Kenya and the region, following the RLSF MoU signing in February 2024.
Kenya, the host country of ATIDI’s headquarters, became the tenth ATIDI member state to sign the RLSF MoU, joining Benin, Burundi, Côte d’Ivoire, Ghana, Madagascar, Malawi, Togo, Uganda, and Zambia.
It also aims to leverage each member state’s natural resources to generate clean and sustainable energy and reinforce its power generation and transmission capacity.
To date, RLSF policies have supported seven renewable energy projects in Burundi, Malawi, Uganda, and now Kenya, enabling total financing of USD 323.7 million and a total installed electricity generation capacity of 171.3 MW, with USD 20.6 million worth of cover under the RLSF portfolio.
Kenya's power sector benefits from an active private sector and abundant renewable energy resources, with hydro, wind, and geothermal projects dominating its energy mix.
The Government of Kenya has ambitious plans to increase the country’s electricity generation capacity from 3,078 MW in 2023 to 5,000 MW by 2030. Geothermal projects are expected to play a significant role in achieving this target and advancing the nation's renewable energy goals.
Thanks in part to ATIDI’s RLSF initiative, which ensures the stability and viability of renewable energy projects, Kenya is on its way to meeting its goal of transitioning to 100 percent clean energy by 2030.