NDF - Financing for climate change and development projects

NCF: Karisimbi Geothermal Prospect [NDF C3 C8]

13.09.2013
The objective was to pave the way in Rwanda for the provision of geothermal energy, an indigenous clean renewable low cost energy, either in the form of electricity or direct applications such as heat and cooling.

Rwanda
Karisimbi Geothermal Prospect
Ref: NDF C3 C8

Nordic Partner: Reykjavik Geothermal Ltd. (Iceland)
Local Partner: Ministry of Infrastructure
Other Partners: n/a
Total Project Cost: EUR 680,000
NCF Financing: EUR 450,000
Agreement Signed: 6 September 2011
Project Classification: Mitigation / Renewable energy
Duration: 24 Months (Completed)

Project Objective

The objective of the project was to pave the way in Rwanda for the provision of geothermal energy, an indigenous clean renewable low cost energy, either in the form of electricity or direct applications such as heat and cooling. The project aimed to harness Rwanda’s geothermal resource through review of surface exploration studies and environmental assessments and through technical assistance for drilling of the first exploratory well in the Karisimbi area in Western Rwanda.

Description

In countries where the best resources are available, as in many countries in the East Africa’s Great Rift Valley, geothermal energy is a clean energy source that combines low emissions with economics that are superior to most other sources of energy. Despite this, growth in geothermal energy has not kept up with that of wind and solar energy, largely due to the fact that most of the resources are located in the developing world where investors have been unwilling to take the risks and to commit considerable capital required by the exploratory drilling activities. Reykjavik Geothermal (RG) is a geothermal development, investment and consulting company that is bucking this trend by focusing its work on emerging and developing markets such as Rwanda.

The Ministry of Infrastructure (MININFRA) and the Energy, Water and Sanitation Authority (EWSA) of Rwanda are fast-tracking the development of geothermal resources in Rwanda. The government of Rwanda has commissioned various studies that indicate that Rwanda has viable geothermal resources, which can be developed for least-cost base load power generation and direct industrial applications. Furthermore, the government has employed consultants to carry out environmental and social studies on the impacts of potential geothermal resources identification and exploitation.

RG and EWSA joined forces for the development of the Karisimbi geothermal prospect with two primary goals in mind:

1. Prove the existence of a geothermal energy source that is environmentally friendly as well as economically and technically feasible to harness, and
2. Pave the way for private sector investment bringing up to 5-10 MWe affordable geothermal power is on line as soon as possible, and then expand to 160 MWe and beyond if the resource allows.

The deep and somewhat risky nature of the Karisimbi geothermal resource makes it unattractive for purely private sector exploration and exploitation. EWSA’s strategy is to optimize development speed and eventual power prices through financing the exploration drilling from loans and grants from their development partners. The Nordic Climate Facility’s support enabled RG to provide drilling engineering services to monitor drilling operations and to ensure that they meet the technical specifications.

Relevance for Climate Change

In Rwanda, major part of the electricity is currently generated in thermal power plants using heavy fuel oil or diesel. Power generation using the methane gas from Lake Kivu is the main foreseen additional capacity, followed by some further investments planned for hydro power and peat. A successful private-sector led geothermal power project in Rwanda or elsewhere in East Africa has the potential to grow into a utility-scale investment in geothermal power across the developing and emerging markets. As each project will have a target capacity of at least 100 MW and in some cases as much as 500 MW+, this could have an important impact on climate change mitigation. A 10 MW plant could potentially generate up to 60,000 t CO2/a (direct) over a lifetime of up to 25 years should the source be eventually proven.

Innovation and Knowledge Transfer

While the geothermal power production is based on established and proven technology, investor appetite for application outside the developed world has been very limited. Africa is currently using only 1-2% of its estimated geothermal power potential, almost all of it in Kenya. Majority of the world’s geothermal resources are located in developing and emerging markets, and these markets are in many cases exactly those most in need of clean, stable and low cost power – as is the case with Rwanda. Therefore, geothermal resources can be seen as a real potential for environmentally and climate friendly development of these countries.

Reykjavik Geothermal aims to become the first major geothermal developer focusing exclusively on the developing and emerging markets. The company believes opportunities are plentiful, and hopes that their efforts will lead to other developers following suit.

More information

Reykjavik Geothermal
Ministry of Infrastructure, Rwanda