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Geothermal Leap for Developing World Needs Public Finance, Says Study

Geothermal energy has the potential to provide significant amounts of low-carbon, low-cost electricity in many developing countries.
Study findings

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Geothermal energy has the potential to provide significant amounts of low-carbon, low-cost electricity in many developing countries.

A new study by Climate Policy Initiative however shows public finance needs to increase 7-10 fold for full and effective deployment of the technology.

Geothermal is broadly cost competitive with fossil fuel alternatives and is the cheapest source of available power in some developing countries with rapidly growing energy demand.

The study includes case studies of geothermal projects in Turkey, Kenya and Indonesia that range from 13MW to 330MW – the largest in the world. It ranked Uganda in the tenth position globally in terms countries with potential to power their growth with geothermal energy between now and 2030.

Neighboring Rwanda and Kenya feature prominently in the second and third position respectively in terms of their potential in harnessing this type of power for their development needs.

Over the last year, Climate Policy Initiative (CPI) has conducted analysis on behalf of the Climate Investment Funds with the aim of helping policymakers and development finance institutions to understand which policy and financing tools to use in deployment of geothermal for electricity.

The findings of the study launched at the side lines of the Climate Change meeting in Bonn Germany provide several policy alternatives for countries.

It says by enabling private investment, governments can achieve the same amount of electricity generation while providing only 15-35% of the financial resources they would have spent had they built and operated projects themselves.

Governments and development finance institutions according to the study will need to provide 42-55% of the total additional financing of approximately 133 billion dollars in the form of low-cost, long-term loans and equity.

Uganda currently has three geothermal fields in Kibiro, Katwe and Buranga are located in East African Rift System particularly in its western arm the Albertine Rift.

Uganda\'s potential for geothermal power generation is estimated at about 450 MW. The geothermal potential of Uganda has been explored since early 1950s but has not been used by now.

State Minister of Energy, Simon D\'Ujanga told Uganda Radio Network that Uganda had not tapped into geothermal because of high initial cost to set up such plants.

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Neighboring Kenya is now number eight in geothermal worldwide  with  geothermal contributing  51% of the country\'s national energy needs  following the commissioning of the final phase of a combined 280-megawatt (MW) electricity early this year.

The Kenya Electricity Generating Company (KenGen) said “at 7.2 US cents per kilowatt hour, geothermal energy is among the cheapest renewable sources of electricity in the country and the world.

According to KenGen, electricity production in the country from hydropower has now been “relegated to second place” at 36%.

Meanwhile President Museveni during this year\'s state of the Nation Address emphasized the need to tap into Uganda\'s renewable energy sources like hydroelectricity, solar and geothermal. He said he was also preparing the country for nuclear power plants.

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Some experts have warned that nuclear plants were likely to be very costly in Uganda though they have the energy potential.

The International Energy Agency\'s ‘Africa Energy Outlook\' report (242-page / 6.90 MB), published last year, said an additional $450 billion in power sector investment could help boost the economy in sub-Saharan Africa by around 30% in 2040.

The report said geothermal was also set to become “the second-largest source of power supply in East Africa, mainly in Kenya and Ethiopia”.

It said that \"unreliable power supply has been identified by African enterprises as the most pressing obstacle to the growth of their businesses, ahead of access to finance, red tape or corruption. Relieving this uncertainty helps every dollar of additional power sector investment in the African Century Case to boost GDP by an estimated $15\".

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