Financial Close Is Reached For TDB, AfDB And Finnfund Financing Of Globeleq’s Menengai Geothermal Project In Kenya

Financial close has been reached for the USD 117 million financing to Globeleq by the African Development Bank (AfDB) as mandated lead arranger (MLA), the Eastern and Southern African Trade & Development Bank (TDB), and Finnfund, for the 35MW Menengai geothermal plant in Nakuru, Kenya.

This greenfield geothermal project broke ground earlier this year, and is part of the first phase of the wider Menengai complex, Kenya’s second largest geothermal field currently being developed. Globeleq, a leading independent power company in Africa which is owned 70% by British International Investment and 30% by Norfund, is providing equity, project development and construction management experience.

The project is expected to reach commercial operations in 2025. Afterwards, Globeleq will operate and maintain the power plant which will feed directly into the national grid. This will contribute to enhancing Kenya’s energy supply and security through a source of renewable energy – in line with the country’s Vision 2030.

Steam will be supplied to the project by Geothermal Development Company (GDC), a Kenya government-owned company under a 25-year project implementation and steam supply agreement.  Once operational, electricity will be sold to Kenya Power, the national distribution company, under a power purchase agreement for the same timeframe.

In addition to supporting local suppliers and communities which stand to benefit from increased trade and other economic activities, about 200 job opportunities are expected to be created for local workers during construction, with 35-40 jobs for both permanent staff and contractors once operational.

The financial close of the project follows the COP28 global gathering, where 118 countries committed to tripling renewable power capacity by 2030, including Kenya where the inaugural Africa Climate Summit was hosted last September.

Michael Awori, TDB Chief Executive said: “This exciting transaction comes at a time where TDB is ramping up its support to the energy transition. We are also pleased to be part of Kenya’s journey of meeting 100% of its electricity needs with clean energy by 2030, by adding to the country’s grid more cost-effective green baseload power, while boosting economic activity. We are likewise pleased to add geothermal energy among the sources of renewable energy we are financing in the region, alongside hydro, solar and wind.”

Mike Scholey, Globeleq’s CEO, said: “Menengai is an excellent example of how lenders and independent power producers can work with Governments to successfully harness natural resources and generate clean and reliable power.  We are excited to be starting construction on our first geothermal power plant and look forward to other opportunities in the region.  I would also like to thank our partner GDC, the senior lenders at AfDB, FinnFund and TDB and our EPC contractor TTC for the achievement of this important milestone and their patience during the process.”