1. Dr. Silas M. Simiyu Managing Director & CEO Geothermal Development Company Ltd May 18, 2011 Development of Geothermal Resources in Kenya

2. Power Sector Overview Ministry of Energy ERC Energy Tribunal KenGenImportssIPPsREA GDC – steam resource development KETRACO – Transmission /Wholesale Market operator KPLC – Distribution/Supply Customers

3. The Geothermal Development Company Incorporated in 2008 to accelerate development of geothermal resources in Kenya by reducing upfront risks to investors

4. Geothermal in Electricity Mix 4

5. Projected Electricity Demand 5 Least Cost Power Development Plan (LCPDP)  Electricity demand of about 15,000 MW by 2030 is projected.  At least 5,000 MW of electricity will come from geothermal

6. Mission & Vision  Resource prospecting  Drilling (all stages)  Field development  Reservoir and management  Contracting for power plant development Core Activities Vision: To be a world leader in the development of geothermal resources Mission: To develop 5,000 MW by 2030

7. Geothermal Power

8. Direct Use Greenhouse Heating  Heating of greenhouses for cut roses ~160 hectares Extraction of CO 2 & H 2 S  Injection of CO 2 to aid in photosynthesis  Fumigation of soils and sterilization of liquid recycled plant fertilizers using H 2 S Water Recovery  Potable water  Irrigation Industrial Applications  Heating and drying  Industrial processes

9. Why Geothermal? 9

10. Abundant and indigenous Suswa, Longonot, Olkaria, Eburru, Menengai, Arus-Bogoria, Lake Baringo, Korosi, Paka, Lake Magadi, Badlands, Silali, Emuruangogolak, Namarunu Barrier Mwananyamala Homa Hills

11. Low Cost *Based on construction time – additional time would be needed for feasibility and other pre-construction activities **6US cents/kwh based on importing hydro power from Ethiopia vs. 12 US cents/kwh based on remaining projects in Kenya, e.g. Mutonga ***Lower than 10 cents/kwh, greater than 80% availability, less than 3 years, lower than 0.20 CO2 kg/kwh and known natural potentia Wind Coal MSD Nuclear Gas CNG Hydro** Gas Kerosene Solar Co-gene- ration 8.8 10.2 12.5 16.5 30-50 tbd Assessment criteria Generation Option Low cost US$c/kwh AvailabilityFast delivery* Environment friendly Natural potential Comments Current GTs running at high loads, need more base load Coal potential in Kitui Significant potential, but dependent on weather Could pursue along side coal opportunity Dependent on weather with low average availability Min plant size of 500 MW required, politically sensitive Significant proven potential High exposure to hydrology risk (60% of installed capacity) Need to import, liquify for transport and re-gas Attractive intermediate capacity, but not large base load Geothermal Location and transmission benefit ?? ? ?? 11

12. Other advantages of Geothermal Green Not affected by adverse weather 95% Availability Predictable cost of power over the plant life Technology already successful in Kenya Modular incremental development

13. Mandate 13 Reduce upfront risks Reduce costs through infrastructural development, exploration works and production drilling Upfront Works Promote Direct Use of geothermal resources Direct Use Develop human capacity Manage public resources such as rigs Capacity Development Support Government in fund mobilization Funding Support Private Sector entry Sell steam to power producers Power Plant

14. Development Strategies 14

15. Single GoK Entity Approach 1956-591967-701971-761976 - 851986-2003 Two Exploratory wells drilled to a depth of ~950m GoK & UNDP entered into an agreement to extensively undertake geothermal resource assessment Drilling was accelerated and about 23 wells were drilled Drilling continued in Olkaria II Steam field ~ 30 wells by 1992 Wells never discharged and later abandoned Six wells were drilled with positive results. 45 MW (Olkaria I) commission ed between 1981-1985 From 1992, financiers pulled out and no major works undertaken until 1999 Most financing was from World Bank Olkaria II 70MW commissione d in 2003 Decision was to concentrate geothermal development at Olkaria (80km2) after positive well results. 2003-2012 Drilling ongoing Olkaria IV 140MW planned for 2012

16. Concessioning 1998 Olkaria III concession for 100 MW Jul 2000 8MW Com. Dec 2000 12 MW Mar 2002 13 MW Sep 2003 13.6 MW 2008 55 MW 2013 100 MW Olkaria III The first 13 MW developed from wells drilled by Government

17. Concessioning IPP license given in 2009 Targets to develop max of 140 MW on a 700 MW Prospect Observation Under utilization of the resource Slow development pace Longonot

18. Suswa Observation Growth relatively slow, expected development pace not realized 2007 Suswa (>600 MW) concessioned to IPP

19. Surface Exploration Exploration and Appraisal drilling Feasibility Study Production & Development of Steam Supply Construction and Operation of Power Plant GDC Private Entity Investment by Private entity/KenGen Sale of Steam Development Strategy

20. GDC Development Strategy 20 Reduce Energy Cost > Use own rigs > Wellhead generation Reduce Development Time > Develop all prospects > Competitive bidding Promote Direct Use > Avail steam for heating > Avail water > Industrial uses Sustainable Development > Manage the steam field > Optimize the resource Accelerate Development

21. CHALLENGES CHALLENGEISSUESSOLUTION FinancialAccelerated geothermal development entails large upfront financial input  GoK annual support of US$150 million  GDC to generate internal revenue from steam sales to support the GoK budget  Identify and consider alternative sources of financing Social & Environmental Land, local politics, competition for resources Community engagement at all stages of development Demand for royalty payments? Availability of drilling water Land, local politics, competition for resources  Use boreholes as source of water  Use brine and recycle 100%

22. CHALLENGES CHALLENGEISSUESSOLUTION Inadequate infrastructure Geothermal operations occur mainly in remote locations away from developed infrastructure -GDC started operations in accessible areas and will need heavy infrastructural investment to open up other remote areas -Incremental development and feed into distribution network -Power evacuation from remote sites Human Capacity Building Geothermal industry requires specialized skills not readily available  On-the-Job training  Short term Consultancy Services to bridge gap  Geothermal Training Institute to train staff  Partnerships with leading geothermal institutions

23. THANK YOU