Kenya Electricity Generating Company (KenGen) has completed a Sh15.6 billion upgrade of its 45-year-old Olkaria 1 geothermal plant. The plant, located in Olkaria, is the oldest geothermal power plant in Kenya and was commissioned in 1981 with an initial production capacity of 45MW. After being shut down three years ago for revamp, the plant's power generation will now rise to 60.5 Megawatts (MW). This upgrade is part of KenGen's efforts to increase its power generation capacity and reduce Kenya's reliance on electricity imports.
The upgrade of Olkaria 1 is critical in helping Kenya Power meet the fast-rising demand for electricity from homes and businesses. Peak demand has risen by 400MW since the plant was decommissioned in 2023, with the current peak demand standing at 2,549MW compared to 2,149MW in 2023. The plant's return to the national grid is expected to help alleviate the pressure on Kenya Power to import electricity from Ethiopia and Uganda. In the year to June 2026, Kenya Power increased imports to 1.91 billion kilowatt-hours (kWh), a 60.5 percent rise from 1.19 billion kWh in the year to June 2024.
The Energy and Petroleum Regulatory Authority (Epra) has approved a 25-year Power Purchase Agreement (PPA) for the refurbished plant. According to Epra's Director General, Edward Kinyua, KenGen applied for the PPA in February and it was approved shortly after. The plant is currently undergoing reliability tests and is expected to go online by the end of the year. The approval of the PPA provides a long-term framework for the plant's operation and ensures a stable revenue stream for KenGen.
Geothermal power plants are a crucial source of electricity in Kenya, supplying 6.42 billion kWh or 40.9 percent of the electricity supplied to Kenya Power in the year ended June 2026. The Olkaria 1 plant's upgrade will contribute to increasing the supply of affordable power in the country. A unit of geothermal power retailed at an average of $0.0729 (Sh9.47) as at June last year, making it the third cheapest source of power after locally-generated hydro and imported hydro.
The rehabilitation of the Olkaria 1 plant was carried out by SEPCOIII Electric Power Construction Co. Ltd of China and Toshiba Energy Systems and Solutions Corporation of Japan. The companies supplied steam turbines and generators for the three units of the power plant. The successful completion of the upgrade demonstrates the importance of partnerships between local and international companies in developing Kenya's energy sector.
According to KenGen's Managing Director, Peter Njenga, the rehabilitation of the Olkaria 1 geothermal power station is a significant milestone for the company. Njenga stated that the plant's completion awaits official commissioning, which is expected to take place by the end of the year. The upgrade of Olkaria 1 is part of KenGen's strategy to increase its power generation capacity and contribute to Kenya's goal of increasing access to affordable and reliable electricity.
The upgrade of Olkaria 1 is a significant step towards reducing Kenya's reliance on electricity imports and increasing the supply of affordable power in the country. With the plant's power generation capacity increased to 60.5MW, KenGen is well-positioned to contribute to meeting Kenya's growing demand for electricity. The successful completion of the upgrade also highlights the potential for growth and development in Kenya's geothermal energy sector.
Key points
- KenGen upgrades Olkaria 1 geothermal plant to 60.5MW capacity.
- Upgrade aims to reduce Kenya's reliance on electricity imports from Ethiopia and Uganda.
- Plant's return to national grid expected to help meet growing demand for electricity.
