“There is no one size fits all approach to developing geothermal"

Published: Thu 23 Jun 2016
A blog entry by Annemarie Roodbol

Contributed by:

Annemarie Roodbol
Senior Communications Manager

Annemarie Roodbol's Blog

“There is no one size fits all approach to developing geothermal. It's an amazing source of base load, renewable energy, but we have to take a realistic approach to how it's developed”

Exclusive interview with Amanda Lonsdale, Institutional and Commercial Development Advisor, East Africa Geothermal Energy Facility (EAGER), USA. During the upcoming East African Power Industry Convention in Nairobi in September, Amanda is the moderator of the Geothermal Development conference track.

1) Let’s start with some background on EAGER and your role there?
EAGER, the “East Africa Geothermal Energy Facility”, was established by the British Department for International Development (DFID) to facilitate the development of geothermal energy for power generation and other uses in the African countries of Ethiopia, Kenya, Rwanda, Uganda and Tanzania. We respond to the request of these governments (our clients) for assistance with improving the environment for geothermal development in their countries. Our work ranges from providing introduction to geothermal, to advising on policy and regulatory regimes, to building financial models to analyze different approaches to development.

I serve as a geothermal advisor, providing technical and strategic leadership for all EAGER projects.

2) Any specific projects you are involved in currently that you are particularly excited about?
We are doing a lot of work in Tanzania and Ethiopia to help them work through the best ways to approach geothermal in each country, from institutional structure to determining the roles of the public and private sectors. Each country, and each resource is different, and having the opportunity to work with the professionals in each country to assist in their decision making is rewarding.

3) What are the different proposed models for developing geothermal energy?
Development of geothermal runs the continuum from fully public to fully private-sector development, with several variations on public-private partnerships in between. In most of the world, development has primarily been either fully private or fully public, but in Africa you are starting to see countries looking to get involved in early stage drilling to help de-risk resources for private developers. These models have not yet been completed, so it's too early to know the results.

4) Are there success stories that East Africa should be looking?
The only operating geothermal plants in East Africa are in Kenya. These were constructed by KenGen, which has developed significant expertise in geothermal development over the past 20-30 years. Because each country varies in terms of its resource potential, and technical and financial capacity within the government, it is difficult to say the KenGen model could be easily replicated in other countries.

5) What are the main challenges for the region to develop its geothermal resources?
Key challenges specific to the region include:
--Unclear regulatory and policy regime
--Low tariffs
--Lack of access to financing for early stage development

6) How big a game changer can geothermal be for East African in your view?
Estimated geothermal potential in the region is more than double the current peak demand, so the potential impact is significant. Geothermal does have to compete with traditionally less expensive energy sources such as hydro and gas for its position in a country's base load, so it's unlikely to become the dominant source for base load power, but it could displace more expensive, less clean sources.

(Region = Djibouti, Ethiopia, Kenya, Rwanda, Tanzania, Uganda)

7) What is your vision for this sector?
My vision would be to jumpstart geothermal development in the region through a series of smaller projects that can be quickly developed and financed to show early success to governments and developers, increase interest and investment in further development. Geothermal does not benefit from economies of scale as much as other resources, so any efficiencies lost from not building larger plants could easily be offset through a faster development cycle, and through the benefits of demonstrated success in the sector.

A series of small project using different models for development and financing could essentially provide a laboratory for testing the best models for given countries and resources.

8) What surprises you about the geothermal sector?
What surprises in me in East Africa is the lack of understanding of geothermal itself. Across the industry, there are oversimplifications about resource characteristics, approaches to development, etc. This leads to wasted resources, unrealistic expectations and a lack of progress. Geothermal development is risky and complicated, but if everyone in the industry in East Africa took the time to read the basics on financing and developing geothermal and hire true geothermal experts, we could put our minds together to develop some meaningful solutions.

9) You are a presenter and moderator at the upcoming EAPIC in Nairobi in September – what will be your message and what are you hoping for during the geothermal track at the event?
My message is really that there is no one size fits all approach to developing geothermal. It's an amazing source of base load, renewable energy, but we have to take a realistic approach to how it's developed, taking into account (first and foremost) the resource itself, the regulatory regimes, and technical and financial capabilities of the countries. People need to educate themselves about geothermal, and to listen to experts who have successfully developed projects in the past.

ABOUT Amanda Lonsdale: She has over 15 years of experience in international development, project finance, private equity, and strategic advisory in US, Europe, and emerging markets. Her geothermal experience includes several years with a geothermal developer/fund, GeoGlobal Energy, where she was responsible for deal sourcing and due diligence, project finance, and asset management. She was the author of the Multi-Donor Strategy for Geothermal Development, sponsored by Power Africa.   Currently, she is serving as a Geothermal Advisor for the East Africa Geothermal Reform (EAGER) project, sponsored by DFID, as well as a technical advisor to PLN (Indonesia) on geothermal PPA renegotiation (on behalf of USAID). For EAGER, she has developed and delivered courses on regulatory and policy regimes, business models for geothermal development, etc. throughout East Africa.

Amanda has an MBA in Finance and Entrepreneurship from The Wharton School, and an MA in Southeast Asia Studies from the Johns Hopkins School of Advanced International Studies (SAIS). She is a frequent guest lecturer in energy project development and finance at Georgetown University and the International Law Institute.