Multimillion Loan Deal Between Kenya and Japan Sets Pace on the Upgrade of Africa’s Largest Geothermal Plant: Expected to Host Africa’s Largest Data Center

Home » Projects » Multimillion Loan Deal Between Kenya and Japan Sets Pace on the Upgrade of Africa’s Largest Geothermal Plant: Expected to Host Africa’s Largest Data Center

The Kenyan government has successfully signed a multimillion loan deal with Japan to upgrade Africa’s largest geothermal plant. The agreement to the deal comes when Kenya seeks to unveil its 2024/2025 budget. The multimillion-dollar agreement will facilitate various projects nationwide that will improve its infrastructure. This includes upgrading Africa’s largest geothermal plant, Olkaria, and improving the seaport.  Furthermore, the loan will facilitate upgrading various irrigation scheme projects nationwide.

The deal is also significant to the country as Japan has successfully overtaken China as an alternative to Kenya’s financing needs. This follows a simmering relationship between Nairobi and Beijing, the dominant contributor to costly commercial debt across Africa in the past decade. Japan is enthusiastic about ensuring that Kenya meets its development targets, especially regarding construction and infrastructure improvement.

The Significance of Upgrading Olkaria: Africa’s Largest Geothermal Plant

Recently, over the years, Kenya has made plans and upgrades on Africa’s largest geothermal plant, such as increasing its capacity. Kenya Electricity Generating Company PLC (KenGen), which is mandated to manage the plant, has been awarded a multimillion-dollar contract. This aims to improve the plant’s output to accelerate the country’s transition to green energy. The upgrade is a strategic initiative poised to elevate the power plant’s operational efficiency and increase electricity generation output by up to 40%. “Leveraging the latest advancements in geothermal technology, we aim to not only enhance the performance of the plant but also set new standards for renewable energy production in Kenya,” said KenGen’s managing director, Eng. Peter Njenga. The project is in a bid to exploit the 10,000MW of geothermal potential in the Rift Valley Region of Kenya.

Furthermore, the upgrade will also facilitate the construction of the $1 billion data center set in Olkaria. The $1 billion Microsoft-G42 Olkaria data center campus is scheduled to break ground in Q3 2024. Furthermore, once completed, the East Africa Cloud Region is expected to go live within 24 months. This visionary project is set to redefine industrialization in the region. It will also provide a sustainable and clean source of geothermal energy. The new ‘East Africa Cloud Region’, based in Kenya, will offer Microsoft Azure cloud services powered by G42’s green data centres. It will provide scalable, secure, high-speed cloud computing and AI capabilities to accelerate digital transformation across Kenya, East Africa, and the continent.

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The State of the Region Regarding Green Projects

At the forefront of pushing the African continent to be a green powerhouse, Kenya has been on the front lines of the issue. Recently, Kenya signed deals for seven green projects on the sidelines of the COP28 summit. This includes geothermal generation plants, fertilizer production and a data center powered by renewable energy. The president is pushing for Africa to embrace green energy as the country generates 92% of its electricity from renewables.

This includes geothermal, hydro, and even wind. The nation also targets growing 15 billion trees and rehabilitating 10,000 wetlands with an eye on nature swaps. The upgrade of Africa’s largest geothermal plant is included in the bill to facilitate this bid. Kenya’s objective to build a green economy is reflected in its recent Medium-Term Development Plan, which endorsed developing a national green economy strategy. It also explicitly focused on green growth opportunities through renewable exploitation, carbon credits, and clean production systems.

The Relations Between Kenya and Japan Regarding Construction Projects in Kenya

The loan deal for upgrading Africa’s largest geothermal plant is one of the many projects Kenya has collaborated with Japan to implement. Kenya has collaborated with Japan on numerous projects during the country’s six decades of friendship. The most recent include upgrading Ngong Road in Nairobi and the construction of bridges in Mombasa and Kilifi counties. Japan is also involved in new significant projects such as the Mombasa Gateway Bridge, which will be the longest in Africa. The upgrade of Africa’s largest geothermal plant will surely be influential.

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