Regional Geothermal Coordination Unit (RGCU)
Background
Despite the high geothermal energy potential within the East African Rift System (EARS) the renewable energy source has so far only been developed to a limited extent. The main barriers faced by the majority of EARS-countries for a wider utilization of geothermal resources are (among others):
(i) the large upfront-costs of geothermal resource exploration,
(ii) the considerably high risk of failure when drilling geothermal wells and
(iii) inadequate political, institutional & economic framework conditions.
An involvement of the Private Sector in form of Independent Power Producers (IPP) and the establishment of financial support mechanisms will be a solution to:
(i) complement the limited public funds and
(ii) provide financial security during exploration and development.
However in order to invest in geothermal energy IPPs will depend on long term investment securities as well as additional fiscal incentives.
So far the liberalisation of the power sector in some of the EARS-countries has contributed to restructuring (unbundling) the former state-owned utility and privatising power generation with a noticeably increase in the involvement of IPPs. Nevertheless current policies and legal and institutional frameworks in the EARS-countries do in most cases not cover the development of the geothermal sub-sector hence hampering the involvement of the private sector.
Project
In the joint GEOTHERM II programme, BGR and KfW aim at mitigating the above described barriers by providing technical and financial assistance for the establishment of a Geothermal Risk Mitigation Facility (GRMF) and a Regional Geothermal Coordination Unit (RGCU). While GRMF (supported by KfW) aims at mitigating the drilling risk by providing direct grants to project developers, the RCGU (supported by the BGR and KfW) aims at setting up a conducive legal and institutional framework to attract IPPs investments in EARS-countries. Both units are attached to the Infrastructure and Energy Department of the African Union Commission (IED-AUC).
The mandate to develop the geothermal energy potential in EARS-countries was given to the AUC by the EARS Ministers in the Addis Abeba Declaration on Geothermal Energy (June 2009).
Consecutive high level meetings supported by the BGR, in Nairobi, Kenya (March 2010) and Kigali, Rwanda (December 2010) provided the technical ground for the practical implementation of the Regional Geothermal Programme.
In order to support the establishment and operation of RCGU, BGR seconds a Technical Advisor (TA) to the AUC-Headquarters in Addis Ababa. Since 2013, RCGU´s key activities cover the following areas:
Development and/or harmonization of renewable energy policies, adaptation of existing mining laws and geothermal concessioning and permits, fiscal support efforts, (e.g. Power Purchase Agreements, Feed In Tariffs) as well as the introduction of harmonized procedure rules for private sector investment in selected EARS-countries.
Development of the capacity of AUC-personnel, policy makers and private investors in geothermal related tasks.
Participation in the review of project proposals and consultancy of applicants
Participants of 2nd GRMF workshop at AUC, Addis Abeba
Source: BGR
Recent Developments
In July 2013, a BGR Technical Advisor started his work within RCGU in AUC in Addis Abeba. He participated in the preparation of a donors and applicants workshop for the GRMF in October 2013 in Addis Ababa and 2014 in Arusha. The first GRMF round has been successful; the 3rd round is ongoing and a 4th one is planned.