RFQs for Tulu Moye geothermal project due mid-May
TM Geothermal Operations (TMGO) – a 50/50 joint venture between Reykjavik Geothermal and Meridiam Infrastructure Africa Fund – invited requests for pre-qualification (RFQs) to EPC contractors last month for the DFI-backed first phase of the 150MW $2.2 billion 300MW Tulu Moye geothermal project in Ethiopia's eastern Rift Valley.
Bidders have until mid-May to submit RFQs, while Request for Proposals (RFPs) are expected to launch in July. Around 25 EPCs have responded to Expressions of Interest (EOIs). A source close to the deal says if prospective EPCs offer Operation and Maintenance contracts with their bids, there will be a significant added value stapled to the bid.
The first phase comprises the drilling of around ten production wells and two injection wells, construction of a steam-gathering and injection system, a single unit water-cooled condensing steam power plant, and a 230kV transmission line to the Koka-Wakena line. KenGen started the mobilisation of its drilling rig for the project in December last year, although drilling has since been halted amid the Covid-19 crisis.
The project is backed by a 25-year PPA signed with state-owned energy utility Ethiopian Electric Power at at levelised cost of electricity of $0.07 per kWh on 19 December 2017. Initial drilling for the first phase is scheduled to be complete by August 2019, with commercial operations in December 2021. The scheme was initially meant to be built in four 50MW phases, but has since been revised to two phases of 75MW each.
Stage one has a total project cost of $263 million and is being financed with an oversubscribed 18-year $193 million debt package provided by DFIs including the EIB, AfDB, FMO, DEG, and Proparco. Given the adolescent nature of Ethiopia’s renewable energy market, with the project marking the country’s first IPP, pricing is high at around 500bp.
The $70 million equity portion is being put up by sponsors. Meridian will provide $40 million, there will be a $1.1 million grant from the USTDA and a $10 million grant provided by the Geothermal Risk Mitigation Facility (GRMF). The GRMF is funded by the UK’s Department for International Development and Germany’s KFW as a means of allowing countries on or around the East African Rift Valley to utilise thermal resources and power.
