The Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, has provided $49.5 million in guarantees to Globeleq Africa Limited. These guarantees offer coverage against the risk of breach of contract, extending up to 20 years for the Menengai geothermal power plant and 17 years for the Malindi solar power plant in Kenya.
The Menengai Geothermal project is a greenfield 35-megawatt geothermal power plant currently under construction. The electricity generated by the plant will be sold to Kenya Power and Lighting Company (KPLC), the state-owned utility, under a 25-year Power Purchase Agreement (PPA).
Additionally, the 40-megawatt Malindi solar power plant has been in operation since December 2021, with its electricity also sold to KPLC under a 20-year PPA. Both projects are supported by a Letter of Support issued from the government of Kenya, which provides a backstop in cases where payment failures occur due to political events.
“The World Bank Group Guarantee Platform is delighted to be adding two new clean energy projects to our Kenyan portfolio,” said Hiroshi Matano, MIGA Executive Vice President. “By providing guarantee coverage, we are helping bring reliable, clean, and affordable energy that drives economic growth and supports the broader objectives of Mission 300 by increasing private sector investment and the supply of renewable energy.”
The two renewable energy assets by Globeleq are expected to provide cost-effective power to Kenyan households, businesses, and industries. They will also advance Kenya’s low GHG emissions development pathway and align with the country’s long-term vision of providing 100 percent clean energy by 2030. Furthermore, the competitive tariffs for these projects are also contributing to lowering the regional average cost of power generation.
Guarantees by MIGA to enable private investment in the energy sector in Kenya
Geothermal energy already represents 41 percent of Kenya’s installed capacity. The new investments will reduce reliance on fossil fuels and displace expensive thermal power generated from heavy fuel oil plants.
“We are thrilled to receive MIGA’s support for our Menengai Geothermal and Malindi Solar projects. These guarantees are crucial in mitigating risks and ensuring the successful implementation of these clean energy initiatives. By harnessing geothermal and solar power, we are contributing to Kenya’s sustainable energy goals and providing reliable and cost-effective electricity to the grid,” said Jonathan Hoffman, interim CEO of Globeleq.
MIGA highlighted that its guarantees to Globeleq will enable foreign private sector investment in large-scale power infrastructure by assuaging concerns about energy sector challenges in Kenya. The company emphasised that the guarantees align with the World Bank Group’s strategy to mobilize finance for development, leveraging private capital to support climate-friendly infrastructure and green financing.
The World Bank Group is partnering with the African Development Bank and other partners on Mission 300, an ambitious initiative to connect 300 million people to electricity in Sub-Saharan Africa by 2030
