InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), announced on 18 January that a shareholders’ agreement has been signed with Berkeley Energy for the 520MW Corbetti geothermal project. The agreement doubles InfraCo’s equity commitment to the project to $30m; $25m equity finance and $5m in standby equity, representing around 20% of the funding required to begin the drilling of up to six exploration wells this year and building a 10-20MW pilot plant in 2019.
“The $30m commitment to Corbetti is truly a landmark deal for us, being our first in geothermal and in Ethiopia and the largest single commitment we have made to date”, InfraCo Africa executive director Alex Katon said. “It is also the first substantial equity commitment under our expanded investment strategy, which enables us to optimise our development impact in projects, while ensuring best practice through construction into commercial operations”.
Following the pilot project, a second phase will raise senior debt for the drilling of a further 9-13 wells and a 50MW commercial power plant. Depending on the success of the first two phases, further phases could expand capacity to more than 500MW over a period of around a decade and at a cost of roughly $2bn.
Berkeley Energy, as manager of the Africa Renewable Energy Fund, and InfraCo Africa formed a joint venture company in 2015 which is the majority shareholder in Corbetti. A power purchase agreement was signed for Corbetti, along with Tulu Moye geothermal project, on 19 December last year. The agreements are expected to be taken to parliament for ratification later this year.
The project has been under development since 2009. Iceland’s Reykjavik Geothermal began active development in 2011, with Berkeley Energy and the Iceland Drilling Company joining as sponsors in 2014. Power Africa has actively supported the project, which has also received funding from the UK government and the Geothermal Risk Mitigation Facility, which provided bridging finance. The East Africa Geothermal Energy Facility and African Legal Support Facility were also involved to build capacity at government institutions.
A funding agreement with the Technical Assistance Facility (TAF), also part of PIDG, will be used to develop a pilot project to provide potable water and improved sanitation in the area. A TAF grant will also look at the possibility of using by-products of the geothermal plant, such as waste heat, in local industry.
