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Iceland's Reykjavik Geothermal will soon commence drilling to build a 500MW power plant on an imploded volcano in the Rift Valley, Ethiopia
Reykjavik Geothermal signed a deal with the Ethiopian government in October 2013 to build a power plant and will begin drilling in July 2014 as part of a US$2bn project to develop renewable energy in the area, according to the company.
Gunnar Orn Gunnarsson, CEO of Reykjavik Geothermal, said, "The company plans to close financing deals this month worth nearly US$80mn and expects to eventually raise US$500mn from equity partners."
Gunnarsson added that Reykjavik Geothermal will sell power to Ethiopia's national grid after it commences production.
Steam seeps up from the cracks between rocks on top of the collapsed volcano, or caldera, in the Rift Valley situated 20km from Shashemene. The caldera, which was formed several thousand years ago, generates steam that can turn electricity turbines.
Tests have revealed a huge resource of water vapour at temperatures exceeding 250°C on the caldera's surface, stated Gunnarson.
The 500MW of power generated from the power plant would increase current generating capacity by 25 per cent, said the company.
The project is being supported by the US government as part of Power Africa, a US$7bn project implemented by US president Barack Obama to increase access to electricity in the continent.
Reykjavik Geothermal is also considering projects in Kenya and Tanzania.