PROJECT DESCRIPTION
The Chiweta geothermal prospect is located in the Rumphi district which is in Northern Region of Malawi and is 470km from Lilongwe. The site falls in the northern portion of the Malawi rift and is underlain by biotitic gneisses of the Basement Complex, covered by clastic sediments of the Karoo System and by a thin level of Quaternary deposits. The geoscientific investigations performed over the prospect, inclusive of geological, geochemical, gravimetric and geoelectrical surveys, allowed to elaborate the conceptual model of the field and to define at a preliminary level the main characteristics of the geothermal system.
Business Activity
Drilling, install a fluids conveyance system, power plant construction and construction of transmission line.
LOCATION
The Chiweta geothermal prospect is located in the Rumphi district which is in Northern Region of Malawi and is 470km from Lilongwe.
BENEFITS OF THE PROJECT/ALIGNMENT OF PROJECT TO GOVERNMENT GOALS
The project is aligned with Government's energy sector and economic development goals as outlined in the National Energy Policy and the Malawi Growth and Development Strategy respectively. Malawians will benefit from the project as it will provide more power to the national electricity grid and their access to electricity for households as well industries will be expedited and increased. Employment opportunities will also be created during and after construction of the project. Implementation of the project will increase Malawi's power generation capacity which will boost industrialization (both import substitution and value addition). It is expected that surplus power from the project will be exported to the Southern African Power and Pool (SAPP) and this will generate foreign exchange for the country.
FINANCIAL REQUIREMENTS
Costs relevant to the construction of the geothermo-electric power plant and to its operation can be grouped into two major components, which is capital expenditures (CAPEX) and operation and maintenance (OPEX). Costs of the above components have been estimated on the basis of updated information and experience of the Consultant in other geothermal projects of similar characteristics, as well as of direct inquiries at the potential manufactures and service providers. For each considered item costs have been expressed in 2018 US Dollars.
The pre-development costs are estimated, rounding off, at USD (2,905,000 x 3)/2 + engineering (4.5%) + contingencies (8%) ≈ USD 5,000,000.
Capital expenditures relevant to the construction of the 10 MW power plant include the following main components: 1. Drilling and testing of production and reinjection wells; 2. Fluid conveyance system from the production wells to the power house and from the power house to the reinjection wells; 3. Power plant and power plant facilities; and 4. 66 kV transmission line to the grid connection point. The total CAPEX of the Chiweta geothermal project is approximated to be 76.2 million USD.
PROPOSED INVESTMENT MODEL (ACTIONS REQUIRED/IMPLEMNTATION ARRANGEMENT/CONTRACT TYPE)
Government preference is to develop the project through an Independent Power Producer (IPP) arrangement. The project will be implemented following a build-own-operate and transfer (BOOT) model with a thirty years long concession period. A Special Purpose Vehicle (SPV) will be established to oversee the implementation of the project. After construction an operations and maintenance contractor will be engaged to operate the plant.
PROJECT FEASIBILITY
The pre-feasibility studies conducted reveal that the project is technically, economically, financially and environmentally viable. The project is expected to generate up to 10 MW of power. Government plans to start developing the project as soon as the IPP is identified. The development phase will cover engineering, mobilization and preparatory works, civil works as well as construction of a transmission line.
Financial Feasibility
The project is financially viable. According to the Malawi Feed-In Tariff (FIT) Policy, Renewable Energy Resource Generated Electricity in Malawi, issued by the Malawi Energy Regulatory Authority in March 2013, the fixed tariff for the geothermal generated electricity is 10.5 USD cents per kWh. The resulting Financial Internal Rate of Return (FIRR) is 12.7%. Assuming a discount rate of 10% for the financial expenses and the benefit, the obtained Levelized Cost of Energy is 10.4 USD cents per kWh, which is very close to the FIT.
The Chiweta geothermal prospect is located in the Rumphi district which is in Northern Region of Malawi and is 470km from Lilongwe. The site falls in the northern portion of the Malawi rift and is underlain by biotitic gneisses of the Basement Complex, covered by clastic sediments of the Karoo System and by a thin level of Quaternary deposits. The geoscientific investigations performed over the prospect, inclusive of geological, geochemical, gravimetric and geoelectrical surveys, allowed to elaborate the conceptual model of the field and to define at a preliminary level the main characteristics of the geothermal system.
Business Activity
Drilling, install a fluids conveyance system, power plant construction and construction of transmission line.
LOCATION
The Chiweta geothermal prospect is located in the Rumphi district which is in Northern Region of Malawi and is 470km from Lilongwe.
BENEFITS OF THE PROJECT/ALIGNMENT OF PROJECT TO GOVERNMENT GOALS
The project is aligned with Government's energy sector and economic development goals as outlined in the National Energy Policy and the Malawi Growth and Development Strategy respectively. Malawians will benefit from the project as it will provide more power to the national electricity grid and their access to electricity for households as well industries will be expedited and increased. Employment opportunities will also be created during and after construction of the project. Implementation of the project will increase Malawi's power generation capacity which will boost industrialization (both import substitution and value addition). It is expected that surplus power from the project will be exported to the Southern African Power and Pool (SAPP) and this will generate foreign exchange for the country.
FINANCIAL REQUIREMENTS
Costs relevant to the construction of the geothermo-electric power plant and to its operation can be grouped into two major components, which is capital expenditures (CAPEX) and operation and maintenance (OPEX). Costs of the above components have been estimated on the basis of updated information and experience of the Consultant in other geothermal projects of similar characteristics, as well as of direct inquiries at the potential manufactures and service providers. For each considered item costs have been expressed in 2018 US Dollars.
The pre-development costs are estimated, rounding off, at USD (2,905,000 x 3)/2 + engineering (4.5%) + contingencies (8%) ≈ USD 5,000,000.
Capital expenditures relevant to the construction of the 10 MW power plant include the following main components: 1. Drilling and testing of production and reinjection wells; 2. Fluid conveyance system from the production wells to the power house and from the power house to the reinjection wells; 3. Power plant and power plant facilities; and 4. 66 kV transmission line to the grid connection point. The total CAPEX of the Chiweta geothermal project is approximated to be 76.2 million USD.
PROPOSED INVESTMENT MODEL (ACTIONS REQUIRED/IMPLEMNTATION ARRANGEMENT/CONTRACT TYPE)
Government preference is to develop the project through an Independent Power Producer (IPP) arrangement. The project will be implemented following a build-own-operate and transfer (BOOT) model with a thirty years long concession period. A Special Purpose Vehicle (SPV) will be established to oversee the implementation of the project. After construction an operations and maintenance contractor will be engaged to operate the plant.
PROJECT FEASIBILITY
The pre-feasibility studies conducted reveal that the project is technically, economically, financially and environmentally viable. The project is expected to generate up to 10 MW of power. Government plans to start developing the project as soon as the IPP is identified. The development phase will cover engineering, mobilization and preparatory works, civil works as well as construction of a transmission line.
Financial Feasibility
The project is financially viable. According to the Malawi Feed-In Tariff (FIT) Policy, Renewable Energy Resource Generated Electricity in Malawi, issued by the Malawi Energy Regulatory Authority in March 2013, the fixed tariff for the geothermal generated electricity is 10.5 USD cents per kWh. The resulting Financial Internal Rate of Return (FIRR) is 12.7%. Assuming a discount rate of 10% for the financial expenses and the benefit, the obtained Levelized Cost of Energy is 10.4 USD cents per kWh, which is very close to the FIT.