Climate change is reshaping the global energy landscape, and East Africa is uniquely positioned to lead the charge toward a sustainable future. With vast geothermal reserves, the region holds the potential not only to address its soaring electricity demand but also to emerge as a global model for renewable energy transition.
Countries like Kenya and Ethiopia stand at the heart of this transformation, leveraging geothermal resources to fuel economic growth, industrial development, and climate resilience.
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Rising Energy Demand and Climate Vulnerability
East Africa’s energy needs are growing at an unprecedented pace, with populations and economies expanding rapidly. Yet, millions remain without electricity—12.5 million Kenyans and 42 million Ethiopians still lack reliable access. Projections indicate that Kenya’s energy demand could outpace GDP growth by 20%, while Ethiopia faces a similarly steep curve. Complicating matters is the region’s climate vulnerability: warming nearly twice the global average has intensified droughts and floods, destabilising hydroelectric systems that supply 35% of Kenya’s and 89% of Ethiopia’s electricity. Diversifying into geothermal energy is no longer an option but a necessity.
East Africa’s geothermal endowment is estimated at 15,000 MW—twice the capacity of Ethiopia’s Grand Renaissance Dam—yet only a fraction has been tapped. Kenya currently produces around 500 MW, while Ethiopia lags at just 7 MW. The primary barrier lies in costly and risky drilling, which often deters investors uncertain of well viability. This is where innovative financing solutions are critical.
Financing the Future
Unlocking geothermal potential requires bold financial intervention. Insurance mechanisms, such as the underwriting facility pioneered by Parhelion and FSD Africa, are designed to de-risk investments and attract private capital. If successful, this initiative could boost Kenya’s geothermal output by 20% and Ethiopia’s by 500%, preventing 515,000 tonnes of CO₂ annually while supplying power to over 5 million people. By reducing upfront risks, finance becomes the key to turning geothermal ambition into reality.
Unlike solar and wind, geothermal offers a constant, weather-proof energy source—an anchor for reliable base-load power. Its benefits ripple beyond electricity supply. In Kenya, the Olkaria plant already generates nearly 900 MW and aims to hit 5,000 MW by 2030, powering industries, creating jobs, and spurring economic growth. Plans for a Green Energy Park at Olkaria, with tax incentives and streamlined regulations, could transform Kenya into a hub for green manufacturing. Agriculture also stands to benefit—geothermal-heated greenhouses are boosting horticultural productivity, while aquaculture projects show faster fish growth in geothermal tanks.
Innovation and Industrialisation
Geothermal energy could catalyse Africa’s industrial revolution. Instead of exporting raw materials for energy-intensive processing abroad, East Africa could harness clean power locally, reducing carbon footprints while adding value and creating wealth. New frontiers such as direct air capture (DAC) for carbon removal, spearheaded by innovators like Octavia Carbon, highlight how geothermal energy is not just about electricity—it’s about positioning Africa at the cutting edge of global climate technology.
Despite its promise, geothermal expansion faces hurdles: high exploration costs, regulatory bottlenecks, and the need for skilled labour. Overcoming these requires strong political will, innovative partnerships, and regional collaboration between pioneers like Kenya and Ethiopia. Joint ventures, shared expertise, and knowledge transfer could amplify results, turning East Africa into a global benchmark for renewable energy leadership.
