Kenya 231
development. Geothermal is not special in this regard: many other large energy
infrastructure projects, including various wind power and transmission line projects, have faced community opposition, spanning from written complaints to
roadblocks and open protests. Government, state- owned utilities, and private
project developers take community concerns seriously. For example, GDC has
enlisted support from the New Zealand government in how to manage engagement with Indigenous groups on infrastructure development and land issues: the
two countries have had some common and comparable experiences (Shortall,
Davidsdottir, and Axelsson, 2015). Meanwhile, development partners, such as the
World Bank, place considerable pressure on their projects to minimise social risks
and show compliance with international standards such as the Equator Principles.
5
Efforts to ensure the local community shares some of the benefits of infrastructure
development typically include compensation, relocation to upgraded housing and
additional community facilities, and job opportunities for unskilled labour in
project construction and post- construction security. But the complex financing
arrangements of geothermal projects often impede or limit on- the-ground implementation of international standards of development finance (Ole Koissaba,
2018). The benefits are often incomparable to the losses or unevenly distributed:
for instance, it might be impossible to weigh improved access to a medical clinic
with loss of fertile land for grazing livestock.
Consequential risks
Geothermal brings many benefits in terms of a low- carbon, climate- resilient
source of electricity, with the potential for high output into the national grid.
But there is also a risk of a range of adverse consequences (refer back to Figure
13.4). With careful management of steam reservoirs – as is currently the case in
Olkaria – geothermal is a renewable source with little financial burden once
initial capital costs are paid back. This results in competitive electricity tariffs
that can help to reduce the consumer cost of electricity, as already experienced
in Kenya. However, if supply does not match demand, then higher unit costs
may prevent Kenya Power from lowering tariffs or may require them to raise
tariffs to cover the costs of meeting obligations in power purchase agreements.
This is a risk for the consumers who may have to pay more, for Kenya Power
who may lose money and reputation, for the government and taxpayers who
may have to subsidise Kenya Power, and for the energy regulator who may find
it impossible to balance cost recovery with affordable tariffs.
Risks of negative social impacts of geothermal development – beyond those
associated with higher electricity costs – largely revolve around negative impacts
on livelihoods and the culture of local communities in the vicinity of steam field
and power plant infrastructure. These negative impacts may perpetuate existing
social inequalities and the marginalisation of traditional societies. While the
urban middle class, industries, and manufacturing businesses benefit from
cheaper and more reliable electricity, access of local communities to training
and skilled employment at geothermal sites might remain limited. The new
development. Geothermal is not special in this regard: many other large energy
infrastructure projects, including various wind power and transmission line projects, have faced community opposition, spanning from written complaints to
roadblocks and open protests. Government, state- owned utilities, and private
project developers take community concerns seriously. For example, GDC has
enlisted support from the New Zealand government in how to manage engagement with Indigenous groups on infrastructure development and land issues: the
two countries have had some common and comparable experiences (Shortall,
Davidsdottir, and Axelsson, 2015). Meanwhile, development partners, such as the
World Bank, place considerable pressure on their projects to minimise social risks
and show compliance with international standards such as the Equator Principles.
5
Efforts to ensure the local community shares some of the benefits of infrastructure
development typically include compensation, relocation to upgraded housing and
additional community facilities, and job opportunities for unskilled labour in
project construction and post- construction security. But the complex financing
arrangements of geothermal projects often impede or limit on- the-ground implementation of international standards of development finance (Ole Koissaba,
2018). The benefits are often incomparable to the losses or unevenly distributed:
for instance, it might be impossible to weigh improved access to a medical clinic
with loss of fertile land for grazing livestock.
Consequential risks
Geothermal brings many benefits in terms of a low- carbon, climate- resilient
source of electricity, with the potential for high output into the national grid.
But there is also a risk of a range of adverse consequences (refer back to Figure
13.4). With careful management of steam reservoirs – as is currently the case in
Olkaria – geothermal is a renewable source with little financial burden once
initial capital costs are paid back. This results in competitive electricity tariffs
that can help to reduce the consumer cost of electricity, as already experienced
in Kenya. However, if supply does not match demand, then higher unit costs
may prevent Kenya Power from lowering tariffs or may require them to raise
tariffs to cover the costs of meeting obligations in power purchase agreements.
This is a risk for the consumers who may have to pay more, for Kenya Power
who may lose money and reputation, for the government and taxpayers who
may have to subsidise Kenya Power, and for the energy regulator who may find
it impossible to balance cost recovery with affordable tariffs.
Risks of negative social impacts of geothermal development – beyond those
associated with higher electricity costs – largely revolve around negative impacts
on livelihoods and the culture of local communities in the vicinity of steam field
and power plant infrastructure. These negative impacts may perpetuate existing
social inequalities and the marginalisation of traditional societies. While the
urban middle class, industries, and manufacturing businesses benefit from
cheaper and more reliable electricity, access of local communities to training
and skilled employment at geothermal sites might remain limited. The new