Reykjavik Geothermal, the Icelandic geothermal development company, plans to launch drilling on its US$ 2 billion project in Ethiopia by July, Chief Operating Officer Gunnar Orn Gunnarsson said.

Reykjavik Geothermal signed agreement with the Ethiopian government in October to build a geothermal power plant at Corbetti, located in the Rift Valley. The plant will have 500 megawatts generating capacity by 2020, according to Bloomberg.

“We think we have a project that can have a return on equity that is acceptable by the investors,” Gunnarsson said in an interview with Bloomberg on March 7 from Iceland. The company plans to begin closing financing deals this month worth as much as US$ 80 million and expects to eventually raise US$ 500 million from equity partners, he said.

Reykjavik Geothermal expects to conclude deals with three or four investors this month worth $40 million to $80 million, which will help cover the cost of drilling as many as five wells to produce an initial 20 megawatts of power, Gunnarsson said.

The U.S. government is also supporting the project as part of the six-nation Power Africa initiative, a $7 billion five-year Presidential initiative aimed at increasing access to electricity in the continent.

The Corbetti site has a capacity to generate up to 1,000 megawatts, Gunnarsson said, and there are other potential geothermal locations in the Rift Valley.

Source: Bloomberg