MHI, Hitachi Venture Eyes Africa, Latin America for Geothermal

(Bloomberg) -- Mitsubishi Hitachi Power Systems Ltd., a venture between Mitsubishi Heavy Industries Ltd. and Hitachi Ltd., is eyeing Africa and Latin America to export its geothermal turbines, hoping to supply equipment for projects backed by Japan’s aid agency.

The company, which announced winning an order in October to supply a 55-megawatt turbine for a project in Costa Rica, is looking at countries like Kenya, Ethiopia, Mexico, Nicaragua and Ecuador, Yoshio Minato, geothermal area manager for Yokohama-based MHPS, said in an interview. In Asia, the venture is focusing on the Philippines and Indonesia, according to Minato.

“Drilling and exploration technologies have been improving on accuracy and we expect the number of geothermal surveys will increase as countries explore their best energy mix” after the landmark Paris agreement to tackle climate change, Minato said.

Support from the Japan International Cooperation Agency has been key for geothermal projects abroad, Minato said. The agency has provided low-interest loans for the drilling of geothermal wells and construction.

“Geothermal wells cost a lot and loans and coordination by JICA help us greatly to reduce risks,” Minato said.

Loan Agreement

In March, JICA signed a loan agreement with the Kenyan government to provide as much as 45.69 billion yen ($405 million) to build a 140-megawatt geothermal plant in Nakuru County in central Kenya, according to the JICA website.

MHPS is among companies bidding to supply equipment for the project, according to Minato.

JICA is also planning to be directly in charge of test drilling in countries such as Ecuador and Djibouti rather than funding governments of developing countries for the task.

“Test drilling is a bottleneck and hinders development because no one wants to take high risks,” Katsuya Kuge, senior deputy director of the energy and mining group at JICA, said by phone.

Meanwhile, MHPS is planning to build on its installed capacity of more than 100 units globally for retrofitting key components like turbine blades and rotors at aging geothermal plants, Minato said.

Three Japanese companies make up for about 65 percent of total installed capacity for geothermal turbines worldwide, according to data compiled by Bloomberg New Energy Finance. Toshiba Corp. leads with 3,011 megawatts, followed by Fuji Electric Co.’s 2,722 megawatts and 2,661 megawatts for MHPS.

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net. To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Iain Wilson, Abhay Singh