Geo-Dairy Prefeasibility Study

Geothermal Milk
Processing- Geo-Mega
Dairy (GMD): Dairy Pasteurization/
Processing Pre-feasibility Study

This is the final version of this report. All views expressed in this Report are those of the authors alone and do not necessarily reflect the official views of the United States Agency for International Development.
Prepared for
USAID – Washington and
The Kenya Geothermal
Development Company (GDC)
by
Land O’Lakes International
Development and
Winrock International
through a
VEGA LWA Cooperative Agreement

ii
Geothermal Milk Processing- Geo-Mega Dairy (GMD)
Prefeasibility Study, Kenya • November 2012-June 2013
Contents
Abbreviations vi
Preface viii
1. EXECUTIVE SUMMARY 01
A. Introduction 02
B. Dairy Supply and Demand Assessment 03
C. Geothermal Dairy Scenarios Studied 05
D. Energy-Related Findings (or Energy Issues) 06
E. Financial Analysis 08
F. Demonstration Unit Summary 09
G. Recommendations 10
2. DESCRIPTION OF THE PROJECT 11
A. Overview of the Dairy Sector 12
B. Overview of the Menengai Geo-thermal Energy Prospect 16
C. Selection of Site for Project 16
D. Project Design Concept and Components 16
E. Schedule for Project Implementation 23
3. DAIRY GEOTHERMAL ENERGY CONSIDERATIONS AND POTENTIAL 25
A. Direct use Geothermal Energy for the Kenyan Dairy Industry 26
B. Traditional Energy Sources for Dairy in Kenya Today 27
C. Geothermal Direct Use (DU) Technology for Dairies 30
D. Dairy Processing Energy Requirements 31
E. Geothermal Energy Resource in Kenya 40
F. Opportunities for a Geo-Dairy at Existing Geothermal Sites 43
G. Potential Environmental Impacts of Geothermal Energy and Menengai
Environmental Management Plan (EMP) 44
H. GMD Plant Energy Consumption, Costs and Returns 48
4. MARKETS FOR PROJECT OUTPUTS 59
A. Dairy Market Overview 60
B. Project Outputs 64
C. Conclusion - Prospects for a Milk Processing Venture at Nakuru-Menengai 66
5. RAW MILK SUPPLY 67
A. Introduction 68
B. Milk Production in Kenya 69
C. Production in the RVP – present and projected to 2025 70
D. Production in a 125 kilometer radius of Nakuru/Menengai – present and projected to 2025 72
E. Conclusion with Respect to Milk supply in milkshed at Menengai/Nakuru 5 to 10 years out 75
6. FINANCIAL ANALYSIS 77
A. Introduction and project overview 78
B. Investments and Loans 81
C. Revenues 81
D. Operating Costs 82
E. Estimated Returns 84
F. Risk Analysis 85
G. Conclusions as to financial feasibility 88

The VEGA/Powering African
Agriculture (VEGA/PAA) Project
iii
Annexes 89
Annex A: Scope of Work for Dairy Prefeasibility Assignment and Demonstration Options 90
Annex B: Proposed GDC Direct Use Eco-Dairy Demonstration Facility 96
Annex C: Financial Tables Risk Analysis 110
Annex D: List of Persons Interviewed and Bibliographic References 131
Annex E: Profile of Well MW-01 136
Annex F: Kenyan Energy Sector Overview 142
List of Tables:
Table I-1: Summary of Milk Supply outlook for Nakuru milkshed present to 2025 04
Table I-2: Summary of Market Outlook in Kenya and opportunity for GMD to 2025 05
Table I-3: Summary of Financial Results for ten year analysis: the GMD (500,000 lpd) and the small scale facility (250,000 lpd) 09
Table II-1: Raw milk required and product output for year one through four 17
Table II-2: Guide composition for milk and dairy products &conversion factors used for the study 18
Table II-3: Energy needs for processing milk and dairy products 20
Table II-4: Finished product stocks and storage needs 23
Table II 5: Tentative action plan for proposed GMD project (2013-2016) 24
Table III-1: Diesel Fuel Energy Density, Emissions, and Cost in Kenya 31
Table III-2: Approximate Thermal (steam) Pressure and Temperature Requirements for Dairy Processes 31
Table III-3: Approximate Energy Requirements for Modern Dairy Processing 32
Table III-4: Example Pipe Heat Transfer Rates 38
Table III-5: Estimated Dairy Processing Energy Consumption for up to a 500,000 lpd plant 49
Table III-6: Geothermal Base Case Assumptions for Geo-Mega Dairy Operation (500k lpd plant) 50
Table III-7: Geothermal Assumptions and Energy Cost Summary for GMD 500k lpd, High Rate Case (US$0.06/kWht) 53
Table III-8: Geothermal Assumptions and Energy Cost Summary for GMD 500k lpd, Low Rate Case (US$0.035/kWht) 54
Table III-9: Geothermal Assumptions and Energy Cost Summary for GMD 250k lpd, High Rate Case (US$0.06/kWht) 55
Table III-10: Geothermal Assumptions and Energy Cost Summary for GMD 250k lpd, Low Rate Case (US$0.035/kWht) 56
Table III-11: Geothermal Revenues and Simple Payback for Low and High Thermal Rates 58
Table IV-1: Milk availability – Kenya and selected countries in the region* 60
Table IV-2: Milk demand projections to 2030 62
Table IV-3: Kenya market for proposed GMD product outputs 63
Table IV-4: Nakuru milkshed dairy product share and projected growth 64
Table V-1: Present reported milk production in the former Rift Province Valley and projections to 2025 70
Table V-2: Milk in RVP going to various end uses, 2010 to 2025 71
Table V-3: Daily volumes of milk available to formal market in the RVP, 2015 to 2025 72
Table V-4: Dairy cattle population and milk production in Nakuru milkshed in 2010 73
Table V-5: Present reported milk production in Nakuru milkshed and projections to 2025 74
Table V-6: Milk in Nakuru milkshed available or going to various end uses, 2010 to 2025 75
Table V-7: Daily volumes of milk available to formal market in the RVP, 2015 to 2025 76
Table VI-1: Raw milk required and product output, year 1 through year 4 of GMD project 78
Table VI-2: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Base Case, Nakuru/ Menengai, Kenya 79
Table VI-3: Product prices and revenues for dairy prefeasibility analysis, base case 82
Table VI-4: Operating costs for dairy prefeasibility analysis, base case 82
Table VI-5: Gross Profit start-up year and steady state year, Base Case 84
Table VI-6: Summary of results from risk analysis evaluations on 500 thousand lpd facility, showing impacts on net
profits resulting from alternative sensitivity scenarios considered. 88

iv
Table VI-7: Summary of results from risk analysis evaluations on 250 thousand lpd facility,
showing impacts on net profits resulting from the alternative sensitivity scenarios considered 88
Annex Tables:
Annex B:
Table B-1: SWOT for proposed GDC DDU 99
Table B-2: Approximate net energy needs for proposed Eco-DDU* 103
Table B-3: Guide equipment list, costs and staffing for the proposed Eco-DDU 105
Table B-4: Immediate 2013 action plan for DGD DDU 108
Attachment: B-1: Steritherm Multi-purpose Batch Processing Unit 109
Annex C:
Table C-1: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Base Case, Nakuru/Menengai, Kenya 111
Table C-2: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD), Capacity Utilization Scenario,
Nakuru/Menengai, Kenya 113
Table C-3: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Energy Adjustment Scenario,
Table C-4: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Labor Adjustment Scenario,
Table C-5: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Milk Price Adjustment Scenario,
Table C-6: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Product Price Scenario 1,
Table C-7: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Product Price Scenario 2,
Table C-8: Financial Analysis Cash Flow Geothermal Mega Dairy (GMD) Mix of Impacts Scenario,
Table C-9: Financial Analysis Cash Flow 250 Thousand lpd Dairy Base Case Scenario, Nakuru/Menengai, Kenya 127
Table C-10: Financial Analysis Cash Flow 250 Thousand lpd Dairy Geothermal Energy Scenario,
Annex F:
Table F-1: Kenyan Sector Electrical Generation Capacity 143
List of Figures:
Figure II-1: Kenya Dairy Value Chain Actors 13
Figure II-2. Example schematic showing geo-thermal energy cascading 19
Figure II-3: Schematic of proposed GMD layout (not to scale) 22
Figure III-1: Cascading concept for geothermal energy from a power plant all the way to a fish farm 26
Figure III-2: Brookside Dairy Wellman-Robey Class 1 diesel boiler supplying up to 2,000 lbs of steam 28
Figure III-3: Happy Cow Dairy Kuiper 400 kW diesel powered boiler. (Foster, 2012) 29
Figure III-4: Daima 2.5 MW Multi-Star antiquated wood fired boiler in Nairobi providing 180°C feed water, which
consumes about ½ ton of firewood per day. (Foster, 2012) 30
Figure III-5: Example DU geothermal system setup. (Lund, 2012) 33
Figure III-6: Example flash steam wellhead electricity generator schematic (Lund, 2012) 36
Figure III-7: Example binary (organic Rankine cycle) wellhead electricity generator schematic (Lund, 2012) 37
Figure III-8: Temperature drop in hot water transmission lines. (Ryan, 1981) 39
Figure III-9: Temperature drop in geothermal pipelines. (OIT, 2013) 39
Figure III-10: Main known Kenyan geothermal resource areas in the Great African Rift Valley (GDC, 2012) 41
Figure III-11: The western Menengai Caldera with GDC infrastructure shown and lava flows visible. (Foster, 2013) 42

v
Figure III-12: Menengai caldera and Phase I Geothermal Project locations (Mutia, 2012) 42
Figure III-13: GDC geothermal well drilling in the Menengai Caldera. (Foster, 2012) 43
Figure III-14: Ol-Rongai village view south over the western portion of the Menengai lava flow. Potential site for
direct use applications like a GMD (Foster, 2013) 44
Figure III-15: GDC Kabarak land tract is a potential site for a pilot dairy demonstration plant. (Foster, 2012) 44
Figure III-16: Menengai caldera showing possible pilot dairy sites (Ol-Rongai, Kabarak, and DU greenhouse),
as well as location of wells drilled by GDC or underway as of January, 2013. (Ahenda Bengo, 3013) 45
Figure III-17. Annual GMD Energy Costs for all cases at both high and low thermal tariff rates 52
Figure III-18. Estimated Simple Payback on Geothermal Investment for the Three Cases, economics are best
when waste heat is used. Further cascading to other direct uses will further improve payback 57
Figure IV-1: Milk and dairy product routes to market 61
Figure IV-2: Africa – middle income countries by 2025 62
Figure V-1: County map showing targeted area of the Nakuru/Menengai milkshed 68
Figure V-2: Small-scale dairy farmers, RVP 69
Annex Figures:
Annex B
Figure B-1: GDC Menengai Crater Geothermal Prospect 98
Figure B-2: Nature’s most complete food! Kenyan school children enjoying processed milk 102
Figure B-3 Example: Eco-Dairy Demo Unit layout (from Eritrea) 102
Figure B-4 Geo-Thermal energy cascading and heat recovery at the proposed Eco-DDU 103
Figure B-5 Guide Milk Flow Diagram for the proposed Eco-DDU 104
Figure B-6 Naivasha Dairy Training Institute(Kenya) 106
Figure B-7 Taejam Dairy Training Centre with fish pond using treated waste dairy water (North Korea) 107
Figure B-8 Energy and nutrient recycling example (Eritrea) 107
Annex E:
Figure E-1: Resistivity cross-section of Menengai well MW-01 137
Figure E-2: Temperature Profile for GDC Well#1 in the Menengai Caldera. Note that well temperatures
exceed 300°C after 1800 m in depth 138
Figure E-3: MW-01 profile of resistivity correlation with estimated formation temperature and alteration minerals 140
Figure E-4: MW-01 pressure profile 141

vi
Abbreviations
AMF Anhydrous Milk Fat
AfDB African Development Bank
CCs Carbon Credits
CDM Clean Development Mechanism
CIP Cleaning in Place
COMESA Common Market for Eastern & Southern Africa
DMP National Dairy Master Plan
DDU Dairy Demonstration Unit
DU Direct Use
Eco-DDU Eco-Dairy Demonstration Unit
EADD East Africa Dairy Development
EMP Environmental Management Plan
ERC Energy Regulatory Commission
FAO Food & Agricultural Organization
FRP Fiberglass Reinforced Plastic
FTF Feed the Future
GDC Geothermal Development Company
GDP Gross Domestic Product
GEDEC Geothermal Energy Development & Eco-Center
GMD Geo-Mega Dairy
GOK Government of Kenya
HACCP Hazard Analysis and Critical Control Point
HW Hot Water
IFAD International Fund for Agricultural Development
ILRI International Livestock Research Institute
IPP Independent Power Producers
ISO International Organization for Standards
KDB Kenya Dairy Board
KDPA Kenya Dairy Processors Association
KDSCP Kenya Dairy Sector Competitiveness Program
KEBS Kenya Bureau of Standards
KENGEN Kenya Electricity Generating Company
KES Kenya Shilling
KETRACO Kenya Transmission Company
KPLC Kenya Power & Light Company
kWh Kilowatt hour
lpd liters per day
LWA Leader with Associate
Mbsl Meters below sea level
MCCs Milk Collection Centers
MDG Millennium Development Goal
MOE Ministry of Energy

vii
MOLD Ministry of Livestock Development
MT Metric Ton
MWe Mega Watt electricity
NEMA National Environmental Management Agency
NKCC New Kenya Cooperative Creameries, Ltd
PAA Powering African Agriculture
PPA Power Purchase Agreements
QC Quality Control
REA Rural Electrification Authority
RTD Ready to Drink
RTRP Reinforced Thermosetting Resin Pipe
RVP Former Rift Valley Province
RVPMOLD Former Rift Valley Province Ministry of Livestock Development
SMP Skim Milk Powder
SOW Scope of Work
TBD To be determined
UHT Ultra-high-temperature
UNFCC United Nations Framework Convention on Climate Control
USAID United States Agency for International Development
USAID-W United States Agency for International Development - Washington
VEGA Volunteers for Economic Growth Alliance

viii
Preface
The study team carried out this prefeasibility review of a dairy processing facility as part
of the Powering African Agriculture (PAA) project funded by United States Agency for
International Development-Washington (USAID-W) through a VEGA LWA Cooperative
Agreement, which is being implemented by Land O’Lakes, Inc., as the lead organization
and Winrock International as the associate organization. The PAA project will contribute
to USAID Feed the Future (FTF) and Global Climate Change objectives by helping to
identify, commercialize and bring to scale innovative geothermal energy solutions for
cutting-edge agricultural applications in Sub-Saharan Africa. This project was identified
by GDC and discussed with USAID-W in a meeting held at GDC’s offices-Nairobi on
31st August 2012. The PAA project started initially with this pre-feasibility study on
the potential for utilizing geothermal energy to power the pasteurization, drying and
further processing of raw milk in the dairy shed regions of Kenya’s Rift Valley. Land
O’Lakes, Inc. has led the project implementation and contributed the agricultural
expertise to the project while Winrock International contributed the geothermal
engineering expertise to the project. This work started in November of 2012 and
was completed in February of 2013. The usual disclaimers apply. The study team is
responsible for any errors of fact or interpretation. The authors (listed below) welcome
feedback from readers.
Robert E. Lee, PhD, Agribusiness/Dairy Advisor /Project Coordinator & Land O’Lakes, Inc.
Consultant, leeagcon1@verizon.net
Mr Brian Dugdill, International Dairy Development Specialist / Land O’Lakes, Inc.
Consultant, dairyconsult@btinternet.com
Robert Foster, PhD, Senior Renewable Energy Engineer / Winrock Associate, RFoster@
winrock.org
John W. Lund, PhD, Senior Geothermal Energy Engineer / Winrock Consultant, John.
Lund@oit.edu
Currency Equivalents
Rate Used: 01 December 2012)
US$ 1.0 = KES 82

02
A. Introduction
This report presents the results of the pre-
feasibility assessment of the technical, financial,
and logistical viability of a geothermal-powered
dairy processing plant in Kenya, where
geothermal heat could be used for a range of
process heat and cooling needs common to
dairies, with the possible option of geothermal
power generation to meet the electric power
needs of a dairy.
The dairy pre-feasibility study team researched
and considered key factors including:
• Co-location or proximity of developed or
known geothermal resources to areas with
significant milk production;
• Technical availability and the expected cost
of geothermal energy delivered to one or
more dairy (or dairy processing) plant sites
compared to the cost of energy at existing
dairies in Kenya;
• Availability and expected cost of locally-
produced raw milk sold to the dairy
processing plant;
• Market outlook for the range of processed
dairy products which could be produced
at the plant, including domestic and export
markets;
• Technical feasibility of the use of geothermal
heat, and possibly geothermal electric power,
in the proposed dairy processing plant; and
• Financial and Economic viability of a
geothermal powered dairy in Kenya.
The motivations for this dairy prefeasibility study
and for the direct use of geothermal energy,
in general, involve a mix or blend of different
actors, perspectives, and goals, including: a)
dairy companies which want to increase their
output and market share, reduce energy costs
and improve energy reliability, increase efficiency,
and increase profits; b) the Kenya geothermal
Development Company (GDC) which wants
to ensure that geothermal energy contributes
significantly to Kenya’s economic development,
ensure that there are significant local, especially
rural community development benefits from
geothermal energy development. For example,
the GDC would like to ensure that local
communities realize more employment and job
opportunities and that the benefits of developing
direct use of geothermal resources has a positive
impact in rural communities. The GDC also may
be considering development of a new line of
business, that is for the GDC to be an enterprise
providing geothermal energy and power for
industrial parks adjacent to or near its geothermal
fields; and c) local agricultural and economic
development interests, including but not
limited to the new Governors and administrative
authorities responsible for development in the
Great Rift Valley and surrounding areas. Players
with this last perspective or focus include local
milk producers, potential employees of a dairy
and the local supply chain delivering raw milk
to the dairy, Kenyan Government agencies, and
other donors, bilateral, multilateral, and private,
who may see the benefit of supporting increased
milk production and/or dairy sector productivity
in order to take advantage of the geothermal
resources and to use them to drive dairy sector
development so that it becomes the engine of
local socio-economic development.
The dairy pre-feasibility study team that produced
this report conducted site visits of numerous
dairies and geothermal sites, conducted
interviews with a wide range of stakeholders,
and consulted many dairy industry reports and
resources. The interview sessions with dairy
industry players included farmers, milk collection
center managers, dairy processing companies’
senior managers, dairy technical plant managers,
retailers of dairy products, the Kenya association
for dairy processors, the national dairy board, and,
officials from relevant government agencies such
as the Ministry of Agriculture and Livestock. Pre-

03
feasibility study team members also visited several
existing dairies in the region in order to gain a
better understanding of their condition, current
energy sources, apparent efficiency, and prospects
for expansion.
The geothermal energy experts on the on the
pre-feasibility team visited proposed geothermal
sites, and engaged in discussions with the Kenya
GDC technical experts in order to gain a clear
understanding of the available geothermal
resources, including the availability and timelines
for delivering thermal energy to different potential
dairy sites. The facts learned from these primary
direct interview discussions were combined
with facts obtained through desk research of
secondary reports. In addition the team met with
dairy industry suppliers of equipment and talked
with groups that provide services and supplies to
the industry in an effort to understand the costs of
various items that would be utilized by the dairy
processors.
Finally, the investigative team met with a number
of donors and donor-funded project teams
supporting dairy sector development in Kenya
in the Rift Valley region including: (i) USAID-
funded Land O’Lakes, Inc. Kenya Dairy Sector
Competitiveness Program (KDSCP); (ii) IFAD dairy
project; and, (iii) Bill & Melinda Gates Foundation–
funded East Africa Dairy Development (EADD)
Project. Meetings with these dairy sector
players and donors were particularly useful in
understanding the prospects for and the efforts
underway to assist dairy farmers to increase milk
production. As a result of these discussions and
site visits, the pre-feasibility team was able to gain
a solid understanding of the dairy industry in this
region and an appreciation for the contribution
to dairy processing that geothermal heat (and
power) could make.
A detailed analysis was undertaken comparing
several possible dairy plants, using two processing
capacity levels: one of 500,000 liters of milk per
day (lpd) (assuming one 8 hour shift per day)
and a second of 250,000 liters of milk per day
(lpd) (also assuming one 8 hour shift per day),
estimating investment costs and operating costs,
including the cost of energy required for raw
milk pasteurization, ultra-high temperature (UHT)
pasteurization, dehydration of milk to produce
skim milk powder (SMP), butter, ghee, and other
dairy processes and operations. These size facilities
were selected for analysis because in the larger
case it is: a) a match to present competition
(largest operation in Kenya is presently 600,000
lpd); b) the greater positive local economic impact
which a large capacity dairy would have, due to
the growing demand in Kenya for high quality
milk; c) takes full advantage of the geothermal
power resource available; d) milk product markets
available; e) allows for significant expansion as
more days per week; and, more shifts per day,
can be easily accommodated as milk supplies
increase; and, f) it offers the potential for
cascading the use of geothermal energy to other
ag/non ag businesses. The study evaluated three
basic scenarios for dairy location and types of
geothermal energy utilized, as described further
below.
B. Dairy Supply and
Demand Assessment
A key component of the pre-feasibility study was
an assessment of dairy market fundamentals,
including available milk supply and anticipated
growth in milk supply, and demand for processed
dairy products at the national level and, in the
case of easily traded products such as Skim Milk
Powder (SMP), the international level.
1. Milk Supply:
Based on current production and significant
increases in production that have been achieved

04
Year
2010
2015
2020
2025
Milk Production
Liters/day (000)
1,905
3,067
4,589
5,595
Milk Going to
Processors
Liters/day (000)
457
869
1,514
2,123
Incremental (over base
period) milk available to
Processors
Liters/day (000)
000
412
1,056
1,665
Milk required by
500,000 lpd plant
(‘GMD’)
Liters/day (000)
000
250
500
500
Milk required by
250,000 lpd plant
Liters/day (000)
125
250
250
Table I-1: Summary of Milk Supply outlook for Nakuru milkshed present to 2025
and are expected to continue to be achieved, it
appears that there will be sufficient additional
milk to supply a geothermal powered dairy. The
PAA team analysis of the existing and potential
available milk supply shows that by late 2015 or
early 2016, milk supply would reach 1.48 million
liters per day in the former Rift Valley Province
(RVP). This is well over the .778 million liters per
day used by the formal processing sector from the
RVP, providing enough milk to meet the needs
of existing processors as well as the proposed
new geothermal powered dairy (GD). Also, it is
important to understand that one or more of the
older existing and inefficient dairy processing
plants might shut down, freeing up more milk.
In the selected radius (125 kilometers) around
Nakuru and/or Menengai, the 500,000 lpd dairy
(based on one 8 hour shift) should be able to
obtain the raw milk it requires to operate a full
single shift successfully. It is estimated that the
milk supply available to the formal sector in 2015
will be 869 thousand liters per day and of this, the
incremental production over the 2010 levels, is
estimated at 412 thousand liters per day which is
sufficient to supply the 250 thousand liters of milk
per day required at plant start-up, still allowing
162 thousand liters per day for existing processors
growth. In order to further mitigate against milk
availability risks, and to include an option with
lower capital costs, the study has also analyzed
a smaller dairy processing plant operation at
250,000 lpd over its ten year life. Shortly beyond
2015 milk supply will increase to easily meet the
requirements of the existing processors buying
milk in the region and the needs of the proposed
geothermal dairy, either the smaller 250,000 lpd
facility or the larger 500,000 lpd facility (see Table
I-1).
It appears that with focused dairy sector support,
specifically technical assistance to small milk
producers that raw milk production could
increase sufficiently by 2015-2016 to fully supply
the 500,000 lpd dairy. This is based purely on
current know-how and dairy sector development
experience in other regions of Kenya. The
socio-economic impact of establishing a raw
milk pasteurization/processing facility, driven by
geothermal energy, will be substantial. First, the
pasteurization/processing facility will support
many jobs within the plant, at milk collection
centers, and the livelihoods for many small and
medium sized farmers and their families supplying
milk to the facility. Second, there will be a ripple
effect in the complementary service industries
that will be supporting this increase in raw
milk production, from feed suppliers to animal
veterinary service providers, breeders and the
providers of artificial insemination services, milk

05
Year
2010
2015
2020
2025
2010 Population
and Estimates to
2025 (000)
40,500
45,500
49,700
53,900
2010 Per Capita Milk
Consumed with estimates
to 2025 (liters)
111.0
141.0
170.0
196.0
Average Daily National
Milk Consumption
(liters)
12,316,438
17,576,712
23,147,945
28,943,561
GMD Output as
Share of National
Consumption
4.1%
2.84%
2.16%
1.73%
Table I-2: Summary of Market Outlook in Kenya and opportunity for GMD to 2025
transport companies, manufacturers of milk cans
and milk cooling centers and so forth.
2. The Market Outlook for Dairy
Products:
Consumption of dairy products has been
increasing rapidly in Kenya, and continued major
increases in dairy consumption, especially among
the rising urban-based middle class, are expected,
reaching more than 17 million liters/day in 2015
and 23 million lpd in 2020. It is expected that
a 500,000 lpd dairy operator would be able to
market the entire volume of dairy products (SMP,
butter, ghee, UHT whole milk, and Yogurt) that
it can produce on a single shift solely by selling
into the national market. (see Table I-2). The table
shows that the milk products produced by the
GMD (i.e. the 500,000 lpd dairy plant) will be
less than 3% of the government projected milk
consumption by Kenyans in the next 12 years.
In addition, a significant portion of the 500,000
lpd dairy’s production would be of exportable
products such as SMP, further increasing the dairy
firm’s confidence in its ability to sell the plant’s
production. The five GMD products account for
almost 60 percent of the trade in processed milk
and dairy products, with the demand for these
products forecast to grow at an annualized rate
of 7.2 percent over the period 2015-2024, more
than the 3.5 percent average annual growth
anticipated for the sector as a whole, as cited
in the Ministry of Agriculture & Livestock dairy
master plan. Thus, marketing the GMD products
would not appear to be too challenging given
that if necessary, half of SMP output could be
exported or sold into the planned Kenya national
strategic reserves.
If the projected market is large enough to
absorb the output of the 500,000 lpd GMD, the
market should certainly absorb the production
of any smaller-scale plant, say the 250,000
lpd facility. When coupled to the appreciably
lower processing costs that geothermal
energy would bring, we can conclude that the
business proposition for the proposed GMD
would be further enhanced, thereby providing
the opportunity for very competitive product
pricing, giving the GMD project a good basis for
competing against the already established dairy
companies.
C. Geothermal Dairy
Scenarios Studied
For the purpose of this pre-feasibility study, three
scenarios and locations were considered:

06
Case #1:‘An Industrial Park near the Menengai
field: Site the dairy within the Menengai
geothermal field on land controlled by GDC, either
as a stand-alone operation or as part of a larger
multi-occupant industrial park. In addition to
selling processed heat to enterprises at this site,
the GDC could also sell geothermal electric power
to these enterprises. For this prefeasibility study,
we assumed that the GDC would be responsible
for delivering thermal energy (steam or brine), and
owning and operating the wellhead generator, if
one is installed.
Case # 2: Nakuru Geo-Industrial Park: A second
option is to deliver geothermal energy to an
existing geothermal industrial park in Nakuru city,
where the dairy would be located. This would
require piping geothermal energy to the existing
industrial park in Nakuru over a distance of about
10 km, depending on routing, which might be
difficult to arrange. This would likely attract the
most users and has the potential to eventually
provide steam throughout downtown Nakuru.
Electric power would have to be purchased from
the Kenya Power & Light Company (KPLC) with
no guarantee of reliability but, because KPLC will
be getting reliable supplies of electricity from
the new geothermal generating facilities, these
electric supplies could be more stable than the
ones being delivered at this time.
Case #3: Wellhead Electricity Generator Geo-
Industrial Park: This final case is involves an
onsite dairy, either a stand-alone or as a part
of an industrial park. The dairy would be at the
Menengai geothermal field or another location,
using a wellhead generator to provide electricity
for the industrial park and, in turn, cascade the
hot water for dairy industry direct-uses such
as pasteurization, milk powder, and UHT. The
commercial site would have a wellhead generator
to provide electricity for the site and in turn
cascade the water for other direct uses, such as
a potential complementary feed mill or fish farm
(aquaculture).
D. Energy-Related Findings
(or Energy Issues)
The review of geothermal sites under
development by the Kenya GDC to date indicates
that the first location to be considered for major
development of DU applications should be the
Menengai geothermal field site near Nakuru,
because other sites are not yet very far along
with respect to development. This geothermal
field is located within a significant milkshed
region, making it a logical location for an initial
geothermal dairy. While, in theory, geothermal
energy could be obtained either by off-taking
steam or brine from the 400MW Menengai I
geothermal power plant or from a dedicated
well, this study assumes use of a dedicated well,
that is Well MW-01, which has a resource of
approximately 10 MW.
This study has assumed that the capital
investment required to deliver geothermal energy
to the dairy would be borne by GDC, which would
recover its investment through energy charges
for heat and, in some cases, the electric power.
The three different dairy locations and scenarios
described above involve a wide range of capital
costs (i.e. investment needed to be able to deliver
energy), from $1.2 million to $14 million. These
are as follows: US$ 1.2 million to deliver thermal
energy for a dairy located in the Menengai
geothermal field at a proposed industrial park
location; US$ 7 million to transport thermal energy
10 kilometers, via a steam pipeline, to a dairy at
the existing Nakuru industrial park location; and
US$ 14 million for the first option (Menengai
location) with the installation of a ~5MW wellhead
electricity generator at a well drilled for the
express purpose of Direct Use.
Dairy processing is an ideal direct-use application
of geothermal heat for many reasons. The
economics of geothermal direct use are always

07
enhanced if there are multiple or numerous
applications of geothermal heat, including
applications with different (i.e. higher or lower)
temperature requirements. In such a case, the
geothermal heat can be‘cascaded’, first serving
the highest-temperature needs, then the 2nd
highest temperature needs, and so on. In the case
of dairies, there are numerous processes requiring
heat and a wide range of temperature are also
needed. For example, the production of skim
powdered milk requires temperatures between
185C to 225C, while UHT pasteurized milk requires
temperatures of between 160C to 180C, and Ghee
production requires temperatures of between
120C -125C, while butter and Yogurt production
requires temperatures of 80C to 90C and, finally,
conventional milk pasteurization requires
temperatures of 72C to 75C.
For the purpose of this study, two prices were
assumed for thermal energy from GDC, $.06 and
$.035 kWht, and the cost of electricity obtained
onsite (i.e. at the geothermal facilities) from
GDC is assumed to be $.08/kWhe. These prices
would enable the GDC to more than cover
its incremental cost of supplying energy, and
significantly reduce dairy operating costs due to
significantly lower energy costs. At these prices
the geothermal power is extremely competitive
with traditional energy sources. In order to
produce a bankable full feasibility study, it will
be necessary for GDC to determine the prices at
which it will be willing to sell thermal energy and
on-site electrical energy, either specifically for
the dairy project or in general, and/or set forth
the cost principles to be used in determining
the prices to be charged, if this will be done on a
case by case basis. The PAA project team will be
working with GDC over the next several months
as it determines the appropriate prices or costing
principles.
Energy Costs and Savings: Under the base case
scenario it has been assumed that the facility
will use electricity at the KPLC rates and factory
fuel oil at the going Kenyan rates of US$ 1.22/
liter. It has also been assumed that the energy
efficiency of the equipment in the facility
constructed will be the latest and nearly twice
as efficient as the old facilities used by National
Kenya Cooperative Creameries (NKCC). On this
basis, it is possible to compare the impact of using
geothermal energy for electricity and thermal
power against the latest state of the art traditional
energy technologies. When using traditional
energy sources, such as KPLC for electricity and
fuel oil for processing heat, the energy cost per
year at single shift full production (500,000 lpd)
would be US$ 6.03 million per year, while using
geothermal energy at the Menengai geothermal
field site (i.e. at electricity rates of US$ 08/kwhe
and thermal energy rates of US$ 035/kwht), the
cost would US$ 2.32 million per year, a saving of
US$ 3.71 million per year. These energy savings,
plus modest revenues from sale of carbon credits,
would increase the accumulated net profits from
US$ 141.7 million to US$ 167.1 million for a US$
25.4 million gain (see Table VI-6 and Annex C, Table
C-3 for the full spread sheet analysis).
The impact of the geothermal energy usage
and the carbon credit gains on the profitability
outcome for the 500 thousand lpd facility as well
as for the 250 thousand lpd plant were reviewed.
When traditional energy sources are used, the
smaller facility uses energy on a single shift full
production basis at a cost per year of US$ 3
million. When using geothermal energy as the
source of energy, the cost of energy drops to US$
.96 million per year or US$ 2.14 million per year
less than when the facility is based on the use
of traditional energy. The facility will generate
accumulated net profits over ten years of US$ 81.1
million or US$ 13.1 million more than the existing
base case for the 250 thousand lpd facility. Thus,
the use of geothermal energy can provide a
significant competitive advantage to processors
using geothermal energy, whether in a 250,000

08
or 500,000 lpd facility (see Table VI-7 and Annex C,
Table C-10). Finally, it should be noted that these
cost advantages occur when the‘conventional’
option is a modern highly energy efficient dairy;
the energy cost advantages of a new geothermal
dairy over the existing old dairy processing plants
in Kenya would be much greater.
E. Financial Analysis
Based on the financial analysis done for this pre-
feasibility evaluation, we believe that with sound
plant financial and technical management and
the proper development of the energy resource
as well as the raw milk supply or delivery system,
this GMD project has great potential and is
financially feasible (see Table I-3). As the data in
the table indicates, after paying off (within ten
years) the initial investments made in the facility,
the GMD (500,000 lpd) will generate an annual net
profit of US$ 17.8 million when using traditional
energy sources. And, if geothermal energy is
used to power the facility, the annual net profit
would increase to US$ 20.65 million. Further,
the accumulated net profits, over ten years, for
the venture would be US$ 141.7 million using
traditional energy sources and, this would rise to
US$ 167.1 million when using the geothermal
power.
In the case of the smaller (250 thousand lpd) scale
facility the pre-feasibility evaluation confirms that
with sound financial and technical management,
proper development of the energy resource and
strengthening the raw milk supply network, the
project will be financially very feasible (see Table
ES-3). As the data in the table indicates the project
will, after paying off in ten years the investments
made in the facility, generate an annual net profit
of US$ 9.5 million using traditional energy sources.
And, if the geothermal energy is used to power
the facility the annual net profit would increase to
US$ 10.95 million. Further, the accumulated net
profits, over ten years, for the venture would be
US$ 67.9 million using traditional energy sources
and, this would rise to US$ 81.1 million when
using geothermal energy.
While we believe that raw milk supplies will
continue to grow and be available to support the
development of the larger GMD (500 thousand
lpd) facility, the analysis of the smaller (250
thousand lpd) facility has been considered in
the event that some potential investors would
feel safer to start with a smaller-scale facility, in
order to be more confident about an assured milk
supply. The analysis of the lower capacity dairy
is also relevant for dairy firms that would opt for
the lower capital investment in the smaller plant.
That smaller plant could also move more rapidly
to operating a second shift, as milk supplies
increased. And, in either case the returns to the
investment seem sufficiently attractive to justify
undertaking the more detailed full feasibility
evaluation of the venture.
The financial sensitivity analysis set out in the
Pre-feasibility Report (Chapter VI) shows that the
greatest risks to the dairy processing project’s
success are: (1) rises in raw milk prices at the
farm-gate; (2) declines in end product (retail or
consumer) prices; and (3) being able to obtain
the quantity of raw milk required for processing.
While energy is an important factor in the cost of
production it is not a major factor determining
viability of the project if milk is available, if milk
prices are reasonable, and end product (retail
or consumer) prices hold reasonably strong, as
they have been for the past several years. Of
course, the energy cost from geothermal sources
seems to offer a substantial saving over the cost
of traditional energy and this certainly helps to
make such a facility much more competitive than
facilities dependent on traditional energy sources.
The stability of the energy supply expected from
the geothermal source and the carbon credits
gained by using geothermal energy will also add
to the competitiveness of the facility.

09
Table I-3: Summary of Financial Results for ten year analysis: the GMD (500,000 lpd) and the small scale facility (250,000 lpd)
Dairy Processing Facility (size)
500 thousand lpd Facility
Estimated Investment
Accumulated Revenues
Accumulated Expenses
Accumulated Gross Profits
Annual Net Profits (year 10 of evaluation)
Accumulated Net Profits (over 10 year evaluation)
250 thousand lpd Facility
Estimated Investment
Accumulated Revenues
Accumulated Expenses
Accumulated Gross Profits
Annual Net Profits (year 10 of evaluation)
Accumulated Net Profits (over 10 year evaluation)
Base Case Analysis (Fuel Oil for process
heat; electricity from Kenya Power)
US$ (000,000)
41.3
1,042.4
839.9
202.5
17.8
141.7
28.0
521.1
423.9
97.2
9.5
67.9
Geothermal Power Case
(Geothermal for both process
heat and electricity) US$ (000,000
41.3
1,043.5
804.9
238.6
20.65
167.1
28.0
522.3
406.4
115.9
10.95
81.1
F. Demonstration Unit
Summary
The Kenya GDC also requested that the team
examine and analyze the costs and benefits of
establishing a demonstration unit as a proto-
type or incubator, to demonstrate to potential
investors, on a very small scale, what might be
done by applying geothermal energy directly to
dairy processing.
• Supported by GDC engineers, the PAA team
conducted a SWOT analysis for setting up a
GDC Eco-Dairy Demonstration Unit (DDU).
The outcome of the SWOT and preliminary
feedback from GDC suggests that it seems
viable to move the concept forward.
• The design concept envisages the
establishment of a state-of-the-art,
environmentally-friendly DDU – an Eco-DDU -
with a capacity to process up to 1,000 liters of
raw milk daily (or milk recombined from milk
powder and AMF into extended life, ready-to-
drink (RTD) fresh and cultured milk products.
• Given the economic, social and environmental
importance of the dairy industry to Kenya
(especially in former Rift Valley Province and
the Nakuru milkshed), and the East African
region in general, the proposed GDC Eco-
DDU would, for a relatively small investment,
demonstrate and advocate for the use of low-
cost geothermal energy for milk processing
and potentially for other related applications
to Kenya at large.
• The investment in the Eco-DDU is estimated
to be on the order of US$ 1 million and this

10
investment will help GDC put in place an
operation that will provide a window for
the general public to get a view of how DU
geothermal power can function in a business
environment.
G. Recommendations
• The pre-feasibility work related to energy
resource availability and use; and, dairy
processing, has determined the GMD project
should move to full feasibility analysis.
• The Eco-DDU analysis set out in Annex B
should be fully reviewed and the best strategy
determined for the successful implementation
of the activity at a site near Menengai.
• Full feasibility should include detailed
engineering for the geothermal resource
connections and the dairy processing plant.
• Full feasibility should confirm a strategy, and
its implementation, that will ensure the raw
milk supply for the GMD.
• Full feasibility should provide for development
of a detailed market information and
marketing strategy that will ensure the sale of
end products produced and help inform the
final scale of the GMD design.
• Full feasibility should involve carrying out a
detailed IEE evaluation and, prepare a“concept
note”for submittal to NEMA in obtaining an
estimate of the carbon credits that could
come to the venture.
• It is recommended that the immediate action
plan set out in Table Annex B-4, for the Eco-
DDU be fast tracked in 2013.
• Finally, the full feasibility financial analysis with
IRR’s will need to be completed to ensure that
the venture will payout as planned for the
potential owners and for the country
• From the work set forth in this document a
promotion brief should be prepared that will
help the GDC take the message to potential
investors in a dairy facility that would be based
on the use of GDC’s geothermal power.

This chapter sets the scene for a proposed energy-saving investment in the dairy sector.
It provides a brief overview of the sector, considers energy and site selection options,
outlines the project design concept and components; and ends with a tentative schedule
for project implementation.
Description
of the Project
2Chapter

12
A. Overview of the
Dairy Sector
1. Country context
Kenya is a low-income economy. It is estimated
that 46 percent of the population of 39 million are
living below the poverty line. Of these, 70 percent
live in rural areas where families are engaged in
subsistence farming. Fifty one (51) percent of the
population does not have access to a sustainable
food supply, and the foods available are often of
low nutritional quality (Rural Poverty Report (IFAD,
2011). There is 40 percent unemployment and 60
percent of the population is below 25 years of age.
Annual GDP is estimated at US$ 41 billion (2012).
Agriculture is the backbone of the economy and
drives growth in other sectors. It contributes 24
percent of GDP directly and another 27 percent
indirectly through linkages to the processing
industry. Livestock contributes about 30 percent of
agricultural GDP. Dairying, excluding live animals,
contributes 30 percent of livestock GDP and
about 25 percent of marketed livestock products.
Approximately 45 percent of the total land area is
agriculturally productive. Rainfall of late has been
erratic in most parts of the country, with frequent
prolonged dry periods and occasional heavy rain
and flooding, including in the Rift Valley.
In 2007 Kenya published its Vision 2030
development blueprint, the over-arching goal of
which is for Kenya to be a globally competitive
and prosperous country, i.e. to reach Middle
Income Country Status by 2030. The generation
and distribution of 15,000 to 19,000 MWe of
energy by 2030 (up from 1,300 MW in 2010) is
crucial to attaining this goal. Vision 2030 is aligned
to: (i) the Compact for Comprehensive Africa
Agricultural Development Program, the goal
of which is a sustained agricultural growth rate
of six percent and increased public investment
in agriculture to at least ten percent of the
national budget; (ii) the Kenya Agricultural Sector
Development Strategy, designed to enhance the
contribution of agriculture to support the ten
percent annual economic growth rate envisioned
in Vision 2030; and (iii) the framework for attaining
Millennium Development Goal (MDG) One of
halving the proportion of people living in hunger
and poverty by 2015 and MDG Six of attaining
environmental sustainability.
2. Dairy sub-sector context
Agriculture, and especially livestock keeping,
is dominated by small producers. Livestock
keeping is an integral part of the rural economy
contributing to food security and livelihoods,
especially for poorer and female-headed
households, providing sustainable nutrition and
regular cash income as well as savings. Livestock
are essential for the two major agricultural
systems: (i) extensive pastoralism – practiced in
arid and semi-arid areas and (ii) intensive farming
– practiced in higher rainfall highland areas, e.g.
the Nakuru milkshed (Kenya Dairy Master Plan
-Republic of Kenya, 2010).
The latest census indicates Kenya has 17.6 million
cattle, 17.1 million sheep, 27.4 million goats and
3.0 million camels (Kenya Bureau of Statistics,
2009). With its vast areas of pastureland and
huge cattle wealth, the country has an important
regional and international comparative agro-
ecological advantage for producing milk and
meat. The country has about 3.4 million dairy
cattle – cows, heifers, bulls; and, calves. While
goats and camels are also milked at certain times
of the year, cows produce about 80% of the
country’s annual 2.7 billion liters of milk (2010
stats). Nearly 40% of this milk is used by the
producing household and calves. Of the 60% sold
off the farm about 60 percent is sold unprocessed,
half in the neighborhood and half through local
intermediaries and traders (collectively known as
the informal market). The remaining 40 percent is

13
mainly sold through a rapidly growing network of
milk bulking centers to dairy processors (known
as the formal market). Figure II-1 indicates the
complex linkages between the many dairy value
chain actors in Kenya. In many areas there is
increasing competition between livestock keeping
and crop farming. This has led the Government
to focus on policies that cluster integrated
farming and food value chains in those parts of
the country with a competitive natural resource
advantage.
Upstream milk production in Kenya plays a major
Farmer
Individual
buyer/
neighbour
Traders:
Small/large
(mobile etc.)
Co-ops/
Groups
Shops/
kiosks
Consumer
Public and
private
sector goods
and service
providers
and
regulatory –
extension/
training,
vet and AI,
production
and
processing
inputs,
consultants,
etc.
Processors Wholesaler/
Retailer
Figure II-1. Kenya Dairy Value Chain Actors
Source: Food and Agricultural Organization
(FAO) Dairy Development Report, 2011
role in the livelihoods of approximately one
million smallholder farming families, close to six
million people, or almost one sixth of the entire
population. These families produce about 85
percent of the country’s milk, with approximately
45 percent living below the extreme poverty
line of less than US$1.25/person/ day. According
to the National Dairy Master Plan (DMP) in 2010
dairying was the single largest component within
the agricultural sector, which in 2007 was larger in
value (US$ 1.33 billion) than horticulture (US$ 0.87
billion) or tea (US$ 0.62 billion).
The downstream milk collection, processing and
distribution links in the dairy value chain provides
four jobs for every 100 liters of milk marketed
(FAO/ILRI Study, 2004). Thus, the sector produces
substantial employment and broad support for
the low income population of the country.

14
3. Policy and enabling environment
The Ministry of Livestock Development (MOLD)
is responsible for livestock policy and legal
matters. Under MOLD the Kenya Dairy Board
(KDB) is responsible for regulating and developing
the dairy industry. Under the new constitution
(2010) the country has further decentralized
its seven provinces into 47 counties with
devolved responsibility for agricultural and rural
development. These boundary changes make
the interpretation of local time-series data on, for
example milk supply and demand, challenging.
In 2009 the National Economic and Social Council,
managed by the President’s Office, adopted
a cluster development strategy to fast track
economic growth and enhance regional and
national competitiveness to support delivery of
Vision 2030. The 12 priority sector clusters are: (i):
transport and logistics at the Port of Mombasa;
(ii) horticulture; (iii) sugar; (iv) tea; (v) tourism;
(vi) marine and inland fisheries; (vii) livestock;
(viii) dairying; (ix) energy; (x) ICT; (xi) maize; and
(xii) cotton. The strategic cluster for dairying is
scheduled to be established in RVP, which includes
the Nakuru/Menengai milkshed.
The government thus attaches high importance
to the energy sector and the dairy sub-sector.
In 2010 the DMP was adopted and aligned to
Vision 2030. The vision of the DMP is: to transform
milk production and trade into an innovative,
commercially oriented and globally competitive
dairy value chain by 2030. Supporting policy
objectives include:
• improving the productivity and
competitiveness of Kenya’s milk and dairy
products;
• positively contributing to the livelihoods of milk
producing households;
• increasing domestic consumption of milk and
milk products;
• contributing to national food and nutrition
security
• transforming the dairy industry into a net
exporter of dairy animals and their products;
• maximizing dairy exports in the regional and
global markets
• re-orienting milk processing toward long life
dairy products.
• decentralizing dairy services to be closer to
the clients.
The overarching aim of the DMP is to double
milk consumption to 220 kg/capita/annum.
While enabling legislation is largely in place,
food, and especially milk, marketing systems are
characterized by low compliance with safety
and quality standards; diffuse market structure
with many small-scale market agents, low
value products limited in diversity and weak
participation of farmers in other parts of the value
chain. Sub-division of land holdings, the result
of traditional inheritance practices, is a major
challenge to smallholder food production systems.
A fundamental shift away from subsistence milk
production to more productive and commercially
oriented small-scale dairy farming is needed to
boost smallholder involvement to fuel growing
demand for milk and dairy products; and the
rapidly growing milk processing industry.
4. Socio-Economic Considerations
The socio-economic impact of establishing a raw
milk pasteurization/ processing facility driven by a
geothermal well resource will be substantial. First,
the pasteurization/ processing facility will support
many jobs within the plant, at milk collection
centers, at transport and distribution facilities,
at facilities that handle discard cattle as well
as the livelihoods for many small and medium
sized farmers and their families. Approximately,
according to FAO, (FAO/ILRI, 2004) one full-
time job for each 100 liters of milk collected,
processed, and marketed will be supported. In
fact, a processing plant processing 500,000 liters
of milk per day will require milk from a minimum

15
of 20,000 to 30,000 farmers assuming present cow
numbers of 2.5 to 3.5 cows/farmer and production
levels of 6.5 lpd /cow and future production
levels of at least 10 lpd /cow. Thus, the number
of people supported at the farm level, including
farmers and their families, will be upwards of
125,000 people if you figure five people per family.
And, the multiplier effect from the project will
support many more folks in the local communities
where milk collection centers are located.
5. Environmental Considerations for
the Dairy
Many factors contribute to elevated concerns as
to the environmental impacts of various industries.
In the case of the dairy industry plant expansions,
site rationalizations and, to some extent, good
returns, contribute to increased environmental
concerns. When conditions arise that cause many
facilities to operate at or well above their design
capacity it can have a consequent increased
impact on the environment from wash water/
product separation, wastewater treatment,
disposal and air emission control systems.
With respect to best dairy industry practices
as relates to the environment, guidelines are
used by several countries dairy industries. And,
the guidelines are generally developed by the
environmental regulators together with the
dairy processing industry. This helps to ensure
that the companies will comply. Given the level
of investment, the plant would be owned and
operated by a well-established professional dairy
or food entity with well-known and respected
dairy brands. For dairy waste, an effluent
treatment plant would be required to meet Kenya
factory discharge regulations and standards. The
dairy processing plant should be designed, built
and operated to achieve the following guidelines
and that is what is expected:
• maximum recovery of products such as milk
fat and solids;
• minimization of losses or emissions to the
environment;
• recycling and/or reuse of wastes, particularly
water;
• prevention of further environmental
degradation;
• restoration of the environment;
• appropriate location of the plant to minimize
the impact on residents, while still allowing for
future expansion;
• waste management, to avoid degradation of
the community environment.
Perhaps the largest environmental impact of
establishing a large scale raw milk pasteurization/
processing facility driven by a geothermal energy
resource will be handling the waste water streams
that comes from the plant because it will be
bio-rich and could create pollution problems if
not handled properly. To minimize or ameliorate
waste streams various options exist but, generally
the Environmental Protection Agency encourages
the industry to adopt cleaner production and
waste minimization principles. Some companies
use lagoons, water treatment facilities, spraying to
nearby lands as a fertilizer, and the like.
Because the plant would be using clean energy
from the geothermal site it will be a much cleaner
operation than present operations burning diesel.
In fact, it is expected that the project will probably
qualify for carbon trading benefits even though the
dairy cows supported by the venture will produce
carbon. When the dairy processing facility moves to
the feasibility stage, as it should, it will be necessary
to carry out a detailed IEE evaluation and, prepare
a“concept note”for submittal to UNFCC and NEMA
in obtaining an estimate of the carbon credits that
could come to the venture. To prepare this it will
be necessary to provide some rough idea of the
investment required to build the facility. Also, it
must be demonstrated that the project is profitable
with a 15% IRR or better. Thus, this question would
be answered during the completion of a full
feasibility study.

16
B. Overview of the Menengai
Geothermal Energy Prospect
Menengai is a massive shield volcano formed
about 200,000 years ago that is located in an
area characterized by a complex tectonic activity.
Geoscientific studies indicate that the Menengai
geothermal resource has the potential to
generate approximately 1,600 MW of power. The
engineers suggest there is good potential for DU
development at Menengai. There are potential DU
sources such as: the waste water from a power
plant to be constructed at Menengai I; from the use
of drilled abandoned wells not suitable for electric
power generation; and from drilling new wells
dedicated for DU.
C. Selection of Site for Project
Options for establishing DU projects to utilize the
geothermal energy from the Menengai geothermal
field include three possibilities that were evaluated:
Case #1: An Industrial Park Near Menengai Field:
Establish a large industrial park on the Menengai
Field. The GDC could sell power and process heat
to renters on-site. GDC would be responsible
for supply for operating and maintaining the
geothermal supply and equipment. GDC would
charge a fee for the geothermal energy supplied to
the dairy plant and/or other DU users. GDC should
be able to profitably charge about half of what the
dairies are currently paying for energy by piggy-
backing off the geothermal power plant waste
heat. GDC could also supply reliable electric power
directly at a discount.
Case # 2: Nakuru Geo-Industrial Park: A second
options is to develop, depending on technical,
environmental and logistical viability, a geothermal
industrial park in Nakuru city for dairy processors
and other industries and operate as a utility.
Thus, piping geothermal energy to the existing
industrial park in Nakuru over a distance of about
10 km, depending on routing, would be required.
This would attract the most users and has, as
well, the potential to eventually provide steam
throughout downtown Nakuru. Electric power
would have to be purchased from KPLC with no
guarantee of reliability but, because KPLC will
be getting reliable supplies of electricity from
the new geothermal generating facilities electric
supplies could be more stable than at present.
Case #3: Wellhead Electricity Generator Geo-
Industrial Park: This final case is to develop, at a
site with a wellhead generator for electricity and
hot brine for thermal energy supply, depending
on technical, environmental and logistical viability,
an industrial park on-site at Menengai or other
location using a well-head generator to provide
electricity for the industrial park and in turn
cascade the water for dairy industry direct-uses
such as pasteurization, milk powder, and UHT.
The commercial site would have a well-head
generator to provide electricity for the site and in
turn cascade the water for DU.
D. Project Design Concept and
Components
1. Proposed Project Goal
The GDC corporate vision is: To be a world leader
in the development of geothermal resources. Its
mission is: To develop 5000MWe from geothermal
resources by 2030 and one of its mandates is to
promote direct use of geothermal energy.
2. Design concept
Capacity and product mix considerations: The
proposed turnkey design concept is based on a

17
Product output
Year Milk required
(liters/year) SMP Butter Ghee UHT (kg) Yogurt*
(MT) (MT) (MT) (kg) (kg)
Start-up 65,000,000 3,354 1,665 137 18,525,000 6,175.000
Second 91,000,000 5,031 2,497 205 22,230,000 8,645,000
Third 110,500,000 6,149 3,052 250 27,170,000 9,880,000
Fourth 130,000,000 6,708 3,329 273 37,050,000 12,350,000
* Includes drinking (cultured and pro-biotic) and set Yogurts
cow milk processing venture that, when at full
capacity for one shift five days per week, would
process 500,000 liters per day (lpd) of milk. This
scale facility was chosen because it is a match to
present competition (largest operation in Kenya
is presently 600,000 lpd); takes full advantage of
the geothermal power resource available; markets
available; and, the potential for cascading the use
of geothermal energy. Also, it allows for significant
expansion as more days per week; and, more
shifts per day, can be easily accommodated as
milk supplies increase. The venture, tentatively
named the Nakuru Geo-Mega Dairy (GMD), would
produce five products – skim milk powder (SMP),
butter, ghee, ultra-high temperature (UHT) whole
milk, and Yogurt. In addition, a facility of 250,000
lpd was reviewed as a sensitivity alternative
should it be felt risks associated with obtaining
the milk supply for the larger GMD might not be
available. The five products chosen would offer
cost-efficient use of a substantial quantity of clean
geothermal energy, even if some of the water had
to be heated to a slightly higher temperature; and,
serve a diversified market that includes top quality
bulk storable product (SMP and butter), long
shelf-life (UHT whole milk and ghee) products;
and, shorter shelf-life Yogurt, and as shown later it
will be profitable. The product mix is appropriate
because it would provide the processor with
substantial flexibility in marketing as no product
in the mix is highly perishable. Milk production in
Kenya, including the Nakuru milkshed, is highly
seasonal because it is largely based on rain-fed
pasture with marked seasonal fluctuations. The
drop in milk supply in the dry season (February
through May and July through October) reaches
50-70 percent of the wet season supply when the
quality and quantity of pasture is high supporting
higher productivity. The product mix would
enable these milk supply spikes and troughs to
be smoothed out with steady or extra demand
met by either: (i) building up finished product
stocks; or (ii) using SMP and unsalted butter to
produce recombined milk for the UHT and Yogurt
lines in the dry season. Moreover, if the milk
supply expands substantially or seasonal gluts of
milk occur, milk intake could be doubled to one
million lpd with minimal additional investment by
running two shifts a day.
The proposed combined product output from the
start-up year (at 50% capacity) through to year
four (full capacity) is given in Table II-1.
Product descriptions: for the five product
categories the following lines and varieties would
be considered, depending on the outcome of
focused market research if the project proceeds to
full feasibility study or strategic investor planning.
Guide composition figures for the products and
Table II-1: Raw milk required and product output for year one through four.

18
liquid milk equivalent conversion factors used for
the study are given in Table II-2.
Skimmed Milk Powder: the proposed
enterprise would produce bulk low heat (i.e.
highly soluble or‘instant’) powder suitable
for domestic and export markets. This type
of SMP is produced by evaporating skimmed
milk to dryness, usually by spray drying.
Whole milk is first separated in to cream and
skimmed milk. The skimmed milk is then
pasteurized and concentrated in an evaporator
to approximately 50 percent milk solids. The
resulting concentrated skimmed milk is then
sprayed into a heated chamber where the
water almost instantly evaporates, leaving fine
particles of powdered milk solids or, in the
case of instant milk powder, agglomerations
of particles. One purpose of drying milk is to
preserve it; milk powder, especially skimmed
milk powder, has a far longer shelf-life
than liquid milk and does not need to be
refrigerated due to its low moisture content.
Another purpose is to reduce its bulk for
economy of transportation. Powdered milk
is used in a wide range of food and health
(nutrition) products and in biotechnology (as a
saturating agent). The target markets for SMP
are summarized in chapter IV.
Butter: the proposed enterprise would
produce fresh cream (‘sweet’) butter. Some of
this butter would be used to produce ghee
(see below). This type of butter is made by
churning un-homogenized cream produced
from the above-mentioned whole milk
separation process. If stored for long period
butter has to be frozen; it can be further
processed in to anhydrous milk fat (AMF)
or ghee which does not need refrigeration.
Two fresh butter product lines would be
considered as described in chapter IV.
Ghee: is a type of clarified butter used
especially in preparing South Asian food,
now globally popular. Basically it is prepared
by heating (to 120oC) unsalted butter to
evaporate off the remaining water content
and skim off any residual milk solids. The
heating process gives ghee its distinct taste.
Ghee has long shelf-life (up to 2 years) and
needs no refrigeration when packed in
airtight containers. Two product lines may are
considered (see chapter IV).
UHT whole milk: is produced by heating
milk at a temperature exceeding 135°C
for an extremely short time (1-2 seconds).
The process produces a product with a
Table II-2: Guide composition for milk and dairy products &conversion factors used for the study
Product Total Butter Milk Solids- Water Conversion
Solid Fat not-fat (%) (%) Factor***
Milk 12.0 3.5 8.5 88.0 n/a
SMP 98.0 Nil Nil 2.0 11.76
Butter 84.0 82.0 2.0 16.0 23.42
Ghee 100.0 100.0 Nil Nil 28.57
UHT milk* 12.0 3.5 8.5 88.0 1.00
Yogurt** 12.0 3.2 8.5 88.0 1.00
* Milk not standardized ** Milk solids only; milk not standardized. *** Assuming no losses.

19
6-12 months shelf-life without refrigeration,
compared with pasteurized milk, which has
an unrefrigerated shelf life of just 1-2 days.
Two product lines would be considered (see
chapter IV).
Yogurt: is produced by bacterial fermentation
of heat treated whole, low fat or non-fat
(skimmed) milks. According to the process and
type of bacteria and fermentation used, the
product may be drunk or eaten and can have
an unrefrigerated shelf life of 3-6 months (UHT
Yogurt). Yogurt is nutritionally rich in protein,
calcium and certain vitamins. It is a functional
food, i.e. it has nutritional benefits beyond
those of milk, and may be further fortified.
Milk processing and energy considerations:
Among the product groups SMP has the highest
energy requirement for processing both in terms
of electrical power and DU superheated/hot water
or thermal energy (see Table II-3). Butter fat (cream)
is removed from milk to make SMP and processed
into butter and ghee. Ultra high temperature milk
also requires DU water of quite high temperature
to make it shelf-life stable, but not nearly as hot
as for the production of SMP. Yogurt uses the least
energy of the products chosen for production.
The proposed product mix provides for efficient
utilization of the geothermal heat exchange
medium by cascading DU heat exchange from
one product to the next using separated brine
to heat water and create efficient heat recovery
(Figure II-2). The temperatures shown in this figure
are illustrative not exactly what is required, see
Table II-3 for precise energy requirements.
On average, thermal energy accounts for 85% of
total energy used in milk processing with electrical
energy accounting for the remaining 15%.
However, depending on the product range and
system design in any given plant, electricity can
vary from 30% of total (as in butter and cheese
making) to 9% for milk powder-only operations.
Milk supply: The venture would require a
substantial quantity of milk – at full capacity
Figure II-2. Example schematic showing geo-thermal energy cascading
High temp
Milk
powder
Medium
UHT milk
Low temp
Past. milk
yougurt, cheese
Food Processing Apartment building
Greenhouse
Fish farm
Refrigiration
plant
Power plant
150°
C
200°
C
100°
C
20°
C
50°
C

20
Product
SMP
Butter (cream
pasteurization)
Ghee
UHT milk
Yogurt-Fresh
Yogurt-Extra life
Standard heat
treatment
parameters
Indirect
210 °C
Indirect
80 °C
Indirect
120 °C
Indirect & direct
145 °C
Indirect
80 °C / 30 mins.
Indirect
80°C / 30 mins
and
90 °C / 15 secs.
Heat exchange
medium and
temperature
Steam
185-225 °C
Steam-HW
85
Steam
125 °C
Steam
160-180 °C
Steam-HW
85 °C
Steam
90 – 95 °C
Total energy
requirement per
MT processed
product (kWh)
Steam
185-225 °C
Steam-HW
85
Steam
125 °C
Steam
160-180 °C
Steam-HW
85 °C
Steam
90 – 95 °C

Total energy
Thermal Electrical
88% 12%
60% 40%
90% 10%
55% 45%
75% 25%
74% 26%
Table II-3: Energy needs for processing milk and dairy products
500,000 liters per shift with the potential to
double to one million liters over two shifts. To
obtain this milk would not only require buying
milk from existing milk collection centers but,
very likely the establishment of several new
milk collection and cooling centers (MCCs)
throughout the Nakuru region. The project could
fund the establishment of these new centers or,
alternatively, have farmers themselves establish
and own the centers. The project implementation
team could work with farmers to help arrange
financing, provide training in how to operate the
centers; and, in how to ensure high quality milk
is delivered to the plant. A couple of projects
presently working in Kenya; Kenya Agricultural
Value Chain Enterprise Support (KAVES) and East
Africa Dairy Development (EADD) could be of help
to farmers in organizing more MCCs or in having
existing MCCs increasing milk supplies to support
this new plant. For example, the new USAID KAVES
project might be able to help co-finance more
MCCs in this milkshed area. And, the EADD project
during its second phase, which will start in July
2013 and run to 2018, will work with an additional
58,000 farmers to produce and market more milk
via MCCs. Both these projects would certainly be
interested in working with the implementer in
RVP to supply milk to the GMD venture.
Site selection: Contingent on the detailed plant
and services layout, including landscaping,
vehicle parking and, possibly, need for staff
accommodation, some 5 to 10 acres of land
would be required. The venture would be located
at either a new industrial park site near the
electrical generation plant at Menengai, or within
the existing industrial park situated between
Nakuru and Menengai. The venture would thus be
located near the source of the milk instead of near
the market. This is another reason it is important
to implement the product mix proposed because
with milk powder as a major portion of the output

21
of the venture, much of the water is removed
and does not have to be transported to urban
market centers across the country saving much in
transportation costs. Moreover raw milk quality, and
hence finished product quality, should be superior
as the time from milking to processing would be
reduced by about half.
Pre-investment activities and start-up: It is
assumed the proposed GMD could be based on
three different options for geothermal energy and
depending on the choice it will influence the start-
up. Pre-investment activities (land acquisition, site
preparation, establishment of farmer owned milk
collection and cooling centers, etc.) could likely
start up to 18 months before construction begins
and the equipment arrives for installation. When
the plant does start to operate it would begin at
50% of the installed one shift capacity and move to
full utilization of one shift capacity by year four of
the venture.
3. Proposed components
This section focuses largely on the dairy plant
itself as other elements in the proposed GMD
are covered in other chapters of this study, viz. (i)
geothermal energy (chapter III); (ii) milk distribution
and marketing (chapter IV); (iii) milk production
and collection (chapter V). All the technologies and
equipment employed would be appropriate to
the location and state-of-the-art enabling highly
eco-efficient plant operations. As indicated above,
the selected product mix and processes are suited
to efficient DU of geothermal energy, heat recovery
and minimizing the use of water – the target
being to achieve a milk water ratio of one to one. A
schematic of the proposed GMD processing facility
layout is given in Figure II-3.
Milk reception and storage: milk would be
procured from the Nakuru milkshed (see chapter
V) using the two collection systems in concert with
a producer milk grading and incentive payment
scheme based on quality. Under the first system,
farmer-owned milk bulking companies would
deliver raw chilled milk in insulated milk tankers
with a capacity ranging from 10,000 to 20,000 liters
depending on rural road conditions from collection
centers to the plant within 2-3 hours of milking.
Another part of the milk may be supplied through
GMD enterprise controlled rural milk chilling/
bulking centers and tankers, leasing them to
farmers to use and perhaps eventually own.
Upon arrival at the GMD milk would be
automatically tested and weighed, then
immediately chilled to 2°C. All producer
milk grading and payments would be done
electronically.
The GMD would thus require bulk milk reception
handling facilities, including tanker washing/CIP
(cleaning in place) facilities. With the exception of
the final disinfectant rinse all the water used in the
CIP process would be reclaimed from the various
milk processing systems; thus, permitting the most
efficient use of water.
The GMD would thus require bulk milk reception
handling facilities, including tanker washing/CIP
(cleaning in place) facilities. With the exception of
the final disinfectant rinse all the water used in the
CIP process would be reclaimed from the various
milk processing systems; thus, permitting the most
efficient use of water.
Milk processing and packaging: the processes to
produce the product range are briefly described in
section 1 above. Packaging would be attractively
and purposely designed to meet market needs and
top quality standards at: (i) national Kenya Bureau
of Standards (KBS) level, regional Common Market
for Eastern and Southern Africa (COMESA) level and
international level (FAO/World Health Organization,
Codex Alimentations). Good Manufacturing
Practices and Good Hygienic Practices would be

22
Site entrance
and exit Vehicle parking
Office
Quality
control
Milk
reception
Milk tanker
washing
Butter &
ghee
Milk
yougurt
processing
Product storage &
loading
Product packing
Bulk milk silo storage
Water
Dry goods store
Workshops
Services/energy
Milk powder
evaporation and
drying
Powder
storage
To effluent
treatment
Canteen
staff
changing
rooms & WCs
Figure II-3. Schematic of proposed GMD layout (not to scale)
employed throughout the entire GMD cow-to-
consumer dairy food chain.
Finished product storage and dispatch: these
would be sized according to each product.
Given the proposed plant would be producing
product during the flush rainy season, some
of which would be sold possibly 3-4 months
later during the dry lean season, the storage
needs are summarized in Table II-4 For the
milk powder store, sufficient storage for three
months production would be required, about
2,500mt. If the proposed plant is to produce and
store strategic stocks of SMP on behalf of the
government, more space would be required or
additional off-site storage organized.
Distribution and sales: the costs of delivering
final product to the markets would be the
responsibility of the processing venture. A sales
division would be set up during the early stages
of development to advocate for the company and
drive sales (see also chapter IV).
Quality assurance and food safely: a small
modern quality control (QC) laboratory would
be set up next to milk reception. Rapid digital
and electronic analyses would be done of raw
milk compositional and keeping quality, both
for supplier payment and for controlling the
various product processing lines. For all the
products produced and associated services, the
laboratory would carry out process QC to facilitate
efficient plant management, to minimizing
wastage and to become HACCP (Hazard Analysis
and Critical Control Point) compliant and
International Organization for Standards (ISO)
certified. Statutory QC testing would ensure all
products meet the concerned local, regional and
international market standards.

23
Table II-4: Finished product stocks and storage needs
Estimated storage needsProduct Maximum storage
stock (MT) Temperature Floor space
(°C) (m2
)
SMP 2,400 ambient TBD
Butter (bulk) 1,000 minus 20 TBD
Ghee (pre-packed) 100 Ambient TBD
UHT milk (packed) 7,500 ambient* TBD
Yogurt (UHT - packed)** 100 ambient * TBD
* If UHT milk stored for more than 3 months preferred at 10o
C; ** Made to order
Services and waste disposal: in addition to
the energy components described in chapter
III below the following eco-friendly ancillary
services and equipment would be required: (i)
energy (vapor/hot water) handling/upgrading/
distribution/recycling plant; (ii) refrigeration plant;
(iii) compressed air plant; (iv) stand-by generator;
(v) potable water supply/treatment and storage
(including waste water/condensate recycling);
(vi) effluent treatment system; (vii) maintenance
workshop (plant and vehicles); (viii) dry goods and
materials store; (ix) staff canteen and amenities; (x)
office accommodation; (xi) vehicle parking; and
(xii) security.
Manpower and training requirements: a fully
trained professional staff complement estimated
at 70 would be required for one shift operations,
including security personnel. The core GMD team
should be hired (or transferred) by a prospective
investor in time to support, and be coached, by
the turnkey team during design, procurement,
construction, and plant installation and
commissioning.
Most of the incremental employment would be
at the milk bulking/collection and retailing level.
Where GMD throughput to reach 1 million liters
daily, potentially as many as 30,000 off-farm jobs
could be created based on the above-mentioned
FAO/ILRI dairy value chain employment study
findings (2004).
4. Investment options for the
proposed GMD
The GDC/PAA team noted huge interest by
existing dairy processors in the proposed GMD
venture, largely because of the competitive
advantage that reliable, lower cost energy would
provide. While the business model would of
course depend on the prospective investor(s),
three general value propositions are identified: (i)
existing Kenyan milk processor; (ii) international
dairy company; and (iii) joint venture between
a dairy company and a farmer organization,
e.g. Kenya Dairy Farmers’Federation. Mapping
of potential investors should be part of a full
feasibility study.
E. Schedule for Project
Implementation
Based on feedback from GDC concerning a
possible date for geothermal power availability,
the schedule (Table II-5) is tentatively put
forward for project implementation. A more
comprehensive and informed schedule should
be developed if the project goes to full feasibility
study.

24
Table II 5: Tentative action plan for proposed GMD project (2013-2016)
Action
1. GDC decide to implement GMD project and conduct full
feasibility study to include: (i) detailed process, building and
civil works design and specifications as turn-key project; (ii)
investment budget & business proposition; (iii) guide strategic
GMD business plan etc.
2. GDC confirms geo-thermal industrial park site & power
(electrical/thermal) delivery system(s) & tariffs
3. Based on study findings the partner firm identified to carry out
the full feasibility study determines how to work with GDC to
implement GMD project
4. RFP for turnkey GMD project prepared & gazetted
5. 3 experienced turnkey contractors asked to submit detailed
bids; contractor selected.
6. GMD milk collection mobilization starts, possibly in
collaboration with public sector & development partners
7. Contractor mobilizes & starts site preparation
8. GMD recruits & trains key staff who support GMD turnkey
contractor & milk collection mobilization
9. GMD start-up
Deadline
Jun 2013
Jun 2013
Dec 2013
Feb 2014
Jun 2014
Jul 2014
Oct 2014
Jan 2015
Late 2014 or
about Jan 2016
Responsible/Remarks
GDC, supported by PAA project to locate
a local partner from existing mix of firms
operating in the sector to carry out the full
feasibility study
GDC, supported by PAA project
Partner firm, GDC, supported by PAA project
GDC, GMD investor(s)
GMD investor(s)
GMD investor(s)
GMD investor(s), turnkey contractor

Dairy Geothermal
Energy
Considerations
and Potential
3Chapter

26
A. Direct use Geothermal
Energy for the Kenyan
Dairy Industry
There is excellent potential for incorporating
geothermal direct use (DU) energy into Kenyan
agro-industrial facilities, such as for dairy
processing. There is a good co-location between
the geothermal resource and the main dairy
production region and needs of Kenya, especially
in Nakuru province. Among the dairy products
processed in Kenya that can take advantage of
geothermal resources are milk pasteurization,
ultra-high temperature (UHT) milk, and powdered
milk; as well as butter, ghee, cheese, and ice
cream processing. The Geothermal Development
Company (GDC) is interested in developing this
type of direct-use (DU) of geothermal energy from
existing wells ostensibly for power generation, but
that are also suitable for a small-scale pilot geo-
demonstration dairy (GDD) for about a thousand
liters per day milk production, as well as for a
large geothermal mega-dairy (GMD) processing
facility with capacities of 500,000 liters a day on a
single shift. Not only can the geothermal electric
power plant waste heat by-product be used
cost effectively for dairy production, it can also
be further cascaded for use in other direct use
applications such as greenhouses, aquaculture,
food drying, etc. This further improves economies
and return on investment. Simple payback on
direct use for a power plant in a location such
as Menengai can run less than one year for the
additional geothermal DU equipment investment.
See Figure III-1 below for an example of cascading
from a geothermal power plant.
Geothermal Development Company (GDC)
The Geothermal Development Company (GDC) is
a Kenyan 100% state-owned company with about
750 employees that was formed in December,
2008 to fast track the development of geothermal
energy resources in Kenya. The creation of GDC
was based on the Kenyan government’s energy
policy Session Paper No. 4 from 2004, and the
energy Act No.12 of 2006 - which un-bundled
key players in the electricity sector to improve
efficiency. GDC’s mission is to Develop 5000 MWe
from geothermal resources by 2030.
Figure III-1: Cascading concept for geothermal energy from a power plant all the way to a fish farm.
Food Processing Apartment building
Greenhouse
Fish farm
Refrigiration
plant
Power plant
170°
C
250°
C
120°
C
80°
C
100°
C

27
The Government of Kenya (GOK) strategic planning
roadmap is called Vision 2030, by which time
GOK plans are to attain mid-income economy
status. Energy is one of the three key“pillars”0f the
Kenya Vision 2030 strategy, the goal of which is to
transform the country to medium income status by
2030. In order to accomplish this goal, the Kenyan
Ministry of Energy forecasts a need to generate
about 15-17,000 MW by then, of which 5,000 MW
of which is anticipated to come from geothermal
energy. Currently, the total effective installed
capacity in Kenya is approximately 1,500 MW.
For a long time, Kenya has relied on hydroelectricity
with seasonal power outages forcing the use of
supplemental power producers who use diesel
to generate electricity (over 1/3 of current power
supply). The reliance on diesel to supplement hydro
greatly increases the cost of electricity, as well as
causing increased atmospheric pollution. The GOK
has identified the country’s untapped geothermal
potential as the most suitable indigenous source of
electricity. GDC plans to drill about 1,400 wells to
provide steam for 5,000MW of geothermal power
by 2030 (GDC, 2013).
GDC has been seeking international donor support
for its geothermal development efforts, including
loans of US$172.5 million and a grant for Menengai
of US$17.5 million from the African Development
Bank (AfDB), World Bank; as well as the German
international development agency, French
Development Agency, Icelandic International
Development Agency, Japan International
Cooperation Agency (JICA), Nordic Development
Fund, UK Department for International
Development, and the US Agency for International
Development (USAID) (Steam #7 and GA #2).
On June 20, 2012, GDC became ISO 9001:2008
certified through the Kenya Bureau of Standards
(Kebs) for three years (Steam #7, 2012). GDC is
currently working to obtain ISO 14001 certification.
Obtaining this environmental management
system certification will facilitate management of
the current environmental monitoring programs
in a comprehensive, systematic, planned and
documented manner.
B.Traditional Energy Sources
for Dairy in KenyaToday
Dairy farming is a large industry in Kenya with
a majority of production located in the RV P,
much in the Nakuru region. Most of the Kenyan
dairies have antiquated equipment that is energy
inefficient and use nearly doubles the energy of
a modern dairy processing facility. Typically, the
Kenyan dairies are using about 2.5 MW boilers
fueled by either diesel fuel or firewood to meet
their thermal processing needs. Current energy
consumption usage for some of the relatively
inefficient Kenyan dairies using electricity, diesel,
and firewood is summarized below.
1. Kenya Cooperative Creameries
(KCC) in Nakuru
This plant receives milk from farmers in the
surrounding area. The plant, which pasteurized
milk in the past, is now only used for cooling milk
to 3 to 5°C before shipping it to pasteurization/
processing plant elsewhere. When the plant did
pasteurize milk for normal handling, 72°C heat
was applied for 15 seconds through a four-stage
heat exchanger. This state-owned facility is now
considering adding milk powder processing at the
facility. If they do, the heat energy needed would
be considerable making this plant a candidate for
using geothermal energy to power the process,
particularly if the power is piped down from
Menengai to the Nakuru industrial park area.

28
2. Brookside Dairy in Nakuru
This facility is presently a cooling and sterilization
center processing 76,000 liters per day (maximum
capacity of 100,000 liters per day) of milk that is
cooled to <4°C for transport to two plants for
pasteurizing in Nairobi. Hot water is needed to
rinse milk cans (40°C) and then to sterilize them
(80°C) – with some water being recirculated.
Water from a well on site at 30°C is heated by
a steam boiler using 100 to 150 liter per day of
diesel mostly for cleaning/sterilization. Diesel fuel
costs about KES 100 per liter, thus diesel fuel costs
about KSh10-15,000 per day (US$125 to $188).
The boiler (see Figure III-13) runs three hours per
day. The plant also uses about 800 kWh/day of
electricity. A 50 kW chiller is used to cool the milk
which is then stored in a 10,000 liter tank. They
may pasteurize milk in the future in Nakuru and
already have Alfa Laval pasteurization equipment
installed. Brookside is emphasizing UHT (ultra high
temperature) milk and powdered milk for a new
government planned program so their energy
requirements could expand substantially.
3. Buzeki Dairy (Molo Milk) at Molo
50 km northwest of Nakuru
This plant receives milk from over 5,000 farmers
and 8 coops, mostly within a 50 km radius but
with some providers from up to 200 km away,
providing 120,000 liters of milk per day. Five
percent of the milk is pasteurized normally at
72°C for 15 seconds and the remaining 95% is
processed at high temperature at 136°C for 3
seconds (UHT milk). The UHT equipment was
purchased from Finland at a cost of KSh150
million (about US$ 2 million). They are planning to
pasteurize at 140°C for longer shelf life. The plant
uses industrial diesel oil at 600 liters per day (100
KES per liter or about US$1.25). They also use Ksh
1.2 million worth of electricity per month (about
US$14,000). A 2.2 ton boiler is presently being
installed along with a 110 kVA – 6,300 liters/day
UHT unit. A total of approximately US$500,000
per year is spent on energy including the chillers.
Their major problem is the reliability of electricity,
thus, they are purchasing a 550 kVA generator as
backup. They used about 600-800 lpd of diesel
Figure III-2
Brookside DairyWellman-Robey
Class 1 diesel boiler supplying up
to 2,000 lbs of steam /hr.
(Foster,2012)

29
fuel (depending on outages). They estimate that
about ten percent of their processing costs is for
energy. Buzeki management was interested in the
geothermal energy concept.
4. Happy Cow Dairy
The Happy Cow Dairy facility processes about
12,000 lpd of milk into cheese (60%), Yogurt (35%),
and bulk milk (5%). Presently they spend Ksh
700,000 per month on energy (about US$9,000) of
which Ksh 400,000 (US$5,000) is for diesel and Ksh
200,000 (US$4,000) is for electricity. They have a
boiler rated at 400 kW operating at 5 bars pressure
providing hot water at 130-140°C (see Figure III-14).
The Happy Cow owners would certainly consider
using GDC geothermal industrial park energy,
other things being equal. (Oosterwijk, 2012).
Figure III-3
Happy Cow Dairy Kuiper 400 kW
diesel powered boiler.
(Foster,2012)
5. Daima Dairy (Sameer Agriculture
and Livestock Company) in Nairobi
Daima Dairy is a leading Yogurt and UHT milk
producer in Kenya. They process 110,000 lpd of
milk and expect to increase to 160,000 lpd. Daima
only uses firewood as its boiler fuel source to
produce steam at 1.5 tons per day (costing KSh6
per kg (about 8 US cents). They also use KSh2.5-3.0
million per month of electricity (about US$30-
40,000 per month). However, they complain that
the electricity supply is not reliable – thus, they
need reliable energy at the bulking centers as
well as at the central processing plant. KenGen
often shuts down the electricity supply for 8
hours per week. The backup energy cost for the
8 hours for Daima is as much as the total energy
cost for the rest of the week. They currently have
a 2.5 MW wood fired boiler (see Figure III-15)

30
that consumes about ½ ton of firewood per day
providing 180°C water for the dairy processing
operations. They estimate that the cost of energy
for their dairy processing is approximately 1.7 to
1.8 KES (US$.021) per liter of product and, this
is about 18 percent of total costs. They are now
considering locating a new plant near Eldoret and
are interested in the geothermal powered dairy
concept (Marete, 2012).
The discussion with these dairies and others
confirmed the energy instability problem and the
disruptions it causes in operations. The disruptions
are very expensive and if the geothermal energy
source could help resolve this problem many
dairies would be potential investors in a new
facility based on geothermal power.
C. Geothermal Direct Use
(DU)Technology for Dairies
Dairy processing requires large amounts of
process heat and electricity. There are a wide
range of processes and products in the dairy
industry, thus energy usage varies widely
depending on equipment and processes used.
Existing Kenyan dairy plants are generally
antiquated and energy inefficient with poor
heat recovery. Thus, existing dairy plants could
improve energy performance with modern
equipment and heat recovery. Further energy
process cost reductions are possible with the use
of geothermal energy for dairy processing.
Figure III-4
Daima 2.5 MW Multi-Star
antiquated wood fired boiler in
Nairobi providing 180°C feed
water, which consumes about ½
ton of firewood per day.
(Foster,2012)

31
D. Dairy Processing Energy
Requirements
1. Present Energy Usage in Kenya:
For the geo-mega dairy (GMD) processing facility,
geothermal energy can provide both thermal
energy and even electrical power given the
excellent geothermal resources found at the
Menengai caldera. This energy will displace diesel
boilers normally used in Kenyan dairy processing.
The diesel power for thermal energy costs dairies
at least US$0.16/kWht and US$0.40/kWhe as
shown in Table III-1; for Kenyan dairy processors
today, operating costs are in reality probably
higher given their old and very inefficient
boilers, leaky steam pipes, and often antiquated
dairy processing machines. Dairy processing
temperature requirements for different processes
is provided in Table III-2, as well as approximate
energy requirements for modern dairy processing
in Table III-3. Note that milk is 88% water, so most
of the energy for powdered milk is in evaporating
the water, which uses considerably more energy
than UHT or Yogurt. Note that the following
illustrative tables give approximate energy
requirements which can vary slightly depending
on process equipment used.
1. Direct Use (DU) Geothermal Systems:
Geothermal reservoirs of low to moderate
temperature water (50 to 150°C) or reject heat
from larger power plants such as the proposed
GDC Menengai power plant, can provide direct
heat for industrial and commercial uses. Direct
geothermal energy use includes generally lower
temperature applications such as agricultural
processes (drying, refrigeration, cooling and
pumping), aquaculture, greenhouses, and
processes such as those for the dairy industry.
There are several examples in the United States,
Romania, and Iceland of DU geothermal for dairy
Table III-1: Diesel Fuel Energy Density, Emissions, and Cost in Kenya.
Table III-2: Approximate Thermal (steam) Pressure and Temperature
Requirements for Dairy Processes.
Dairy Thermal Energy - Steam
Product Steam pres - bar Steam Temp °C
Powder 22 185-225
Cheese 3 133
Liquid milk Past. 1.5 110
Liquid milk UHT 10 139
Butter 3 133
Source: Frazer moffat, dairy engineer, UK,2013
processing (Lund, 1997). There are only a few
DU applications in Kenya, mostly for spas and
greenhouses in Osseria; none for dairies as yet.
A DU geothermal system (see Figure III-9) requires
pumps, pipes, controls, and other equipment to
deliver the geothermal heated water. It is often
necessary to isolate the geothermal fluid from the
Milk & Disel physical properties
Weight
Milk= 1.032 kg/l
Disel Fuel= 0.832 kg/l
Disel energy density approx
9.7 kWh/l
11.6 kWh/kg
Disel boiler operating costs Kenya boiler system efficiency
1.20 US$/litre
steam 0.16 US$/kWht 75%
electricity 0.40 US$/kWht 31%
Disel emissions approx.
3.2 kg CO2
/kg fuel
0.24 kg CO2
/kWh fuel

32
TableIII-3:ApproximateEnergyRequirementsforModernDairyProcessing
MilkandDairyproductsprocessingandgrossenergy
Product
SMP
Butter(cream
pasteurization)
Ghee
UHTmilk
Yogurt-Fresh
Yogurt-Extralife
Weight
%
14%
100%
100%
100%
Totalenergy
requirement
4012
363
700
440
400
500
Standardheat
treatment
parameters
Indirect
210°C
Indirect
80°C
Indirect
120°C
Indirect&direct
145°C
Indirect
80°C/30mins.
Indirect
80°C/30mins
and
90°C/15secs.
Heatexchange
mediumand
temperature
Steam
185-225°C
Steam-HW
85
Steam
125°C
Steam
160-180°C
Steam-HW
85°C
Steam
90–95°C

Totalenergy
Thermal Electrical
88% 12%
60% 40%
90% 10%
55% 45%
75% 25%
74% 26%
TotalenergyperkWh
perton
kWht kWhe
3531 481
218 145
630 70
242 198
300 100
370 130
TotalenergyperkWh
perlitre
kWht kWhe
0.644 481
0.225 0.150
0.650 0.072
0.250 0.204
0.310 0.103
0.382 0.134
Source:Frazermoffat,dairyengineer,UK,2013

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