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Wednesday, 26 March 2014

Largest Wind Farm in Africa finally set for construction in June 2014 - Kenya

Construction of the delayed Lake Turkana Wind Power Project will begin in June 2014 after Monday’s signing of a financial package worth Sh76 billion(US$883m) provided by a number of multi-lateral lenders.
The wind farm, which is to be the largest on the continent, will have a capacity of 300MW and is expected to help plug a power supply shortfall and offer cheaper electricity.
The wind farm had been due to start generating power in June 2011 but the project has faced financing difficulties after the World Bank pulled out of the project.
On Monday 24th March, 11 financiers including the Africa Development Bank (AfDB), Standard Bank, PTA Bank, European Investment Bank and East Africa Development Bank signed the financing pact for the Sh76 billion(US$883m) plant that will see its shareholders inject Sh15 billion(US$174m)
“The project is expected to be fully operational in a period of 32 months from the time we are issued with a notice to proceed. That should be in June this year,” LTWP chairman Carlo Van Wageningen said while closing the financing deal in Nairobi.
“We will generate the first 100MW in the next 27 months, then about another five months or so to get the full 300MW.”
Kenya Power, the country’s sole power distributor, will pay a tariff of 7.52 euro cents (Sh9) per kilowatt hour, which is lower than the Sh16 consumers are paying on increased use of the fuel driven generators to feed the national grid.
The 300MW wind plant, which will sit on 4, 000 acres, will produce about a fifth of Kenya’s current installed power capacity of 1,664MW.
Mr Wageningen said the project would save Kenya US$150 million (Sh12.9 billion) per year in foreign currency and fuel adjust costs that reflect on electricity bills mainly due to increased use of thermal power.
Kenya is also set to earn Sh481million (€4 million) annually from trading in carbon credits that will come from the environment-friendly project that will lower carbon emissions in the race to tackle global warming.
The  Africa Development Bank (AfDB) was the lead arranger for the financing package that saw the European Investment Bank commit Sh23 billion or slightly over a third of the loan value. The Africa Development Bank also provided guarantees to the financiers after the World Bank exit.
The Bretton Woods institutions expressed concerns over construction of the 428-kilometre transmission lines and the power purchase agreement with Kenya Power that it feared would be unfair to consumers as they would have been forced to pay for the excess power.
Energy Principal secretary Joseph Njoroge directed Kenya Electricity Company (Ketraco) to beat the 2016 deadline in laying the 428 kilometre transmission line that will connect the wind farm to the main sub-station in Narok and eventually to the national grid.
Kenya plans to quadruple its power output in the next five years with the aim of unleashing faster economic growth, eyeing an additional 5,000MW of power supply.
It plans liquefied natural gas (LNG), new wind plants and coal-fired power stations, while also tapping vast steam reserves to boost geothermal production to wean the country off unreliable rain-fed hydro-electric dams and expensive diesel generators.
Power costs for industry, which the private sector says leaves it struggling against global rivals, would fall by nearly half by 2017, according to government projections.
By Neville Otuki