Kenya's wind power project secures funds to start construction

Construction of Kenya's Lake Turkana Wind Power project, which has been delayed by financing difficulties, should begin by June after it secured 498 million euros in funding, officials said on Monday.

The project and its financiers signed agreements for the sum, paving the way for the start of the 623 million euro project, the largest single wind power scheme in Africa, building of which had previously been scheduled for the first quarter of 2014.

The wind farm will have a capacity of 300 megawatts (MW) and will help to plug a power supply shortfall which, coupled with an ageing grid, has led to frequent blackouts that hamper industry and anger residents in east Africa's biggest economy.

A Kenyan official said a 428-km transmission line would be built to transport the electricity from the wind plant, which had initially been due to start generating power in June 2011.

"Let's say by June we hope to have completed all the conditions precedent, and then we can put the spade in the ground. What is very important is that the transmission line starts before us," Carlo Van Wageningen, chairman of Lake Turkana Wind, said by telephone.

Denmark's Vestas Wind Systems will supply some 365 wind turbines at the site in the north west of the country.

While the 498 million euros of funding is debt, the remainder will be contributed as cash by all the partners in the form of equity, he said.

"Once constructed, Lake Turkana Wind Power will be the largest single wind power project in Africa. It is to date the largest single private investment in the history of Kenya," Wageningen said earlier at a signing ceremony.

The project expects to produce an initial 100 MW in 2016, with the remainder expected to be in the grid within 32 months of that, Van Wageningen said.

About half of the country's electricity is produced from hydro sources, and the rest from geothermal - using steam from below the earth's surface - or diesel.

The wind power scheme could save Kenya up to $150 million annually in money used to import fuel for thermal power generation, Lake Turkana Wind Power estimates.

The project will bring on line 20 percent of Kenya's installed capacity at a 9 Kenyan shillings per kilowatt hour, thus contributing to the government's push to lower electricity costs.

The government said last year it aimed to halve the cost of electricity within three to four years from between 17 and 18 U.S. cents, mainly by replacing diesel generation, which he said costs about 35 shillings (41 U.S. cents) per kilowatt hour.

Kenya generates 1,664 MW of electricity and is working on expanding its power supply by adding 5,000 MW by 2017, with the goal of boosting growth.

The economy, projected to grow by about 5 percent this year, is expected to push power demand up to 15,000 MW by 2030.

The Lake Turkana Wind Power consortium comprises KP&P Africa B.V. and Aldwych International as co-developers, Industrial Fund for Developing Countries, Vestas, Finnish Fund for Industrial Cooperation Ltd, and Norwegian Investment Fund for Developing Countries.

The Africa Report