“Next (this) week, we will be announcing a funding programme to develop wind energy sector in Morocco and the Central Africa Republic,” said Ms Hellen Chedrourou," said AfDB’s director for climate finance.
Mr Carlo Van Wageningen, the chairman of Lake Turkana Wind Power, told participants at the climate change talks in Durban that conclusion of the deal paves the way for the €600 million plant to produce the first 50 megawatts (MW) of electricity in the third quarter of next year before rising to full capacity a year later.
“We expect to close the financing deal in March or April 2012 and to have full production of 300 MW a year later,” he said in a presentation to showcase the project in Durban.
The announcement comes a year after the Treasury offered the financiers guarantees they had sought against political and other risks.
The Turkana wind farm, billed as one of the largest in the world, is being financed through a 30 per cent syndicated loan arranged by the African Development Bank (AfDB).
Other financiers are the Standard and Ned banks of South Africa, BKF, a Danish development bank and the European Investment Bank who will pump in €42.8 million.
The project is 51 per cent owned by Aldywich International, South Africa’s IDB (25 per cent), Pan Africa Investment Development Fund and Vestas— the Danish leading manufacturer of wind turbines (12.5 per cent) and the six co-founders (6.5 per cent).
KP and P Africa B.V, a special purpose vehicle, registered in Denmark is the holding company for the wind power firm.
The Turkana wind power company hopes to produce electricity at the cost of €7.52 cents per kilowatt hour making it the cheapest power source in Kenya.
“There must be a strong PPA and fixed price contracts with the suppliers,” said Zuber Suliman, an investment analyst at DEG- the private sector lending arm of KfW, a German development bank.
Once completed, it is expected to account for 22 per cent Kenya’s electricity demand, in addition to the 400MW geothermal power that is expected to be on the national grid in the next four years.
Together with hydro-electric power that already accounts for more than 70 per cent of Kenya’s electricity needs, these two projects are set to make the country nearly 100 per cent dependent on environmentally-friendly energy sources and to smooth out fluctuation in output from hydro sources.
“Hydro, wind and solar complement each other,” said Vestas grid expert Eric Sorensein. The government through the Kenya Electricity Transmission Company (Ketraco) has advertised tenders for construction of a 428 km power line and four substations to link the wind farm that is located in remote but windy Loiyangalani area to the national grid.
Lake Turkana Wind Power plans to build at least 353 wind turbines. Each unit, to be procured from the world’s top marker of wind turbines, Vestas Wind Systems of Denmark, has the capacity to produce 850 KW of electricity.
Sponsors of the Turkana power say they have had to build a unique financing model for the project to lower perceived risks and bankability of infrastructure and energy security programmes. Unlike Europe where energy sector loans can be funded up to a high of 97:3 debt/ equity ratio. The ratio rarely passes 70:30 in Africa because of high levels of perceived risk.
ZEDDY SAMBU, www.businessdailyafrica.com