Markets & Finance

Company to start building Sh12.9bn wind power plant


Wind turbines. Aeolus is set to build a Sh12.9 billion wind farm in Nyandarua from May. Photo/File

Aeolus Kenya is expected to break ground on the Sh12.9 billion Kinangop Wind Park Ltd power project in the next two months.

Aeolus Kenya, part of the European renewable energy group, is planning to put up a 60.8 megawatt wind farm in Kinangop, Nyandarua County, after the financing is finalised within the next 30 days.

Transaction advisers CFC Stanbic Bank have said that they are finalising arrangement where $100 million (Sh8.6 billion) will be in the form of a loan extended by Standard Bank, CFC Stanbic’s parent company. The $50 million (Sh4.3 billion) balance will come from two equity investors.

“Aeolus Kenya should reach financial close on its $150 million (Sh12.9 billion), 60.8 megawatt wind farm on the Kinangop Plateau in the next 30 days,” Kwame Parker, head of debt solutions and infrastructure finance for East Africa at Stanbic Kenya told intelligence service Debtwire.

US conglomerate General Electric will install 31.8 megawatt turbines on the site. General Electric is already implementing a similar project in Kajiado through its energy subsidiary GE Energy. The subsidiary owns Kipeto Energy Limited which will install the 100 megawatt of wind power in Kajiado County.

Late last year, GE Energy said it would raise $210 million (Sh18 billion) from debt, which amounts to 70 per cent of the Kajiado project cost, and invest the remaining Sh7.5 billion through equity.

(Read: GE targets Sh17.5bn local debt for wind farm)

Despite its enormous potential, wind energy has rarely been tapped. But a utility report by Genghis Capital says that it is only a matter of time before major investors go full-blast into it.

“The estimated wind energy potential is between 4,000 megawatt and 10,000 megawatt. Of this only 5.1 megawatt is harvested and fully exploited,” the report says. “We, however, note that applications received to develop wind energy had totalled 650 megawatts as of December 2011.”

Signs that investor interest is growing are becoming clear going by the number of wind energy deals in the pipeline. Africa’s biggest wind project, the 300 megawatt Lake Turkana project to cost Sh75 billion, is being built in Marsabit County with guarantees being the last hurdle in its implementation.

Financiers ADB have already committed to the project whose backing World Bank withdrew last year.

Listed utility KenGen already has a footing in the niche with a planned 25.5 megawatts plant in Ngong. The project has already received a Sh1.32 billion interest-free loan from Belgium and a Sh2.38 billion credit line from the Spanish government.

State agency Kenya Forestry Service has earmarked 560 hectares in Ngong for a wind farm and invited investors to put up a plant targeting to generate 100 megawatts.

Energy experts say that the huge gap between what is being exploited and what can be exploited provides a blank canvas for firms to paint a profitable future while at the same time making life for the consumers easier.

“It is a green energy project and as long as its feed-in tariff is significantly lower than thermal generation, then it will contribute to lowering of electricity prices in Kenya. It should be significantly prioritised in our national energy mix,” said Petroleum Focus Consultants director George Wachira.

Consumers are already preparing for an increase in their power bills after electricity distributor Kenya Power asked the industry regulator, the Energy Regulatory Commission to review its tariffs.

Kenya Power wants to raise the fixed charge to Sh200 from Sh120. The variable cost for a kilowatt per hour (Kwh) will also go up.

Consumers using less than 50Kwh will pay Sh5.1 up from Sh2 per unit consumed while users consuming between 50 and 1,500Kwh will see their energy charge increase to Sh11.4 from the current Sh8.1 for each unit of power.

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