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Turkana Power seeks AfDB guarantee for wind farm

windfarm

A wind farm. Kenya has stepped up investments in clean and renewable sources of energy such as wind. Photo/File

The 300 megawatts Lake Turkana Wind Power was last week endorsed by the Treasury and Ministry of Energy as its promoters touted project financiers, African Development Bank (AfDB), as a potential guarantor.

The Sh65.6 billion (€582 million) project now enters the final phase of fundraising after the Lake Turkana Wind Power and the government signed a letter of support on Thursday last week.

The support document signed by Finance PS Joseph Kinyua and his Energy ministry counterpart Patrick Nyoike does not amount to a guarantee though. Independent power producers require underwriters for their investments and any unabsorbed power — and World Bank has insisted this could be unsustainably huge, especially if a transmission line is not built on time. The lender withdrew its backing.

(Read: Kenya Power’s deal that forced World Bank out of wind farm)

“The government letter of support is not a guarantee. The project has an alternative security structure, which does not require the World Bank guarantee,” said the Lake Turkana Wind Power.

“The African Development Bank is now in conversation with the GoK to provide a similar guarantee, which will further enhance the project.”

The ambitious project has been steeped in controversy following revelations that the power producer had signed a take-or-pay deal with Kenya Power that would cost consumers Sh8.5 billion in idle power.

“We are delighted that this project will move forward with the continued support of the Government of Kenya, vendor Kenya Power, the AfDB, and the numerous other partners,” said Lake Turkana Wind Power chairman Carlo Van Wageningen.

Under the terms of the power purchase agreement, the electricity retailer will buy the electricity at the rate of Sh10.35 per kilowatt hour.

The tariff puts the cost of wind power 70 per cent higher than geothermal power, where KenGen says it will deliver its 280 megawatts Olkaria project at 6.05 per kilowatt hour.

Kenya has stepped up investments in clean and renewable sources of energy such as geothermal and wind which are not affected by the vagaries of weather and cut reliance on costly thermal power. But World Bank’s International Finance Corporation has simultaneously backed expensive thermal producers.

The project in Loyangalani District, Marsabit County is billed to be Kenya’s largest wind farm.

A total of 365 wind turbines each with a capacity to generate 850 kilowatts will be erected at the 40,000-acres farm situated nine kilometres from the shores of Lake Turkana.