Kenya is set to become sub-Saharan Africa’s top producer of wind energy after the US committed to finance the 100-megawatt Kipeto Wind Farm in Kajiado County.
The Overseas Private Investment Corporation (OPIC), a US public agency that mobilises capital for private firms, has pledged Sh17 billion for the project.
US Ambassador to Kenya Robert Godec said the money was part of Sh43 billion ($500 million) that the US intends to put in the country’s renewable energy resources in the next five years to lower the cost of power.
“There are big changes coming to Kenya’s grid, but the US Government is also committed to building management capacity,” Mr Godec said on Tuesday when President Obama’s Power Africa Initiative co-ordinator Andrew Herscowitz launched the campaign in Nairobi.
The money will be in the form of direct loan, credit guarantee, insurance cover and a private equity investment fund, officials said, without disclosing the breakdown.
Kipeto Energy Limited (KEL), initially founded by Kenya-based Craftskills Wind Energy International Limited, seeks to produce clean electricity at its Kiserian base, becoming the second largest wind farm in Kenya after the Turkana Wind Farm that targets to produce 300 megawatts.
KEL is majority-owned by US-based General Electric with the World Bank Group’s investment arm IFC and a community trust its other shareholders.
The high cost of power in Kenya has frequently been cited as one of the reasons local goods are not competitive in the global market.
On Tuesday, officials said the development of Kipeto – together with the ongoing upgrading of Turkana Wind Project, a number of small hydros and geothermal plants - would slash Kenya’s power cost from 18 US cents (Sh15) per kilowatt hour to just eight cents (Sh7).
Under the Kipeto Wind Energy Project, General Electric will construct a new on-site substation and a 66 kV line to transmit the generated electricity to the national power grid.
The fresh commitment adds to $310 million (Sh27 billion) worth of financing that OPIC committed in the first private geothermal energy plant, the Orpower 4 plant at OlKaria.
The commitments are in line with the Sh595 billion ($7 billion) Power Africa Initiative announced by President Obama on June 30, 2013 with the aim of connecting at least 20 million families and businesses in the continent to affordable electricity.
Under the campaign, the US government will guarantee local banks and international development institutions like the World Bank and African Development Bank to finance renewable projects.
“I cannot say at this point how much of the Africa fund will be coming to Kenya, but I hope it will be enough to generate 10,000MW of geothermal that Kenya has the capacity to produce,” Mr Herscowitz told the Business Daily.
KEL falls within Kenya’s Vision 2030 goal of putting an additional 5000 MW of mostly clean electricity on the grid in the next 42 months.
“Just as Kenya has been a leader in private-sector energy development in Africa, we know that Kenya will be a leader for Power Africa,” Mr Godec said of the initiative that has attracted various US Agencies.
As part of the grand plan, the USAid has partnered with Kenya Power, Ketraco and the Energy Regulatory Commission to boost wind generation.
The agency is also involved in the development of small, renewable projects and mini-hydros targeting rural dwellers in Kenya, officials said.
Similarly, the US Trade and Development Agency has also organised a geothermal trade mission to the United States for Energy ministry officials.