The developers of Lake Turkana Wind Power project have started billing Kenya Power #ticker:KPLC every month for its failure to distribute their production due to lack of a transmission line.
This is despite recent discussions between Energy ministry officials and the wind farm managers to delay the billing that would ultimately be passed on to consumers.
“They have been billing Kenya Power,” said an energy sector source who sought anonymity, adding that the government could be absorbing a Sh700 million monthly burden, piling the pressure on taxpayers.
Energy principal secretary Joseph Njoroge declined to respond to the Business Daily's phone calls and text messages.
The wind park general manager Phylip Leferink also did not answer our calls.
Kenya Power managing director Ken Tarus said an inter-ministerial committee had been formed to address the matter, referring us back to the Energy ministry officials.
The wind farm, the largest in Africa with a capacity of 310 megawatts — enough to power up to one million homes — was supposed to inject the first 50 megawatts to the grid last October and the whole capacity by July this year.
But delays in construction of a Sh20 billion 428km high-voltage line has hampered electricity evacuation from the northern town of Marsabit to Suswa substation, the country’s main interchange for power coming from different sources.
This has left the wind farm developers with stranded power amid pressing cash needs such as loans repayment, an obligation that taxpayers look set to shoulder.
The government had committed to link the mega wind park to the grid by January to allow the owners of the project to earn an income from power sales in time to pay bank loans in June.
The transmission line was approved in August 2014 and the government agreed to pay the owners of the wind project a monthly compensation of Sh700 million should there be delays in injecting power to the grid after January 2017.
The fine is technically known as capacity charge and aims to compensate investors for their expense on energy projects when their electricity is not supplied to the grid for sale to end users.
Kenya Power collects revenues from consumers for onward remission to power producers.
Electricity from the wind park will cost Sh8.7 per unit (8.5 US cents), which is in a similar cost range as geothermal power, or three times cheaper than diesel-generated electricity.
UK-based Aldwych is the single largest investor in the €623 million (Sh68 billion) wind project with a 30.7 per cent stake.
Other investors in the consortium include Google, KP&P Africa B.V., Industrial Development Corporation of South Africa, Industrial Fund for Developing Countries, Norwegian Investment Fund for Developing Countries and Vestas Eastern Africa.
At 310 megawatts, the wind power plant will account for 13 per cent of Kenya’s total power capacity.
Wind power now accounts for only one per cent of what the Kenyan economy consumes, led by geothermal at nearly half the energy mix, followed by hydropower and thermal sources.