news - FMO invests in Lake Turkana wind project in Kenya


FMO invests in Lake Turkana wind project in Kenya

March 31, 2014

On 24 March 2014, the financing documentation for a 300MW wind project near Lake Turkana in North West Kenya has been signed with Lake Turkana Wind Power Ltd (LTWP). The project is the largest wind project in sub-sahara Africa. The project has been developed by KP&P Africa BV, a group of Dutch entrepreneurs, with Aldwych International as co-developers and Finnfund, IFU, Norfund as investors.

Total project costs are expected to be €623m. FMO provides €35m in senior debt and up to €8.5m in (partly stand-by) equity through shareholder Aldwych Turkana Investments Ltd. In addition, the Dutch Government provided a €10m grant for the rehabilitation of the access roads to the project site.

Potentially Africa’s largest single wind power project to be constructed, Lake Turkana has attracted financial support from the European Investment Bank (EIB), the Standard Bank of South Africa, Nedbank, FMO, Proparco, East African Development Bank (EADB), PTA Bank, EKF, Triodos and DEG; all of whom were led by the African Development Bank (AfDB).

LTWP will benefit from an exceptional wind resource with average wind speeds of 11.1 m/s. The Project comprises 365 Vestas V52 wind turbine generators, each with 850kW generating capacity, a Siemens supplied and built electrical collection network and substation, and three dynamic reactive power controls manufactured by RXPE from China.

Construction of the 428km €142m transmission line to evacuate the power to Nairobi, is the responsibility of the national transmission company Ketraco, and will be built by Isolux from Spain.

LTWP is a key deliverable under the Kenyan Government’s commitment to scaling up electricity generation to 5,000 MW and to provide cost-effective renewable power to the Kenyan consumer. This project alone will produce approximately 20% of Kenya’s currently installed capacity at €7.52 cents/kWh. It is also a Vision 2030 flagship project and will be transformative in terms of the development impact in the northern arid areas of Kenya, to the Kenya’s electricity sector, and to the country as a whole. It is also expected to generate up to US $150 million annually in foreign currency savings to Kenya through fuel displacement costs.

The wind park will be fully commissioned by 2017. To date, the Lake Turkana wind project is the largest private investment in the history of Kenya. The project’s estimated value for avoided greenhouse gas emissions is 736,000 tCO2eq per year, while the FMO share of the financing can be translated into an additional 323,000 persons with access to energy.

Linda Broekhuizen, CIO of FMO, said: “We are really proud to be part of this landmark project for Africa. FMO has, through its shareholding in Aldwych International, been involved in the structuring of this project for the last four years. The closing of this transaction shows commitment of the shareholders to make this investment successful while the Dutch involvement in the equity, debt and the grant shows the important role that the Netherlands can play in the roll out of renewable energy projects in Africa”.

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