The Lake Turkana Wind Power Project (LTWP), a wind power project in Africa, has signed $870 million financial agreements in Nairobi, Kenya, with Harith General Partners.
The Project will contribute to the economical development of Kenya, especially the Turkana area where unemployment is high.
The project is expected to add 300MW of wind energy to the national grid of Kenya. LTWP has signed a 20-year power purchase agreement (PPA) with the government of Kenya through its electricity entity, Kenya Power.
LTWP is primarily responsible for the financing, construction and operation of the wind farm and comprise a grouping of investors and lenders including FMO, Vestas, Finnfund, IFU and a strong local sponsor KP&P on the equity side.
The project will be financed with a mixture of equity, mezzanine debt and senior debt.
The LTWP wind project consortium comprises KP&P Africa B.V. and Aldwych International as co-developers, Industrial Fund for Developing Countries (IFU), Wind Power A.S. (Vestas), Finnish Fund for Industrial Cooperation Ltd (Finnfund), and Norwegian Investment Fund for Developing Countries (Norfund).
The syndicated loan from consortium of financial institutions is led by African Development Bank and includes Standard Bank, Nedbank, EIB, DEG and Proparco.
“The signing of the over US $870m financing agreements represents a major breakthrough to actualizing the biggest clean power energy project in Africa, spanning years of negotiations and fundraising,” says Tshepo Mahloele, CEO of Harith General Partners.
The LTWP project is the first of its kind in East Africa and will be the largest wind project on the continent to date, says Mahloele.
The project is located on one of the most favorable wind power locations. Here wind speeds are exceptionally high, wind flows from only one direction, is not seasonal and is low in turbulence, LTWP officials said.
Estimates say the LTWP tax contribution to Kenya alone will be approximately $27 million annually and $548m over the life of the investment.
This project also forms part of Harith’s commitment to the United States backed Power Plan announced last year by the US President Barack Obama to bring more than 10 000 MW of electricity to sub Saharan Africa.
Through Power Africa, Harith has committed $70m for wind energy in Kenya and $500m across the African power sector through a new fund.
“It is our assertion that the Lake Turkana Wind Project will greatly reduce Kenya’s over reliance on hydropower which is playing a critical role in ensuring security of electricity supply but is however vulnerable to periodic draught seasons,” says Mahloele.