US$150 million wind project deal to boost Kenya’s power

Last Updated 13 years ago by Kenya Engineer

Kenya’s current state of power demand surpassing the supply is set to change after Standard Bank and its subsidiary CfC Stanbic Bank signed a deal with the Aeolus Kenya, to build a US$150 million wind power plant in the country. Aeolus Kenya Limited (AKL), an Independent Power Producer (IPP) and a member of the Power Africa initiative is developing 1.0 GW of wind, geothermal and gas fired power projects in the East African region. The 60.8 MW Kinangop Wind Park marks its first project among others. 

Kinangop Wind Park will be built in the Kinangop plateau, and will add to Kenya’s 1,672 MW national power grid. According to Kwame Parker, Standard Bank’s east Africa Head Of Debt Solutions and Infrastructure Finance, the transaction will be fully funded through a combination of debt and equity. Standard Bank is the lead arranger and will underwrite US$90 million (Ksh7.7 billion) of the debt, while Norway’s Norfund and a large Africa-focused international infrastructure investor will provide US$60 million (Ksh5.1 billion) in equity.  The financial close is expected by the end of this month and syndication of the debt is now underway. 

“With the rising demand for electricity in Kenya, this project will go a long way in providing cost-effective power to the economy. It is a good example of how to successfully bring private players into the renewable energy sector and serves as a good vote of investor confidence in the Kenyan economy,” said Mr. Parker in a statement.

The wind project which is also registered under United Nations’ Clean Development Mechanism is set to commence in mid-2015 with the government being the main buyer of the power produced. According to Mr. Parker, Aeolus has already signed a power purchase agreement with Kenya Power.

“What makes this deal significant is that it is a collaboration of players in various sectors combining their skills in order to meet Kenya’s growing demand for electricity. It’s been a complex deal, but we are delighted that all our efforts have yielded a positive outcome for Kenya and its on-going efforts to improve energy security,” said Mr. Parker.

He adds that although this is the first deal that Standard Bank has concluded in the renewable energy sector in East Africa, it has opened the way for similar deals in the region as investors are increasingly looking at renewable sources to help boost power supply.

“On the back of the success of this deal, Standard Bank has signed mandates to develop other wind farms in Kenya some of which are going to be larger in size. There are also significant opportunities to finance renewable projects in the hydro and geothermal energy sectors in east Africa. There is a growing interest in renewable energy in the region and Standard Bank is positioned to play a major role in this sector,” he stated.