Kenya reaches close on $870m wind farm

The Lake Turkana project, backed by a €498m debt package, will add 300MW to the country’s generating capacity.

Kenya has reached financial close on one of the largest onshore wind projects ever recorded.

The Lake Turkana Wind Farm (LTWF) project, located in the Rift Valley, is set to receive a €623 million financing package, following the signing of an agreement between a host of development finance institutions (DFIs), developers and private investors. Designed to add 300 megawatts (MW) to Kenya’s 1.67 gigawatts (GW) current electricity generation capacity, it is the largest wind project in Africa to date.

Equity financing will be provided by a wide range of investors including Aldwych International, the power business majority-owned by South African firm Harith, along with KP&P Africa, Industrial Fund for Developing Countries, wind turbine maker Vestas, the Finnish Fund for Industrial Cooperation and the Norwegian Investment Fund for Developing Countries.

The investment, which will total €125 million, is backed by around €498 million of debt and mezzanine financing led by the African Development Bank and involving Standard Bank, Nedbank, the European Investment Bank, Dutch development banks DEG and FMO, and French DFI Proparco.

The project, which has been in development since 2006, will require a 428-kilometre transmission line to be connected to the grid. This link alone is expected to cost an additional €142.5 million, financed by the Spanish government, Spain’s credit export agency and the Kenyan government.

LTWF has signed a 20-year power purchase agreement with the government of Kenya through its electricity utility Kenya Power.

The deal was sealed on a landmark day for renewable energy project finance, with Ontario’s C$850 million (€550 million; $800 million) K2 Wind Farm also reaching financial close yesterday. K2, which is being developed by US power group Pattern Energy, Korea’s Samsung Renewable Energy and Alberta-based Capital Power, secured debt financing from a consortium of 15 lenders.

LTWF and K2 are the second- and third-largest renewables deals recorded so far in 2014, according to Infrastructure Investor Research & Analytics, behind the $1 billion refinancing of Xe-Pian Xe-Namnoy hydropower plant in Laos.