Standard Bank Group and its subsidiary company in Kenya, CfC Stanbic Bank, have signed a deal with independent power producer Aeolus Kenya (AKL) to build a US$150 million wind power plant in Kenya. The plant will be the largest such facility in sub-Saharan Africa to date.
Aeolus Kenya is a member of the Power Africa initiative which is led by US President Barack Obama. The organisation is developing 1GW of wind, geothermal and gas-fired power projects in the East African Region and AKL’s landmark project, the 60.8MW Kinangop Wind Park is to be the first in a strategic line of projects. The plant will add a further 60MW to Kenya’s current 1,672MW national power grid and will provide electricity to 150,000 Kenyan households. It is to be located on the Kinangop Plateau in central Kenya.
The project will be fully funded through a combination of debt and equity according to Kwame Parker, Standard Bank Group’s East Africa Head of Debt Solutions and Infrastructure Finance. The bank is to be the lead arranger and will underwrite US$90 million of the debt while Norway’s Norfund and a large Africa-focused international infrastructure investor will provide US$90 million in equity. Financial close is expected towards the end of October 2013.
“With the rising demand for electricity in Kenya, this project will go a long way in providing cost-effective power to the economy” Mr Parker said. “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."
Kenya is East Africa’s largest economy and relies heavily on hydro-electric power, something that often presents challenges in times of reoccurring drought.
“The project is designed to provide a clean source of electricity to Kenya” Mr Parker added. “It will not only contribute to the social and economic development of Kenya, but will also significantly help ease the energy supply deficit that the country is grappling with. It provides a perfect opportunity for Kenya to increase the production of clean energy and reduce heavy reliance on other sources of power.”
The plant is expected to come on line in mid-2015 and the Kenyan government will be the main purchaser of the generated power. Aeolus Kenya has already signed a power purchase agreement with the state utility, Kenya Power, to this effect.
This is the first deal that Standard Bank Group has concluded in East Africa with regard to renewable energy, but it paves the way for similar deals in the region. According to Parker the bank has already signed mandates to develop other wind farms in the country, some of which will be larger than the Kinangop facility. There are also opportunities to develop other renewable projects such as more hydro plants and geothermal energy.
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