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Kenya: Wind power contract signed

29 January 2010 – The Kenya Power and Lighting Company (KPLC) is due to finalise a power purchase agreement with private investors that will boost power supply by 300MW to the national grid.  Wind will be the source of the generation.

Implications of this deal are possibly cheaper energy for end-users, as studies have shown that wind-based sources of power are more economical in the long-term than thermal sources that are mostly used currently.

"A power purchase agreement will be signed between the Kenya Power and Lighting Company and Lake Turkana Wind Power for the supply of 300 MW electricity tomorrow (today)" the power distributor said in a statement yesterday.

The group, Lake Turkana Wind Power consortium (LTWP), hopes to channel about 300MWof electricity for sale through the national grid by June 2011 – an equivalent of 30 per cent the country’s current installed power capacity. Analysts say the project will bring relief to electricity consumers who have faced back-to-back power crises that impacted on economic growth on the effects of prolonged drought.

Industrialists have particularly suffered serious down times owing to regular outages that come with power rationing programmes. This has forced most of them to turn to alternative sources such as diesel run generators that drove up their operational costs.

Mr Carlo van Wageningen is the chairman of LTWP and has said that the company envisaged to construct a wind farm consisting of 353 wind turbines, each with a capacity of 850 kilo watts (kw). The total power generated in the initial phase of the project expected to reach 300mw by July 2012. LTWP already has an agreement with Danish firm — Vestas Wind to supply 360 wind turbines for use in the project.

The signing of the power purchase agreement means the terms have been agreed upon and registered with the Energy Regulatory Commission whose approval is required before pen is put to paper.

The signing of the purchase deal with KPLC will open the doors for the private investor to roll out the northern-Kenya based project that will help boost the country’s energy reserves once completed.

Projections by experts at the Energy ministry showed that Kenya requires at least 2,013MW in additional power supplies to the national grid by 2014 even though such dreams have repeatedly been thwarted by hitches in access to finance to construct new power plants.

The Energy Regulatory Commission (ERC) identifies lack of investment in the sector as a major contributor to the current energy crisis despite widespread claims that poor weather was to blame. Kenya heavily relies on hydro-based source that accounts for about 60 per cent of its power capacity.

Statistics showed that Kenya currently has an installed power capacity 1, 480 mega watts, including temporary emergency power of 290, but is currently supplying about 1050 megawatts at peak time. Data further showed that the country’s current power reserve capacity — the difference between power demand and supply–has wilted to record levels of 65mw or 5.6 per cent of the effective demand which is well below the reserve limit of 15 per cent, hence the push for additional generation by the government.

As result there has been growing fears that the country is likely to run short of power from 2012 if new power plants do not come through as demand for electricity is set to surpass supply.

An analysis by the World Bank says that the country’s power crisis including supply and costs erodes about 1.5 per cent of the country’s GDP in lost business opportunity besides weakening the country’s competitiveness in attracting fresh investments.

LTWP’s is one of several projects being pursued to arrest the power crisis.Power producer, Kenya Electricity Generating Company (KenGen) also plans to boost power out put through a Sh55 billion joint venture coal power plant project to be situated in Mombasa. KenGen aims to provide 300 MW power plant in two phases as recommended by findings of joint feasibility study with the government on the project.

Stirred by the poor energy reserve situation, the government the Ministry of Energy has brought on board new policies targeted as alternative sources of energy such as wind, small hydro and biomass generated electricity with the aim of attracting private sector investments.It argues that such a move would also help enhance national energy security and create employment and income generation.