UK fund Actis closes Kipeto Wind power deal

London-based private equity company Actis LLP has acquired the equity interests of both the International Finance Corporation (IFC) and the African Infrastructure Investment Managers in the Kipeto Wind Power project, making it the largest shareholder in Kenya’s second largest wind farm.

Actis, which will now fund the 100MW project by 88 percent together with Kenyan partner Craftskills Wind Energy International at 12 percent, will also rope in senior debt from the Overseas Private Investment Corporation (“OPIC”) – the US Government’s development finance institution.

The wind power plant located in Kajiado County will be Kenya’s second largest wind farm after the Turkana Wind Power project which has a generation capacity of 310MW.

The deal will now see the complete exit of the World Bank financing arm from the project originally conceived by Craftskills Wind Energy International, with support from US multinational conglomerate General Electric (“GE”).

The power plant already inked a power purchasing deal with Kenya Power #ticker:KPLC in 2016, meaning the country will soon benefit from cheaper wind generated power as Kenya continues to push for less expensive green energy sources.

Once operational, the project – which is now preparing for the construction of 60 GE 1.7-103 wind turbines and a 17km (220KV) transmission line to carry the power to Isinya substation in Kajiado County – is expected to supply at least 40 homes with power.

Wind is, however, an intermittent source of power and fluctuates from time to time.

Actis Director in the energy business Lisa Pinsley said the project is expected to create jobs over and above its provision of the cheaper wind power in to the grid.

“We are excited about taking the Kipeto project forward and we are committed to maintaining the highest level of standards drawing on our 70 years of investing responsibly in Africa. The project will not only contribute significantly to the Government’s Vision 2030 agenda but will also have a positive impact on the local community through the creation of jobs and provision of over 80 houses,” Ms Pinsley said.

Kipeto Energy Limited Chairman Kenneth Namunje said land acquisitions are complete with the close collaboration of the local community.

Wayleave headwinds have been a major setback for mega power projects with critical transmission lines now stuck over land issues that have ended in litigation.

“We have leased and secured more than 60 plots within the project area for the wind turbine footprint and the transmission line through voluntary participation of land owners, which is a first for any project of this kind in Kenya, and we’re constructing new houses for the families outside the project’s 500m buffer zone, so local buy-in has been a vital component,’’ Mr Namunje said.

The firm says the local Maasai community will also receive 5 percent of annual dividends once the project is on stream from 2020.

OPIC is the principal lender to the project while the African Trade Insurance Agency will provide a 10-year standby on-demand insurance cover to protect the project against risk of payment delays by Kenya Power.

GE Renewable Energy will provide the wind turbines which the firm will also operate and maintain while the China Machinery Engineering Corporation (CMEC) provides engineering, procurement and construction services.