Two major renewable energy projects in Kenya and Sierra Leone took big steps forward this week in a boost to the sector in sub-Saharan Africa.
Standard Bank Group said it had signed a deal with independent power producer Aeolus Kenya (AKL) to build a $150 million wind power plant in Kenya.
AKL is a member of the Power Africa initiative led by U.S. President Barack Obama, which is developing 1 gigawatt (GW) of wind, geothermal and gas-fired power projects in East Africa.
The 60.8 megawatt (MW) Kinangop Wind Park in central Kenya, first announced in 2011, will provide electricity to 150,000 Kenyan households and will be the largest wind power generation project to be constructed in sub-Saharan Africa outside of South Africa, the companies said in a statement.
The plant is expected to come on line in mid-2015, and the Kenyan government will be the main buyer of the power produced, expanding the capacity of the country's 1,672 MW national grid.
"The project is designed to provide a clean source of electricity to Kenya. 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," said Kwame Parker, Standard Bank's East Africa head of debt solutions and infrastructure finance.
Kenya relies heavily on hydro-electric dams for power, which are often challenged in times of recurring drought, the statement added.
The Kinangop wind plant has also been registered under the United Nations Clean Development Mechanism (CDM), which enables projects to earn certified emission reduction credits, each equivalent to one tonne of carbon dioxide. Countries that need to offset their greenhouse gas emissions to meet targets under the Kyoto Protocol can buy these credits.
Standard Bank will underwrite $90 million in syndicated debt financing for the construction of Kinangop, while Norway's Norfund and a large Africa-focused international infrastructure investor will provide $60 million in equity.
The Kenya wind farm is the first deal Standard Bank - Africa's largest bank by assets - has concluded in East Africa's renewable energy sector, but it is eyeing more. It has signed mandates to develop other wind farms in Kenya, some of which will be larger in size, it said.
