Kipeto Energy Ltd., an IFC client and partner, today signed a 20-year Power Purchase Agreement with Kenya Power that will increase supply of clean, renewable energy supporting the country’s economic growth. Under the agreement, Kipeto’s 100MW wind farm will sell its power to the national distributor at stable costs in a market where demand for electricity is rising at 7 percent annually.
The new agreement marks a major milestone for Kipeto’s large wind farm project, which is expected to reach financial close and commence construction in the second half of 2016. Located 70 kilometers southwest of Nairobi in Kajidao County, it will be Kenya’s second largest wind farm and the second privately financed wind energy project. It is part of US President Obama’s ‘Power Africa’ initiative, which aims to add 30,000 megawatts of renewable power capacity in Sub Saharan Africa.
Kipeto is being developed jointly by IFC’s InfraVentures, which supports infrastructure projects in developing countries. Other partners include African Infrastructure Investment Managers and Kenyan company Craftskills Wind Energy International. The Overseas Private Investment Corporation, the US Government’s development finance institution, is the principal lender to the project. General Electric will supply 60 wind turbines and will service the plant over a 15-year period.
Along with financing, IFC is advising Kipeto management on best practices related to land, community and the environment. Kipeto has established a community development trust, through which 5.0 percent of the wind farm’s dividends will be invested in health, education, and other social projects to benefit Kajiado county residents. The trust is the first of its kind in Kenya.
“Reliable, affordable energy is vital to creating jobs and supporting economic growth in Kenya,” said Oumar Seydi, IFC Director for Eastern and Southern Africa. “IFC supports pioneering companies like Kipeto that are investing in renewable energy in Kenya while benefiting the local community.”
The Kenyan government is expected to commission more than 700 megawatts of renewable energy projects in the next three years. IFC, a leader in renewable energy finance, is uniquely positioned to help developing countries like Kenya transition to a low carbon future. Over the past three years, IFC has financed $3.5 billion in renewable energy projects worldwide.