Monday, 28 October 2013

Wind power: Ethiopia beats Kenya to the finish line.


Ashegoda windfarm: The largest wind project in Africa
ETHIOPIA HAS JUST commissioned a 120MW wind power farm, the largest operating wind power farm in sub-Saharan Africa so far. This brings to 170MW the quantity of Ethiopia’s electricity produced by wind power. In the process, Ethiopia has now become the leader in wind power generation in Africa beating Kenya, to a poor second- at least for the time being.

 Kenya has very ambitious plans, including being home to Africa’s largest wind power project, the Lake Turkana Wind power Project, which is just crawling off the ground.  Other projects include the proposed 100MW Kipeto Energy sponsored by the American multinational GE in the Ngong area at a cost of US$ 300 million; Aeolus (Kinangop and Ngong Hills) and Isiolo Wind farm. 

The Ashegoda project in Ethiopia cost US$ 290 million was built by French firm Vergnet SA was funded by concessional loans from BNP Paribas and the French Development Agency (AFD). The Ethiopian government contributed 9 percent of the cost.

 This follows the commissioning of 51MW Adamia1 wind farm in 2011. The project was built by Hydro China and CGOC also of China at a cost of US$117 million. It was funded by the Chinese Export Import Bank and the Ethiopian government.

The progress of Ethiopian power development is an important lesson for African countries. Power generation is still the preserve of the government owing to its large capital outlay. All Ethiopian Power projects enjoyed a significant (9-15 per cent of the project cost) financial input from the government. The government, through a bond meant for Ethiopians will fund the US$4.8 billion 6,000MW Grand Ethiopian Renaissance Dam GERD, currently under construction at the Blue Nile.

This is the lesson Kenya appears to have learnt in the development of geothermal. The private sector has no stomach for the drilling risk nor does the financial sector appear ready to finance such a risky venture. Therefore, where the energy sector is liberalized as in Kenya, the government has to bear the drilling risk and then allow the private sector to generate power from the capped wells. That has resulted in a rapid expansion of geothermal power generation in Kenya, which could reach at least 1000MW by 2016.

Participation of the government is a confidence builder especially for the private sector financiers. Refusal by the Kenya government to provide sovereign risk on the Lake Turkana wind power project, which will generate 300MW thus being the largest such project in Africa, has resulted in its lengthy delays.


 However, the project is back on track after the Africa development Bank issued guarantees for the construction of the 400kv, 428km high voltage transmission line to deliver electricity from the site to Suswa station. Lack of sovereign guarantees was one of the causes for the delay. 

The wind farm is located in a very remote area lacking in basic infrastructure. Initially LWTP was expected to build the infrastructure including the transmission line to Sasumua power station 400km away. This is in addition to building roads to transport the generating equipment. 

However, several government interventions have eased the burden on the sponsors, making the project attractive to investors. One of the interventions was the decision by the government to build the transmission line.

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