Dream that gave birth to Sh70b Turkana wind power

The wind farm in Loiyangalani, Marsabit County, on July 19, 2019. [Courtesy]

The Lake Turkana Wind Power plant has had its fair share of controversies but also put Kenya on the global map as one of the largest clean energy projects in Africa.

The firm has offered Kenyans electricity at far much cheaper rates than the diesel power plants that would kick in whenever production from hydro was low.

But it has also dented the consumer through a Sh9.6 billion penalty levied for failure by government to have a working power line between the plant and Suswa as one of the conditions to invest in the plant.

The government paid Sh5.7 billion upfront, while the balance will be recovered from the monthly electricity bills over a six-year period, with recovery starting when the firm started selling the wind energy to Kenya Power in late 2018.

The plant also saw the World Bank withdraw its support and funding over financial viability.

Lake Turkana Wind Power (LTWP) has, however, enhanced Kenya’s position as among the leading countries using renewable energy, with clean sources now accounting for over 90 per cent of the power consumed in the country.

Away from the hits and misses that the plant has had in the recent past, the backstory of the 310-megawatt wind farm in northern Kenya is a rich account that spans 21 years from the date the idea was first floated to when it started operating.

In an interview posted on the Africa Sustainability Matters news site, one of the founders, Carlo Van Wageningen, tells how the idea to put up the power plant came at the most unlikely place - on the shores of Lake Turkana, the largest desert lake.

Here, a free-spirit Dutchman, Willem Dolleman, used to savour his sundowners in his definition of bohemian dreamland. But it was not him that swept up the dream of the Turkana wind farm to fruition.

His good old friend from Netherlands, Wageningen, a 63-year old master dealmaker, did. It was from his friend that Wageningen, a diploma holder, got to learn about the magical landscapes of Turkana.

Out of curiosity, he decided to join Dolleman the next time he flew over to the wilderness from the capital Nairobi.

Upon arrival one evening in 1997, the pair sat by the shores of the lapping waters enjoying a cold beer.

It was in that serene moment of bliss that Dolleman broached the subject that back then did not make much sense.

“Why don’t you set up a wind farm here? It’s perfect here, the winds are strong and steady and the area is remote and uninhabited,” Wageningen recalls his friend saying.

He shot down the idea.

“I remember giving all the reasons why the idea was a bad one and wouldn’t work,” Wageningen narrated to Africa Sustainability Matters.

To begin with, the remote scrublands were so cut-off, rugged and inaccessible. It would be impossible to convince investors and financiers of a future harvest for them to plant their money in the hardscrabble desert land.

Next, oil prices were rock-bottom back then in 1997, averaging just $19 (around Sh1,900 at current rates) a barrel. That meant diesel-generated electricity was cheap and wind power could not possibly compete with thermal plants in pricing without State subsidies.

As a coming-of-age strategic investor, Wageningen had been in the game long enough to know a wind farm marooned in the middle of nowhere was definitely not a good investment.

He had burnt his fingers before as an independent investor, long after he parachuted out of employment in search of bigger dreams. At some point, when he sunk to his nadir, all he was left with was his shares on the stock market that he sold off to keep him afloat.

But soon after, Wageningen got some pretty good breaks. This was after trying his hand at making hotel room key cards and plastic money (credit and debit cards), along with waste management.

He later divested from these businesses, having bagged a fortune from selling them off.

Global heavyweights

Today, Wageningen sits pretty as the founder and a board director of LTWP. The $700 million (Sh70 billion) plant is enough to power up to one million Kenyan households.

The wind farm runs on 365 wind turbines, spread out over 40,000 acres of land in Marsabit County.

Its investors comprise global heavyweights including UK firm Alydwych, the largest shareholder with a 30.7 per cent stake. KP&P Africa, comprising a team of Dutch individual investors including the founders Wageningen and Dolleman, comes in second with a 25.25 per cent stake.

Other investors include Danish turbines maker Vestas, Danish Climate Fund, KLP Norfund Investments AS and Finnish Fund for Industrial Cooperation.

Google had earlier expressed interest in buying out Vestas’ shareholding at an estimated $40 million (Sh4 billion). There have however been reports that the tech firm had dropped its bid, attributing this to the delay in building the power transmission line between Marsabit and Suswa.

The plant has bagged multiple global awards, attracting accolades as a game changer in green energy. Never mind its humble origins on the shores of Lake Turkana where two dreamers once sat, sipping their beer.

So what exactly changed after Wageningen rubbished the idea in 1997?

He is actually considered the man who ‘sold wind’ to investors.

It is in 2005 that the ghosts of the idea that he thought was long dead started haunting him. For starters, the price of crude oil was on a steady climb, one that would later hit an all-time high of $147 a barrel in 2008 from the $19 a barrel in 1997, coinciding with the global financial meltdown.

The surge meant thermal power would cost a lot more, allowing other technologies to race from behind and play catch-up.

Not only was wind a green energy, but the cost of the technology was dropping too. With government subsidies in Europe, more investors had taken to wind technology, enabling it to scale and driving down production costs.

Equally, the green energy global campaign made the sector gather steam in light of global warming, largely blamed on fossil fuel-based energy generation. Consequently, interest among development finance institutions to fund such green projects shot up.

With these considerations, Wageningen was back in the game. There was a challenge, though.

Wageningen and Dolleman were snubbed by a wind expert who they were persuading to fly in from Netherlands to conduct pre-feasibility studies on the project.

“Harry was adamant, saying there was no way wind power would work in Africa without State subsidies. He just wouldn’t budge,” said Wageningen.

Just when they thought that was it, Wageningen had his light bulb moment.

“We convinced the expert to come on a safari treat to the famous Masai Mara and Diani beaches he had heard so much about,” said Wageningen.

“The only condition was that he had to fly to Turkana with us after visiting these places.”

Harry gladly agreed and the day that the three Dutchmen finally flew through the windy skies in northern Kenya would mark a turning point for Kenya’s wind power affairs.

As their flight cut through the Turkana corridor, hissing with low-level jet stream, the expert asked the pilot of the Cessna plane to turn direction and fly direct against the rushing winds.

Silence enveloped the aircraft as it creaked, cruising 800 metres above the ground, fighting against the howling gales. Only the pilot and the wind expert seemed calm.

Harry, looking nonchalant in the face of the turbulence, silently took notes as he studied the anemometer recording wind speeds on the aircraft’s dashboard.

Later that evening, the trio settled down at Dolleman’s favourite spot on the shores of Lake Turkana for sundowners. And for the first time since that shaky afternoon in the aircraft, the expert talked about the winds.

“I have never seen anything like this before. This is a wind developer’s dream come true. A paradise,” the expert finally said, according to Wageningen’s account.

He proceeded to advise them not to construct anything below 300MW, despite their initial plan being a smaller plant of 50MW.

A wind farm in Turkana wilderness would only make economic sense if it was large enough to justify construction of support infrastructure with equally large costs such as a transmission line and substation.

With that affirmation, the next task for Wageningen was to seek regulatory approvals for feasibility studies and State guarantees for a ready market with which to convince investors for funds.

That is when he approached a good friend, former Comptroller of State House Matere Keriri with the idea. Keriri, in turn, set up a meeting with the then Ministry of Energy Permanent Secretary Patrick Nyoike to whom the dreamer sought to sell his wind dream.

“There was resistance in the beginning given that in 2005, Kenya’s total power capacity was just 900MW, and here we were, foreigners, asking approval to inject nearly half of that capacity from wind, an intermittent source,” said Wageningen.

Worse, a 25MW wind farm at Ngong constructed earlier had proved inefficient. The government was, therefore, naturally opposed to yet another wind project that would turn out to be a white elephant.

But with endorsement from Keriri, the PS was somehow convinced and gave the project the green light.

Wageningen then proceeded to ask for two government letters for risk mitigation, which he was granted a week later.

With these formal documents and a strong business case, the wind man now felt emboldened to approach investors and financiers.

In 2014, the developers reached a financial close after lots of paperwork and negotiations. That set in motion the construction process with the wind farm starting to produce clean power in September 2018.

“The journey has been arduous. From nothing here, to all these around us now, it’s a miracle,” an emotional Wageningen told Africa Sustainability Matters, acknowledging that the project had been challenging.

Fishing expedition

“It gives me pleasure to see the wind blades rolling and people having jobs, water flowing, children going to school and roads being passable because of the dream that started with the fishing expedition.”

The World Bank at some point during negotiations pulled out of its financing commitment, citing inadequate demand in Kenya for such a large project, along with a weak national grid system.

Delays in construction of a 435-kilometre transmission line that was only completed in September 2018 also further delayed power generation.

Ever a visionary, Wageningen plans to mobilise Kenyans into pooling funds to invest and own wind turbines, from which they could earn from power sales.