Carlo Van Wageningen’s working space is not his private office on the fringes of Nairobi , nice though it is, but rather a narrow corridor running between two high-range mountains near Kenya’s border with Sudan and Ethiopia.
The 250km corridor, along Lake Turkana and cutting through Kuala and Nyiru mountains, enjoys gusts of wind all-year round. It has a stunning 24,000 acre geography that lends itself to the newest obsession of generating wind power. Wageningen, the chairman of Lake Turkana Wind Power (LTWP), finds the space and wind quite inspirational, and has turned them into his working station for seven years.
“A good wind resource is tantamount to an oil discovery,” he says, clearly a euphemism for the lucrative nature of green and cheap energy in era of expensive oil. “It’s good to look for oil, but it’s even better to exploit the wind.”
LTWP, the company he founded seven years ago, will begin construction of 365 turbines in June in this arid region. The wind farm is valued at $775 million and is expected to produce 300 megawatts (MW) of power to be fed into Kenya’s national grid.
This will be Africa’s largest wind farm, dwarfing Morocco’s $300 million plant, with a capacity of 140 MW generated from 165 turbines. Wageningen says the wind farm is expected to begin producing power in 2014 at a threshold capacity of 50 MW, reaching its full capacity of 300 MW in 2015.
Like many great businesses today, the wind farm idea was mooted in the most unlikely way. In 2004, Wageningen and his Dutch entrepreneur friend, Vuillem Dollem, who had cut his teeth in agribusiness, were drinking coffee, from enamel cups, at a Nairobi café when wind became a topic.
“Dollem used to do sport fishing,” recalls Wageningen. “He was baffled by the amount of wind he was met with during his expeditions.”
Dollem had always been a fan of wind energy, if you will pardon the expression. In those days, oil prices were cheap at $20-a-barrel and wind technology was still rudimentary. Motivation for cheaper alternative energy was sparse.
In 2004, when prices rose, hitting $50-a-barrel in 2005, Wageningen started looking at the wind opportunity seriously. So, he got his two investment partners, Christopher Staubo and John Mwangi, to buy into the idea and soon they were six.
“I had little knowledge in wind but simply sensed it was a very good time to do it. I brought in partners and other entrepreneurs from Netherlands who were mature in wind energy,” he says.
Most of the partners liked what they saw. Lake Turkana was an impressive site with vast space and few people.
“We knew from an environmental point of view it would be easy,” he says.
Wageningen and his partners guarded jealously the project lest it be taken up by other cash-flush investors. For two years they did feasibility studies.
Then the dream turned nightmare.
The new company faced logistics challenges. Turkana is an investor’s version of hell on earth. For starters, it’s a semi-arid region and with no physical infrastructure–no roads, power or even water.
“It became clear that we would have to go large and spend really good money on constructing power lines&#8230; and roads to transport materials and turbines.”
Despite these costly troubles, there was one consolation: the wind was ideal for power production. It rates better than US and European wind farms.
The wind blows in off the Indian Ocean as a low-level jet and hits the Ethiopian islands. The thrust diverts part of it to the Far East, creating monsoons, the rest is attracted by the low pressure in the Sahara desert to blow through the Turkana corridor towards Sudan.
“When it hits the two mountains it’s compressed and creates a venturi effect that accelerates the wind. There’s no such phenomenon anywhere else in the world,” says Wageningen
The wind project proved a hard sell to Kenyan investors and private equity firms. “We approached a number of local investor groups who basically said, ‘Thank you very much, but no thank you,’” Wageningen recalls.
His first overseas stop was the Netherlands. The project needed lots of funds initially—around €5.5 million ($6.8 million)—for a comprehensive feasibility venture. They got €4 million ($4.9 million), thanks to two prominent Dutch wind investors who convinced others to invest in the Kenyan project. The initial investors raised the difference.
“As entrepreneurs we said we will not be scared because of the cost. We are looking at 300 MW and a yield of 50% to 65% of installed capacity. In the US on-shore wind farms average 26-27% yield, meaning for every one megawatt of wind power installed the actual power per year is 270KW. In our case we’ll get 500-600KW,” says Wageningen.
The company expects to reach a financial close for the project as soon as the World Bank gives guarantees to investors. The wind farm is financed 70% debt and 30% equity. The African Development Bank is arranging loans to cover 70% of the project cost, with the remaining 30% from private investment funds and co-developers.
Seven years later, €17 million ($21.2 million) has been spent for no energy. By the time of financial close, Wageningen reckons they would have cast €23 million ($28.7 million) to the wind.
This kind of investment is for those with a long-term view. It will take 12 years for the wind farm to break even though Wageningen says there will be a dividend payout to investors in between.
“This is normal for projects of this size if you consider that the six founding fathers of this project have been working for six years. It is a deferred salary, and we hope to get it one day. The passion has been more important than the money. To do something like this as a first case, we feel proud. We are driven a lot more by dedication; of course the money will be very welcome.”
On completion, the power generated from the wind farm will form 17% of total installed capacity in Kenya. Together with geothermal, the new sources of power by 2015/16 will represent at least 40% of power pool/mix and could halve tariffs.
Managing such a huge project is no walk in the park. Wageningen says he works with a construction management plan that identifies the various interfaces.
“Once construction starts, we know what starts and what follows. You need prudent management to ensure each one of these contractors works and meets targets.”
Wageningen, who holds a high school diploma and a number of specialized courses in personnel and project management, says success in business is about thinking big and outside the box.
“It’s about experience. I have been so diversified. And I don’t work alone. I have strong teams,” he says.
Wageningen has always been a trouble shooter, after the experience he gained working for the United Nations. He worked for Food and Agriculture Organization (FAO) for 12 years in Rome, Niger, Benin and then Zimbabwe until 1988 when he joined Fata European Group, an Italian engineering company, in Kenya.
Five years later, the parent company collapsed, but he decided to stay on in Kenya and went into entrepreneurship.
“I have had a number of businesses,” he says. “Some have been successful while others have failed. You can’t win them all.”
His first venture was Sally Days, a furniture maker, in 1993, which he exited after selling his stake to the local partner and went into technology.
“I have always liked innovation. Even with furniture we were doing it in a different way. We started garden furniture made of wood. Those days you’d only see metal furniture not even plastic and even shelter umbrellas were metal. That always bewildered me. Kenya was rich in wood and cotton, and we found a way to use it,” he says.
It turns out Wageningen is the serial entrepreneur who sets up businesses and sells. “I like seeing success and going for something new. That excites me,” he says.
Wageningen was the first to bring plastic cards, like credit cards, to Kenya. He sold the businesses when it had 70% market share, and went into telecommunications as a franchisee for Global Star in 22 African countries. But the US parent company collapsed and left him high and dry. In 1996/7 he invested in a small bank in Nairobi and today Chase Bank is a big player in the financial services industry.
“I’m not sure. Maybe when this wind farm is up and running something exciting may just come up,” he says.
Lake Turkana Wind Power has opened a whole new investment world for Wageningen and Kenya as a country. He is looking at expanding the project, technology allowing, to 2,000 MW. Before he came in there were only a handful of turbines in the country. Now there are at least a dozen projects awaiting approval. The government is developing a comprehensive wind atlas to attract more investors.It is very predictable wind, but the investor had to measure and observe its trends for close to six years–just to be sure.
“The wind pattern is predictable. We know when power will go down and maximum production, and so we can inform the power distributor in advance. We have no turbulence, something that turbines don’t like–gusts of wind at 29m/s, like a hair drier.”
In Europe wind can drop in 10 minutes by 50% , and if providers are not prepared you suddenly get blackouts. Lake Turkana Wind Power has entered into a contract to sell power to Kenya Power at a cost of less than $.10 per kilowatt hour, making it Kenya’s cheapest energy source, next to geothermal energy.
A 428-kilometer transmission line will also be built to link the wind farm to the national grid at an additional cost of $188 million. For a world slowly turning to wind power after being let down by hydro-electricity, gusts of high-speed winds have become a precious resource.

Tag: high speed

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