Finnfund sells shares in Kenyan wind farm to BlackRock fund
Finnfund, the Finnish development financier and impact investor, has signed an agreement to sell its shares in Lake Turkana Wind Power Limited (LTWP), which owns and operates the largest wind farm in Kenya. Finnfund has been a shareholder in the company since the construction of the wind farm began in 2014. The Climate Finance Partnership (CFP), a public-private finance vehicle managed by BlackRock Alternatives, will acquire the shares, and the transaction is expected to close in Q2 of 2023.
LTWP was the biggest equity investment made by Finnfund at the time of the commitment and one of the largest private investments in Kenya’s history.
“This is a natural next step for us,” says Helena Teppana, Finnfund’s associate director, who has been involved in the project since its inception and in the company’s board of directors since 2014. “We were there to share the initial risk of the construction phase and the start of operations. Today, it has been proved that the wind farm lives up to the expectations and generates revenue from providing Kenya with low-cost green power. It is time for us to move on.”
Finnfund is funded by the State of Finland, private capital markets, and retained earnings from its investments. All profits are reinvested in new projects that drive sustainable development. “Going forward, we will continue investing in renewable energy projects on the continent,” says Teppana.
David Giordano, global head of climate infrastructure at BlackRock Alternatives, comments, “We are excited for CFP’s first investment to be in Kenya, one of Africa’s fastest-growing economies, and we look forward to working with our partners in the region to source future developments that not only capitalise on the historic investment opportunity presented by the energy transition but also contribute to local economies.”
Lake Turkana wind farm was connected to the national grid in 2018 and now meets approximately 14% of Kenya’s current electricity demand, serving 1.2 million homes. The electricity generated by LTWP has reduced Kenya’s reliance on fuel imports, helping the country save more than €281 million between 2018 and 2021. Kenya’s total power demand is expected to grow at almost 5% p.a. due to increasing urbanisation, rural electrification, and rapid development.
“The project has exceeded our expectations in many ways,” says Teppana. “Despite its size and rural location, the project was built on time and on budget. During operation, we have seen the wind farm reach an exceptional annual average capacity factor of 60+%. Some days for some hours, the wind farm has generated green power to the Kenyan grid at 100% of capacity. This is undeniably one of the best wind sites in the world.”