Supervisor: Kristian L. Nielsen, Department of International Business Communication (IBC)

Transcription

1 Author: Mikael Østergaard Nielsen Supervisor: Kristian L. Nielsen, Department of International Business Communication (IBC) Hand-in deadline: 17/08/2015 (Handed in: 14/08/2015) Number of characters and pages: (71,7 pages) Copenhagen

2 Abstract Proponents of Actor-Network Theory (ANT) has for some time challenged classical constructivist approaches, such as diffusion theory, in explaining the success or failure of innovations 1. Classic sociology tends to reduce explanation to the intrinsic qualities of either humans or objects 2. On the other hand, ANT is an empirical grounded approach that takes into consideration the complex and changing context of human and non-human entities in contrast to the famous diffusion model which supposes an irremediable separation between an innovation and its environment 3. Instead of aiming for generic explanations ANT makes no assumptions about the qualities of humans or objects, but explores the connections between these elements that make an innovation durable 4. Innovation projects that involve entities from the social, technical, economic and political domain can be a challenge for any innovation manager to chasten. This was experienced in France where the construction of a wind farm met severe and unexpected resistance from actors whose interests were not considered 5. In Kenya a similar, but much larger wind farm project, is being constructed and has been under development since The project is called the Lake Turkana Wind Power project (LTWP) and is of the same complex nature that large-scale energy projects typically are embedded in. Therefore, the purpose of this thesis has been to utilize ANT in order to investigate how the Lake Turkana project has been mobilized and how ANT can be used to manage innovation projects. The investigation takes it point of departure in the hypothesis that an explanation can be reached if we aim for a saturated description of the innovation project. By combining concept-driven coding, meaning condensation with the concepts and the model of interessement that ANT offers, a description of the innovation project is made. From the translation process and the case description it can be seen how actors are associated in the innovation project and how each actor has contributed to, or been in resistance with, the mobilization of the Lake Turkana project. The findings in this thesis shows how the success of innovations are relying on knowing the interests of actors so that negotiations can be made that convinces the actors to be in compliance with the network. It further shows how ANT can be used to create a methodology that can be used to describe complex innovation projects. 1 Akrich, Callon & Latour 2002 :: Callon 1986b :: Latour 1988b, 1991, 1996a, 2005 :: Law 1986, 2007 :: Woolgar Callon 1986: 1-2. :: Latour 1991: Akrich, Callon & Latour 2002: Latour 1996a: 9. 5 Jolivet & Heiskanen

3 Table of Contents Abstract... 1 List of Abbreviations... 5 Introduction... 7 Problem area... 7 Problem Formulation Structure of Thesis Theoretical Frame Historical Background Language as a Tool for Research Philosophy of Science and Politics Relativity and a Flat Ontology The Social Actors, intermediaries and mediators Networks, Stability and Power Objects and Dislocated Action The Translation Model Methodology Hypothesis and Case The Actor-Network and Process of Translation Analytical Strategy Validity, Reliability and Generalization Limitations Data Collection Thematizing Designing Interviewing Transcribing Analyzing Verifying Reporting Analysis Lake Turkana Wind Power Project - Case Description

4 2006 The Beginning The Middle The Middle The Middle The End of Development Translation Process Descriptive statement st Problematization nd Interessement rd Enrolment th Mobilization *Other indirect factors Discussion Mobilizing the Project Actor-Network Theory and Innovation Management Research Conclusion Perspectivation Bibliography Books Research Papers Documents Articles and Press Releases Video Appendix st Interview Guide Transcript of 1 st Interview (Henrik Frøsig) nd Interview Guide Transcript of 2 nd Interview (Bob Chestnutt) Models and Figures ) Wind Speed Measurement ) Project Location Windfarm, Road up-grade and Transmission Line ) Lake Turkana Wind Power Financing Structure ) Licence for Power Generation - Energy Regulatory Commission

5 5) List of Electrification Status of Public Facilities in Kenya

6 List of Abbreviations Below is a list of the abbreviations that each entity typically goes by. The abbreviations are used in the project if the entities are mentioned several times within a short period. AfDB - African Development Bank CDM - Clean Development Mechanism CSR - Corporate Social Responsibility IFU - Danish Industrial Fund for Developing Countries DFI s - Development Finance Institutions ERC - Energy Regulatory Commission ESIA - Environmental Impact Assessment Study EIB - European Investment Bank EU - European Union EOI - Expression of Interest FiT - Feed-in-Tariff Finn Fund - Finnish Fund for Industrial Cooperation Ltd GDC - Geothermal Development Company GoK - Government of Kenya IDA - International Development Association IEA - International Energy Agency KenGen - Kenya Electricity Generating Company Ltd KETRACO - Kenya Electricity Transmission Company Ltd KNHA - Kenya National Highways Authority KeRRA - Kenya Rural Roads Authority KPLC - Kenya Power and Lighting Company Ltd LTWP - Lake Turkana Wind Power Project MDB s - Multilateral Development Banks MIGA - Multilateral Investment Guarantee Agency 5

7 NEMA - National Environment Management Authority Norfund - Norwegian Investment Fund for Developing Countries OPIC - Overseas Private Investment Corporation PPA - Power Purchase Agreement PRG - Partial Risk Guarantee REA - Rural Electrification Authority SREP - Scaling-Up Renewable Energy Program UNFCC - UN Framework Convention on Climate Change MDG s - UN Millennium Development Goals UN - United Nations IRENA - UN s International Renewable Energy Agency WB - World Bank 6

8 Introduction In this chapter arguments and considerations are presented that lead to the creation of this projects problem formulation. It is also explained why the problem formulation is of relevance to the field of innovation management research. Actor-network theory (ANT) is a research approach that confronts what ANT proponents call the classical social analysts. It is a critique of the classical social constructivists which explains the diffusion and success of innovations in terms of the intrinsic qualities that is embedded in innovations, such as user-value, price and quality which somehow convinces more and more users to adopt the innovation 6. These qualities are related to the success of the innovation without explaining the reasons for it 7. Despite the popularity of the diffusion model it has a distant link with reality and symmetry in the model is incomplete 8. According to ANT; in order to understand the diffusion and success of innovations and innovation projects, the idea that an object is only taken up if it manages to interest more and more actors must be accepted 9. Mobility, durability and the capacity to exert force depends upon the generation of a structure of heterogeneous elements 10. The predictability of any innovation depends on the actors to function as intermediaries, actors which can be punctualized, black-boxed and written off as functioning in serving the purpose that the network expects them to 11. The model of diffusion should therefore be replaced by the model of interessement, which allows us to understand how an innovation is adopted and how it is transformed into success. A socio-technical analysis, such as ANT, underlines that the movement of adoptation is a movement of adaptation; such is the formula which provides the best account of diffusion 12. Problem area The development of wind energy is of increasing political importance. It has become the symbol of a transition towards a more environmentally responsible society 13. Even though wind energy is associated with suiting words such as sustainability, responsibility, green-tech and clean-tech; wind 6 Akrich, Callon & Latour 2002: 202. :: Latour 1991: Callon 1986: 1. 8 Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: Law 1986: 241, Latour 1991: Akrich, Callon & Latour 2002: Jolivet & Heiskanen 2010:

9 projects has faced severe and unexpected resistance 14. Wind projects cannot be as easily imposed without the consent of concerned actors that demands participation 15. A number of academic studies have reflected on this techno-political period, but it is still unclear why projects of such large scale fails or succeed 16. ANT has developed concepts to help seize both the local dynamics of actors resistance in a specific project and the close intertwining of the social and material nature of such processes. ( ) the material dimension of projects, which represent large and complex engineering investments, should not be left aside as they are often the very subject of disagreement and controversies ( ) Capturing the technicalities and the socialities, as well as the local context in which they are implemented, remains conceptually challenging. 17 Based on this quote it can be said that Actor-Network Theory might have potential as a sociotechnical approach to analyse the complex technical-natural-political environment that an innovation such as a wind farm needs to be embedded within 18. The latter quote is related to a study of a wind power project in northern France called Cap Eole that caused much local resistance. Since then legally mandated procedures, financial and legal arrangements has been implemented to make wind farms a standardized package meant to make it easier for project managers to realize these projects 19. Still project managers has to be wary of recipes for wind power projects, cause such recipes are quite generic and fails to take into consideration the specificities of the particular sociotechnical assembly implicated by each unique project 20. The case chosen for investigation in this thesis is also one of a kind and combines entities from the social, technical, natural and political domain. The Lake Turkana Wind Power project (LTWP) in Kenya is one major development project that started developing in 2006 and is currently still under construction. One of the major obstacles for such a large project has been to manage all the different partners in the project: 14 Jolivet & Heiskanen 2010: Jolivet & Heiskanen 2010: Jolivet & Heiskanen 2010: Jolivet & Heiskanen 2010: Jolivet & Heiskanen 2010: Jolivet & Heiskanen 2010: Jolivet & Heiskanen 2010:

10 The main problem with this project, which takes 9 years, is that it is too large. ( ) The main obstacle is that there are many partners involved. 21 The project is being managed by the LTWP consortium which consists of both private investor groups and different national development finance institutions (DFI s). Besides having to deal with many stakeholders the wind farm is being built in an African country which poses risks of political nature for the developers: It is a very large project and it is in Africa, so it is considered risky. ( ) So it is syndicated between many partners, both on the side of equity and lending 22 ( ) when you do business in an African country, like Kenya, you do not dare taking a risk on a 20 year basis with the local utility company, neither does any bank. ( ) You do not know if there will be a new government who does not consider this a good idea. 23 Another risk is posed by the local communities. Just like the wind project at Cap Eole in France also experienced severe resistance from the local population, so had the Turkana project in Kenya. In Africa disputes about land rights between government and populations are common, but no matter who is in the wrong or in their right, it poses an obstacle for the innovation project developers: The most evident threat is the populations in the area or region that they will object to this for different reasons. 24 ( ) It is also a threat that you do not know who owns the land. In Africa they do not have a register for land owners, so you do not know who owns the land. 25 So the success of the project requires the LTWP consortium to negotiate with and ally with a vast amount of human and non-human actors consisting of lenders, international institutions, governments, local communities, wind mills, transmission lines, road upgrades, environmental studies and the attainment of several technical contracts and licenses: Licenses from everything from bird monitoring, to road, environmental licenses, also business permits, health and safety, the extraction of water, we have pages and pages of summaries of 21 Henrik Frøsig, 1 st interview transcript, 10:00-15:00 22 Henrik Frøsig, 1 st interview transcript, 10:00-15:00 23 Henrik Frøsig, 1 st interview transcript, 15:00-20:00 24 Henrik Frøsig, 1 st interview transcript, 15:00-20:00 25 Henrik Frøsig, 1 st interview transcript, 25:00-30:00 9

11 licenses required. So the whole area of licensing is one of the major tasks to be undertaken for a project such as this. 26 Actor-Network Theory could be utilized in explaining the development of this particular innovation project and Actor-Network Theory could maybe benefit innovation managers seeking to chasten complex and large innovation projects. Problem Formulation With regards to the reasoning in this chapter the questions that I wish to clarify with an Actor- Network Theoretical approach is: How can Actor-Network Theory explain the mobilization of the Lake Turkana Wind Power project and how can Actor-Network Theory be used to manage innovation projects? Hence, the purpose of the thesis is two-fold: To use the model of translation to describe how actors have responded to the negotiations that they have been exposed to in the Lake Turkana case, which ultimately lead to some mobilization of the project, and to use the findings in this case study analysis to contribute with insights on how to deploy Actor-Network Theory for the purpose of managing innovations. To be innovative organisations or project developers must favour interaction, permanent coming and goings, and all types of negotiation that allow for rapid adaptation 27. But to manage innovations and to adapt to any given context, we need a better understanding of the mechanisms through which innovations succeed or fail, we need principles which can serve as a guide for action 28. Any task in the making reveals heterogeneous and confused decisions made by different and often conflicting groups and decisions which can be hard to decide on whether they are crucial or not 29. Innovation is then by definition created by instability and unpredictability which no method can master entirely 30. In such environment anyone who takes on the task of managing innovation projects has to consider the wider and sometimes unforeseeable context that evolves around the innovation project, in order to adapt ones innovation to a changing context that often leads to unforeseen investments in the 26 Bob Chestnutt, 2 nd interview transcript, 25:00-29:16 27 Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002:

12 adaptation process 31. To adapt an innovation to context thus means that the innovation must search for allies. It must integrate itself into a network of actors who take it up, support it and diffuse it 32. Innovation is the art of managing the interest of an increasing number of allies that will make the innovation stronger 33. An innovator relies on his ability to negotiate with, and rely on, other entities that represents a part of the innovation-network. It can be said about the innovator that he: ( ) put himself in the hands of some (very) rare speakers, of whom he never completely knows who or what they are representing, and whether indeed they really are representing them 34. Successful managers of innovation are the ones who are able to stabilise an arrangement in a contextual mix consisting of human actors and non-human actors by turning any resistance in the innovation context into favourable relations 35. This means that the successful innovator has to adapt his innovation to a network already consisting of actors or negotiate with actors in the network to get them to adapt to the innovation. This transformation thus depends on testing the resistance of the different elements that constitute the actor-network 36. Proponents of Actor-Network Theory suggest that the success or failure of innovations can be described by the model of translation i.e. it can be described how innovators shape the environment that the innovation inhabits. Successful translation depends upon the capacity of an innovator to define and enrol entities needed to realize the innovation project 37. The purpose of translation is to solidify actor-worlds and effective translation will in theory lead to stable constructions and successful innovation 38. Actor-Network Theory and the model of translation were developed as an answer to how we can explain innovations by describing socially and materially heterogeneous systems 39. Other classic models, theories, social constructivist approaches such as the diffusion model are considered by Actor-Network theorist to be inadequate in explaining the success or failure of innovations because they focus on explaining the whys instead of the hows 40. Actor- Network Theory is a constructivist but anti-theoretical approach to describing innovations 41. It is 31 Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: Akrich, Callon & Latour 2002: , Akrich, Callon & Latour 2002: 219. :: Callon 1986b: Callon 1986b: Callon 1986b: Law 2007: Law 2007: Laurier 2010: 434,

13 anti-theory in the sense that it does not seek to make general theoretical claims from research. According to Actor-Network Theory conventional or classical sociological analysis must be abandoned because they limit relationships to a restricted range of social categories 42. The model of translation underlines the socio-technical, collective dimension of innovation and therefore does not limit itself to any pre-given categories 43. The development of scientific knowledge and technical systems cannot be understood unless the simultaneous reconstruction of the social contexts of which they form part is also studied 44. Actor-Network Theory provides semiotic tools to describe the sustaining or creation of innovations. It is not an abstract theory but is mainly grounded in specific empirical case-studies 45. In contrast to social constructivist approaches proponents of Actor- Network Theory describes the purpose of science to be different: On defining science - ( ) was not about discovering or unveiling a hidden reality, but about the construction of a reality capable of resisting the strongest objections made by others. 46 Actor-Network Theory is in this sense an approach designed to describe the stability, durability, success or failure of innovations in their specific context, which makes it suitable for case studies. 42 Callon 1986b: Akrich, Callon & Latour 2002: Callon 1986b: Law 2007: Miálet 2012:

14 Structure of Thesis Introduction In the introducing chapter both case and theoretical considerations is presented. These considerations along with the chosen case study are intertwined in a problem area that together serves as the foundation for the problem formulation that guides the thesis. Theoretical Frame In this chapter the concepts and philosophy of actor-network theory is described together with the model of translation. The theory serves as the theoretical frame from which the data collection and analytical strategy has been built on. Methodology The chapter on methodology starts with a hypothesis that is deduced from actor-network theory. Methods of data collection and analysis is presented and reliability, validity and limitations of the project is described. Analysis This chapter starts with a description of the Lake Turkana Wind Power project (LTWP). After the description each actor is presented and analysed by the process of translation. Lastly a descriptive statement is made on the process of mobilizing the LTWP that follows the translation model. Discussion After the analysis it is discussed how the project has been mobilized and how actor-network theory can be used to both explain and manage innovation projects. Conclusion In the final chapter the conclusions to the thesis' problem formulation is presented, followed by a perspectivation with reflections that could inspire further research or applicability of actor-network theory. 13

15 Theoretical Frame Historical Background Actor-network theory is a research approach that has its origins around and the term was first developed by Michel Callon in Though there have been several contributions to the amount of ANT literature the main authors are considered to be Michel Callon, John Law and Bruno Latour 48. The origin of ANT is quite arbitrary as it is the lovechild of networked associations between several authors and their attempt to describe how innovations are assembled. Michel Callon is mostly known for his sociological description on a technological innovation in his work The Sociology of an Actor-Network: the Case of the Electric Vehicle (1986b), in which he describes a group of engineers at Electricité de France in their attempt to introduce an electric car on the French market. Another famous work is Some elements of a sociology of translation: domestication of the scallops and the fishermen of St Brieuc Bay (1986a), where Callon uses a more systematic approach in describing how the fishermen of St Brieuc attempts to restock the Bay by allying scientists, municipalities and scallops. John Law is best known for his work On the Methods of Long Distance Control: Vessels, Navigation, and the Portuguese Route to India (1986), where he describes the Portuguese empires expansion as a combination of several clever innovations that allowed them to dominate and navigate the oceans. Bruno Latour is considered a constructivist, whom spends much time explaining the success or failure in scientific progress in terms of social factors 49. Latour has contributed with the largest amount of literature in terms of books and articles on ANT, or the Sociology of Association as he refers to it, but for this thesis the most relevant work to mention is Reassembling the Social: An Introduction to Actor-Network-Theory (2005), which is the first written attempt on systematically describing ANT, it will therefore serve as this papers primary perspective on ANT. 47 Law 2007a: Sismondo 2010: 81. :: Laurier 2010: Laurier 2010:

16 Language as a Tool for Research Actor-network theory is an attempt to move from conventional sociological analysis or a science of the social to a sociology of associations 50. According to Latour sociologists of the social have created a meta-language that explain events in terms of concepts such as society, power, structure, and context etc. 51. A sociologist of the social might say that the lower-class is a result of industrialisation and capitalism, but the wording in such a phrase mobilizes a large amount of data, but are typically presented as a social explanation reduced in concepts. The concepts used by sociologists of the social are almost blindly accepted even if they are just as fictional as the many interpretations that can be associated with each concept of this meta-language. By reducing the social to concepts, the sociologist of the social have created a social-realm where the researcher creates the social instead of describing what elements it consist of 52. In contrast to this view ANT uses an infra-language which allows the researcher to follow the actors that creates the social. These are words such as group or actor, which seem relatively meaningless, which is the point, as these words can be universally used and take the researcher from one setting to another, it can be used for describing a group of planets or a group of atoms 53. If a good ANT account is to follow the actors, then this infra-language is a good way to check that the researcher is not doing all the talking 54. Comparing meta- and infra-language you might say that social scientists have confused what to explain with the explanation 55. By reducing explanation to such concepts researchers are simply creating concepts instead of describing what mobilize the concepts 56. They have forgotten to follow the actors and the associations that create the social-realm. Instead they have tried to create an explanation that finally explains the social, a hope of a true explanation and a promised land of a real social world 57. Society is the consequence of association and not their cause 58. The problem with the quest for an explanation is that reality becomes a social construction instead of a study constructed for the purpose of describing the social. Therefore any explanation is not the point of social science, because it is unreachable 59. The difference between explanation and description is a 50 Callon 1986b: 31. :: Latour 2005: Latour 2005: Latour 2005: Latour 2005: Latour 2005: 12, Latour 2005: Callon 1986: Latour 2005: Latour 2005: Latour 1988b:

17 false dichotomy that is deconstructed in ANT 60. This way ANT is suitable for a narrative analysis as the approach seeks to trace associations of the social by recording and describing 61 and a good ANT account is therefore considered a narrative that describes the actors and their movements 62. Deconstructing the sociology of the social and moving to a sociology of associations requires tools that are better adjusted to tracing associations between actors 63. The only way we can explain the social is by making the social traceable by opening it to empirical inquiry 64. You cannot build a bridge without having standards in metrology, without the meter, the kilos or mph. We have to talk of people, texts and devices in the same analytical terms 65. If the social sciences are to be taken serious as a discipline it is evident that it becomes open to universal, empirical inquiry. In light of this, the concepts of ANT should be considered as the attempt to set a standard in metrology to further the social sciences. ANT is a material-semiotic method to describe the deployment of associations like semiotics is a method to describe any narration 66. Philosophy of Science and Politics Actor-network theory is built on a relational ontology; it is based on relational materiality. Objects are defined by their places in networks, and their properties appear in context of tests, not in isolation 67. Successful innovations are therefore built on many distinct elements in a multidimensional environment of a technical, economic, social, and political nature. ANT treats all actors in the same relational terms and does not privilege any variables because every variable depends on each other 68. ANT considers facts and explanations as constructions which puts it close to the idea of constructivism or more specifically a radical constructivist epistemology 69. The ingredient that makes ANT a radical constructivism is that ANT treats both humans and non-humans in the same relational manner. 60 Latour 2005: Latour 2005: Latour 2005: Latour 2005: Latour 2005: Law 1986: Latour 1996a: 9. :: Law 2007a: Sismondo 2010: Sismondo 2010: Latour 2005:

18 Constructivism is to ANT synonymous with an increase in realism, which has caused objections from some realists since they consider some things to have intrinsic properties such as human intentionality 70. According to actor-network theorist intrinsic properties as intentionality has been confused with behaviour. Intention or behaviour is also constructed properties and they do not reside inside any subject, anything that comes out of a subject must have been put into it, so subjectivity is also constructed 71. In this way ANT differs from social constructivism as it seeks to deconstruct the notion of social. ANT does not agree with the social sciences in their idea of a social society. Society does not cover the whole any more than the World Wide Web is really worldwide 72. The controversy here is that society or social are small simplifications, in words, compared to the big it holds 73. It seems impossible to empirically trace all the actors and associations that are the glue of these very concepts, but that should not mean that we should take the shortest route to not explaining anything. If we take the long and slow route with our standardized tools of measurement, then we will discover and describe many more entities that constitute the social. What we measure then become known and formatted, but that which is not yet formatted in metrological chains, and not yet covered or not yet measured will always remain unknown and in the background as some kind of plasma 74. This is exactly the field that the work of the social sciences has to engage, to trace this plasma that binds the social, the society and the innovations. We can explain society if we can develop a proper methodology to trace the associations that makes up the social. Explanation is only possible when description becomes saturated 75. Therefore we have to restudy what the social are made of and extend the repertoire of ties and the number of associations way beyond the repertoire proposed by social explanations 76. Politically this would open up the possibility of designing a common world, a transition from a society to a collective 77. Every science is political in nature but the social sciences will not get recognition until it is deconstructed and reassembled so that it can be universally used to describe the composition of society. When you combine the idea of a universal standard in metrology and 70 Latour 2005: 92. :: Sismondo 2010: Latour 2005: 208, Latour 2005: Latour 2005: Latour 2005: Latour 1991: Latour 2005: Latour 2005:

19 the task of describing the unknown and always moving plasma in the world then ANT becomes a cosmopolitical project 78. A project which success rest upon a common infra-language as tools for measurement and a wide acceptance within the social sciences to agree on the use of such tools. This might sound like a utopia or the finite goal of ANT, to describe every element and associations in the universe so we are best suited for engineering our circumstances: So the test for political interest is now slightly easier to pass: one must practice sociology in such a way that the ingredients making up the collective are regularly refreshed. 79 This makes ANT an endless and impossible task since all elements and associations have the habit of changing into new constellations, but the purpose of science in Latours view is not about reaching, discovering or unveiling a hidden reality, but the construction of a reality that is capable of resisting the strongest objections made by others 80. Relativity and a Flat Ontology ANT is an approach to research which purpose is to describe changing constellations or associations; this makes it both relativistic and anti-theoretical. Relative in the sense; that we have to describe interactions which occur between an overflow of elements in settings subjected to other agencies, other places and time 81. It is almost empirically impossible to render visible all the factors that constitute a chain of events without missing a single step. What happens at one local site at a given time can shape interaction at another local site in another time. Therefore there can be no exact theoretical explanation to a fundamental structure of reality as reality is in movement and changing, in this context there is no place to park. If there is such thing as a structure then this is produced from all interactions coming from many local sites, the office, the documents, the institutions, the machines, the people, the language etc. In ANT there is no such thing as Macro- Meso-Micro distinctions; the world should not be described as a Russian Matryoshka doll where the larger contains the smaller 82. The global is the sum of all local interaction or the macro is the sum of the micro, so it will make no sense to deploy this distinction. 78 Latour 2005: Latour 2005: Mialet 2012: Latour 2005: Latour 2005:

20 Next step would then be to ask how the local is being generated. Local interaction is the assemblage of all other local interactions distributed and transported elsewhere in time and space by human and non-human action 83. Action is dislocated; meaning that a local site has been made to be a place by some other locus through the use of material, wood, concrete, steel; trough the work of many artisans and workers who are no longer on the site but let objects carry their action in absentia 84. So what is acting at the same moment in any place comes from many other places, many distant materials and many faraway actors 85. The job of the social scientist in ANT is to make a description which connects these local sites by creating a report, a story, a narrative, an account 86. The solution to this relativity is standards and metrology, but this requires some sort of universal agreement on the concepts we use to trace interaction 87. Traceability is precisely what metrology is about. When we refer to the concepts in ANT as adhering to an infra-language it is because the concepts can be used to trace interaction from one local site to another, they make it possible for the researcher to connect the sites by description. The Social The real contrast between classical sociology and the sociology of association becomes apparent when we compare the two views of the social 88. As mentioned before, sociologists use concepts such as society, social norms, social laws, customs, culture or structures when they account for the social realm as if each concept are generated out of itself and sustains itself 89. In contrast the actor-network theorist opens up each of these boxes to trace the objects, the documents, institutions, humans etc. which constantly performs the norms, customs and society. ANT treats the social as being composed of both human and non-human actors 90. ANT is supersymmetric meaning that it treats both the social and the material world in a relational manner and as products of interaction 91. The social is for ANT between actors of human and non-human 83 Latour 2005: Latour 2005: Latour 2005: Latour 2005: Latour 2005: Latour 2005: Latour 2005: Sismondo 2010: Sismondo 2010:

21 nature and it is the new combinations or ongoing assembling of these actors in associations that makes up the social 92. Actors, intermediaries and mediators In ANT terminology an actor is a semiotic definition, that is, something that acts or to which activity is granted by others. An actor can be anything provided it is granted to be the source of an action 93. In previous research made by Callon, Latour and Law the term was used to label anything that made other actors act in a social setting. Such as navigational instruments on the Portuguese ships, the Scallops and the fishermen at St Brieuc, electric conductors or a word in a sentence that brings meaning to the other words. An intermediary is what transports meaning or force without transformation: defining its inputs are enough to define its outputs. It is a black box, a punctualized network which might be complex but are treated as one actor. A mediator is an actor which is unpredictable; their inputs are never a good predictor of their output. They modify the meaning or elements that they are supposed to carry 94. Objects/humans/actors can be treated as either intermediaries or mediators. For instance, let us think of ourselves as passengers in a car: the car can be considered to be an intermediary, an actor which input is to drive a person from A to B. We trust the car to do its work, thereby threating it as an intermediary. We do not trust or know the intention or interest of the person behind the wheel, so we do not know where he will drive; he is a mediator. If we convince him to drive us where we want to go, then he can be treated as an intermediary actor. But suddenly, on our way from A to B, the car breaks down and becomes a mediator, open for investigation and negotiation with a mechanic that can turn it back to being a reliable intermediary that performs as expected, as a car. Car, driver and mechanic are actors associated as intermediaries or mediators in a network which performs the task of getting us from A to B. Networks, Stability and Power The previous example shows that each actor can be a network of several actors and perform in a network consisting of actors. The network gains it structure from the associations between these 92 Latour 2005: Latour 1996a: 7. :: Latour 2005: 46. :: Sismondo 2010: Latour 2005:

22 actors and that structure is susceptible to change 95. When the structure is stable and performs as expected, then the actors work in agreement as stabilized intermediaries. A reliable set of actors that makes up a performing network can be black boxed, signed off as functioning. An innovation becomes increasingly predictable by black-boxing longer and longer chains of associations, an actor can become coherent as to be almost considered predictable 96. Creating a network that performs as intended depends on the amount of mediators turned into reliable and connected intermediaries. Power and domination are not properties or things that can be stored, they are the ability to manage and repair a chain of interrelated actors in a network 97. Just like the Portuguese long-distance control and domination of sea trade routes, they had to combine the right documents, the right devices and the right people properly drilled put together they created a structure for one another that ensured their durability and fidelity 98. Objects and Dislocated Action Traditionally a term as action would be used to describe an intentional character from the human world, but in ANT non-human actors or objects also creates action 99. Objects are not only what makes interaction possible; they can also shape and extend action. A teacher would not write on a blackboard without students to view his teachings, the teacher would not be permitted to teach without having a contract with the institution. The point is that an actor in an actor-network is not the source of any action by itself. Actors are made to act by other actors. An actor by itself transfers no action; action is constructed in the negotiations between several actors consisting of humans and objects. If a network is established to serve some intended goal, then all actors must accept the negotiations in order to transfer action. Describing or aligning all the actors interests in a network toward a desired goal is referred to as the process of translation. The Translation Model The process of translation happens when an actor tries to attend to a problem by four typical phases: 95 Callon 1986b: Latour 1991: Latour 1991: 110, Law 1986: Latour 2010:

23 - Problematization, is when an initial set of actors define a problem and offer themselves as a solution to this problem by becoming an obligatory passage point for entering the network. - Interessement: is when other actors are made aware of the problem and comes through the obligatory passage point by making their interest in the network recognisable. If the actors have interests in the network it is more likely that they will be enrolled. - Enrolment: is the process of coordinating and negotiating the actors role in the network. Actors can respond to this by either accept, dispute or disregard the offer. Making this a process of negotiation by trial and error. - Mobilization: is when the network starts to function as one actor to produce some effect in the world through its intermediaries. Translation is a process, never a completed accomplishment, and it may fail if actors dispute or disregard the offer to join the network, thereby creating resistance to the mobilization of the network 100. According to Callon the success of the translation process is: ( ) The capacity of certain actors to get other actors whether they be human beings, institutions or natural entities to comply with them depends upon a complex web of interrelations in which Society and Nature are intertwined 101 Michel Callon. A successful translation, and thus a mobilization of the network, depends on some actors ability to convince other actors in joining the network by convincing them that it is within their interest by means of actors that are both human and natural, which is why the principle of generalized symmetry should be applied whenever analysing or creating a network. According to Callon the first moment of translation is the problematization, in which an actor or a set of actors makes themselves indispensable for the network. The second phase or interessement is when the initial actors try to define the interest of the actors, thereby formulating their identity. But these identities are tentatively implicated in the problematization of other actors, which means that the interest of actors in the network is constantly being negotiated 102. Therefore it is important to identify the interest of actors in the network as this will make any strategy of enrolling them more likely 103. Interessement can lead to an alliance with other actors and thereby achieving enrolment. To describe enrolment is thus to describe the group of multilateral negotiations between the actors in 100 Callon 1986a: Callon 1986a: Callon 1986a: Callon 1986a:

24 the network that eventually will lead to an acceptance, a dispute or a disregard from the actor to join the established network 104. If negotiations are accepted the actor helps mobilizing the network, thus making it more likely that the network will prosper in the purpose that it was established to serve. Essentially it is about controlling a network through negotiations or as Callon explains: Translation is the mechanism by which the social and natural worlds progressively take form. The result is a situation in which certain entities control others. Understanding what sociologists generally call power relationships means describing the way in which actors are defined, associated and simultaneously obliged to remain faithful to their alliances 105 Michel Callon The stability or power of a network to serve its purpose is therefore depending on the relations between actors in the network. The projection of power depends on each actor s willingness to accept its role in the network according to actor-network theory. 104 Callon 1986a: Callon 1986a:

25 Methodology The purpose of this chapter is to construct a method with ANT as a theoretical framework that can be used to identify the role of actors relevant to the Lake Turkana Project in order for me to describe how these actors has contributed to the mobilization of the Lake Turkana Wind Power Project (LTWP). Hypothesis and Case The hypothesis behind the use of ANT is that; if I wish to explain the mobilization of an innovation, such as the Lake Turkana Wind Power Project, I have to construct a narrative using Actor-Network terminology and the translation model. The closer I get to a saturated description the stronger an explanation I can make about the relational forces that make this innovation durable 106. In order for me to test the hypothesis that has been deduced from the previous chapter it was decided to have the Lake Turkana project as case. Traditionally case studies are suited to the purpose of generating theory out of an inductive research approach, but case studies are also associated with the testing of theory 107. The purpose is to see how the metrology, the concepts, can be used to establish a credible description of the mobilization of the Lake Turkana project. Thus the type of investigation is a mix between an explorative study and descriptive. Descriptive in the sense that I seek to understand relations and processes using ANT terminology as categories and exploratory as the description might shed light on possible ways that actor-network theory can be deployed and used as a research method to understand and manage the mobilization of innovations such as the LTWP 108. The Actor-Network and Process of Translation To test the hypothesis it was at first necessary to gather data from various sources that could be used to establish a credible description of the LTWP case which represents the network to be analysed. I started by writing the narrative, or the actor-world, from which actors and their relations can be described and identified. The second step was to identify the actors and analyse by the process of translation how each actor have contributed to the mobilization of the LTWP. In the beginning of 106 Latour 1991: Bryman 2008: Olsen & Pedersen 2005:

26 the process the description was somewhat incoherent, but by using the model of translation the more actors I found and analysed, the more coherent the description became. Ultimately this enabled me to describe how the LTWP has been mobilized as a result of negotiations between actors in the network. The network I refer to is the narrative or case description that has been established from my data investigation, which follows this chapter. The data used to create the description of the case is primary and secondary, mostly secondary for the case description. The primary data investigation consists of interviews with key persons from the LTWP consortium, the interview investigation is presented later in this chapter. The secondary data consists of a large amount of press releases, articles, broadcasts and documents released from the beginning of the project up till present. Analytical Strategy As mentioned earlier the first step in the process of analysis was to gather available data on the LTWP which then was made into a case description or narrative that represents the network to be analysed or what critical realists would refer to as the empirical domain. When all data was retrieved and translated a case narrative began to take form. To reach this description of the LTWP I used a hybrid process involving; the model of translation, concept-driven coding and meaning condensation. Concept-driven coding is used to identify and categorize all actors in the case. Meaning condensation is used to condense data into a description that are related to each of the categories of translation. Below is an example of the analysis or process of translation by which each actor is related to the description and mobilization of the Lake Turkana project. Actors Problematization Interessement Enrolment Mobilization Actor Act Meaning condensation Meaning condensation Meaning condensation Meaning condensation Meaning condensation Meaning condensation Meaning condensation Meaning condensation Whenever an actor is identified from the case description that actor is put into the first column. The next column then contains a condensed description of the actor as an obligatory point of passage (OPP) or the normative purpose of that actor-network. In the next column, interessement, the interest of the actor is described and under the column of enrolment it is described how the actor has 25

27 been in negotiation with other actors in the network. In the last column it is described how the actor has responded to the negotiation with a condensed description on how they affect the mobilization of the Lake Turkana project. This customized methodology amounts to an analysis that can be described in four steps and which are compatible with the process of translation: 1 st Problematization (The Actor-Network): The first step is to describe the purpose of the actornetworks and how these are obligatory points of passage for other actors. 2 nd Interessement (Actors and Interests): The second step involves the identification of actors and a description of their interests in the project. 3 rd Enrolment (Negotiation): The third step describes the negotiation that determines the actors role in the network. This step makes it able to determine how the actors have responded to the enrolment. 4 th Mobilization (Description): The fourth step is the result of the negotiations between actors and their interrelated interests in the network. This step gives a description of the actors influence on the mobilization of the LTWP. The logic behind this strategy is that each step is compatible with the process of translation and this process makes it easier to manage large amounts of data and brings a structured overview on the process of analysis. Comparing these condensed descriptions makes it possible to describe how actors are connected by relations, ultimately describing the mobilization of the LTWP case by the model of translation. Validity, Reliability and Generalization The validity of the conclusions in this research depends on the amount of actors identified and translated and the extent to which I am able to deploy connections between the actors and their relation to the LTWP. The closer I come to a saturation of actors, the stronger an explanation I can deploy on the mobilization of the LTWP Latour 1991:

28 Theoretically the argument from ANT is that a research approach based on ANT would ensure a more reliable approach as the terminology can be deployed universally. Even though the terminology can be used to describe any case, it cannot be said that the results would be the same. Even if another researcher used the same data, he or she could have different interpretations on which actors are of relevance, how their interests should be defined, which negotiations they are exposed to and how they ultimately mobilize the Lake Turkana project. But the task is not to make a project that is easy to replicate, it is to establish a description strong enough to resist other explanations, which is why both primary and secondary data has been used to establish a credible description. In addition it is not possible or desired to generalize or create generic and theoretical explanations on behalf of this study. The purpose is to describe this specific innovation project and to reflect on the utility of ANT as a tool in innovation management research. Whether or not other innovations related to wind power are mobilized by the same factors is not the focus of this project, even though this research approach could be used to explain other cases. Limitations As mentioned before; relativity makes it impossible to reach a saturated description considering the methodology deployed in this research, nor am I acquainted with any method that can handle this amount of big data in the manner that ANT, or reality, requires for reaching a saturated description. Actors and connections are almost unlimited in numbers and are constantly subjected to change throughout time, but as said; the purpose is not to reach an explanation, instead the aim is to make a convincing story of the mobilization of the LTWP. The possible amount of actors and connections are therefore limited in terms of the time given to me for investigation and since a lot of possible data consisting of meetings, events and actions has vanished in time and memory, I cannot describe reality in its actuality, but a saturation within the empirical domain, which is the data I have been able to collect, must suffice. Latour has said that: A little bit of constructivism takes you far away from realism; a complete constructivism brings you back to it. 110 This means that all the unlimited imaginable structures or actors makes it impossible to comprehend reality in its actuality, but a complete, or saturation, of all the structures or actors would complete 110 Sismondo 2010:

29 the puzzle he refers to as realism. The problem is just that there are no methods which can measure or keep track of all the actors/structures that change through time, space and objects. Data Collection To create a case description and to attain validity to the findings and description in this thesis both primary and secondary data has been gathered. The primary data investigation was structured in accordance with Steinar Kvale & Svend Brinkmann s: Seven stages of an Interview Investigation 111. The data collected by interviews has been attained by interviews with key people from the Lake Turkana consortium. The people interviewed were Henrik Frøsig and Bob Chestnutt. Henrik Frøsig is the Regional Director for East Africa at the Danish Development Finance Institute (IFU). He is responsible for all IFU s investment relations to the Turkana project. Bob Chestnutt is the Project Director at Aldwych International, who throughout the development phase of the Lake Turkana project was appointed as Project Director for the consortium and had the responsibility of realising the Turkana project. 1. Thematizing The purpose of these interviews is to get knowledge on the development of the Lake Turkana project and on how the actors identified in the case narrative are associated in the network. The associations take the form of contracts, licenses, people, materials and meetings that somehow make the organisation capable of acting and influencing the mobilisation of the Turkana project. The main purpose of the interview is therefore to discover relations between actors that take the form of human and non-human relations. The purpose is also to get knowledge on how these relations has been formed and to validate findings and strengthen argumentation related to this thesis findings. 2. Designing For both interviews a semi-structured interview guide was made 112. The questions have been constructed so that they are compatible with the process of translation i.e. so that the questions reflect the theoretical framework. The choice of a semi-structured interview guide was strategic as this allowed me to make follow-up questions that could reveal more actors and relations. This should make it more likely that the responses from the interviewee are of relevance to the purpose of describing the mobilisation of the LTWP. Before both interviews were conducted all secondary 111 Kvale & Brinkman APPENDIX: 1 st and 2 nd Interview Guide 28

30 data had been collected and read so that I had in-depth knowledge on the project and was thereby able to ask relevant and specific follow-up questions. 3. Interviewing Both interviews was conducted by phone and recorded for the purpose of transcribing. The choice of making the interviews by phone was due to the working conditions of both Henrik and Bob, and the fact that Henrik was travelling to Kenya at the time of the interview and Bob was in England at Aldwych. Interview by phone did not pose any hindrances to the interviews as mimic or facial expressions are not of vital importance for the validity of the answers. The purpose of the interviews was to get very factual information on the process of mobilizing such a huge project and it was therefore not necessary to make a confidentiality agreement. Both interviewees were very keen to answer all questions that I posed to them. 4. Transcribing All interview data was transcribed to ease the process of analysis 113. The interview transcripts have been marked with an abbreviation of the name of both interviewer and interviewee and an interval of five minutes so that referencing can be used whenever deemed relevant to the project. 5. Analyzing The interview data has no by itself been through a process of analysis but are used in parts of the project whenever it could enhance validity and credibility of the thesis. The interviews made it easier to identify and understand the interests of some actors and the negotiations to which they were exposed. Familiarity with the interviews was achieved by reading through them several times to use the statements in the project. 6. Verifying As mentioned; it was not needed to make a confidentiality agreement with neither of the respondents. The truthfulness or validity of their responses is not under questioning, since they willingly discussed many aspects of mobilizing such a large project, even the problems they experienced during the process. The reliability of the answers from the respondents depends on their subjective experience with the project, but the interviews are not made to reveal power relations or any hidden domain. They are made to help with the case description and to enhance the 113 APPENDIX: Transcript of 1 st Interview and 2 nd Interview 29

31 validity of my interpretations on what actors, interests and negotiations that is of relevance to the mobilization of the Lake Turkana project. 7. Reporting As stated previously the primary interview data are presented as quotes when they have relevance for the validity in parts of the project. 30

32 Analysis Lake Turkana Wind Power Project - Case Description 2006 The Beginning In 2006 a Dutch Entrepreneur and farmer named Willem Dolleman living in Kenya noticed the windy conditions around Lake Turkana and approached a company named Anset Africa who he knew to be project developers. Anset Africa was intrigued by the idea of exploiting the windy conditions around Lake Turkana and established KP&P later in 2006 to develop the Lake Turkana Wind Power (LTWP) project. The first step KP&P made was to collect wind data in November So they contacted DEWI a leading international wind energy consulting firm to carry out wind tests in the region around Lake Turkana 114. Having measured extremely favourable wind conditions in the region, KP&P, who now referred to their initiative as LTWP, submitted a proposal to the Kenyan authorities to survey the site 115. This was regarded as an Expression of Interest between Kenya Power (KPLC) and KP&P in April 2008, in which both parties express a mutual interest 116. Having given an expression of interest the project now entered into a Feed-in-Tariff procedure in order for the consortium to gain a Power Purchase Agreement with KPLC, which was a vital document that would ensure the economic viability of the project. The primary objective of the Feed-in-Tariff process was to map out all clearances and agreements the investor had to obtain before starting the generation of renewable energy in Kenya. This process required the project developers to make several assessments and studies. They had to identify the site of the project, to have made initial feasibility studies, made land acquisition, acquire relevant licensing and to have a plan for financing, construction, operations and maintenance etc. In accordance with the Environmental (Impact Assessment and Audit) Regulations of 2003 the Project required an Environmental Impact Assessment Study (ESIA). The assessment was to be paid for by the project developers and had to meet certain standards. LTWP had to describe the objective of the project, what technology, procedures and processes to be used in the implementation of the project, what materials to be used in construction, what products and waste 114 LTWP Consortium (2011): Updated Environmental and Social Impact Assessment Summary, (May 14, 2015) 115 APPENDIX: Models and Figures Figure 1) Wind Speed Measurement 116 LTWP Consortium (2011): Updated Environmental and Social Impact Assessment Summary, (May 14, 2015) 31

33 would be generated by the project. An assessment on the potential effect on the environment, an economic and social analysis of the project or any other such matters the National Environment Management Authority (NEMA) required. The wind power projects Environmental and Social Impact Statement was then submitted to NEMA which found the project to be environmentally sound and socially acceptable. The EIA licence was then issued in July 2009 and has since then been renewed 117. LTWP also made a required ESIA for the proposed road construction that was carried out in close collaboration with the Ministry of Roads. The Licence was issued in January 2011 and has since been updated to reflect the design modification 118. To attain financing KP&P had already been in discussion with other partners, such as the Development Finance Institutions (DFI s) Norfund, the Danish IFU and the wind turbine manufacturer Vestas who already had relations with IFU. IFU was invited to join the consortium because KP&P was planning to use Vestas technology. Vestas came in as part of a broader business deal where Vestas supply the wind turbines and invests equity that amounts to 12.5% of the shares. Finn Fund was the last partner to join the consortium mainly because of their close relations to the other Scandinavian DFI s 119. IFU came in because we are using Vestas technology and IFU is a Danish development institution and they work regularly with Vestas. Finnfund was the last partner who came in and they came in because of its link to the Scandinavian neighbours. The last partner then is Vestas. Vestas came in as part of its broader business deal where Vestas supply the turbines and owns 12.5% of the shares of the company. 120 Each partner invited by KP&P; Norfund, IFU, Finn Fund and Vestas had several meetings with equity negotiations and agreed on a shareholder agreement that formed the basis for the consortium and how the project was to run going forward. After several discussions with the Government of Kenya, having an agreement with equity partners and relevant licensing, a Power Purchase Agreement could now be signed with the off-taker KPLC. The Power Purchase Agreement was signed in January 2010 and the project was now a realistic business opportunity. 117 LTWP Consortium (2011): Updated Environmental and Social Impact Assessment Summary, (May 14, 2015) 118 LTWP Consortium (2011): Updated Environmental and Social Impact Assessment Summary, (May 14, 2015) 119 Bob Chestnutt, 2 nd Interview Transcript, 00:00-05: Bob Chestnutt, 2 nd Interview Transcript, 00:00-05:00 32

34 KP&P also approached Aldwych International in late 2009; a project developer specialized in renewable energy projects. Aldwych was introduced to the project and joined the Lake Turkana consortium as a technical developer in January 2010 just after KP&P, the original developers, signed the Power Purchase Agreement with the Government of Kenya 121. Aldwych already had experience in renewable power projects in Africa and expertise in negotiating contracts, technical agreements and handling financing. Aldwych was therefore an important partner for KP&P since this was the first power project that they had engaged in 122. The consortium chose Bob Chestnutt from Aldwych to become the project director due to Aldwych technical expertise and experience in power projects The Middle In February 2011 Kenya was one of six countries to become part of an initiative called Scaling-Up Renewable Energy Program (SREP). The SREP mission in Kenya was led by the World Bank and the African Development Bank (AfDB), as an initiative made to pilot and demonstrate viability of low carbon development pathways in the energy sector. The SREP described certain criteria that the pilot countries had to live up to, if they were to attain finances through the World Bank and other Multilateral Development Banks. The financing attained would have to be used for addressing risks associated with renewable energy technologies, removing barriers for additional public and private financing, increase the pilot nations installed renewable energy capacity and support proven renewable technologies. As part of this initiative representatives from the World Bank, AfDB and observers from the European Investment Bank consulted with representatives from the Government of Kenya. The Government of Kenya created a team that consisted of representatives from the Ministry of Energy and the Ministry of Finance, the Prime Minister s Office, the Geothermal Development Company, the Kenya Power and Lighting Company Ltd (KPLC), the Kenya Electricity Transmission Company Ltd (KETRACO), the Kenya Electricity Generating Company Ltd. (KenGen), the Rural Electrification Authority (REA) and the Energy Regulatory Commission (ERC). After many meetings the Kenyan government was asked to make several assessments on electricity demands and needs, define investment objectives, identify financing instruments, partnerships etc. The Kenyan government finalised the required assessments in collaboration with 121 Bob Chestnutt, 2 nd Interview Transcript, 00:00-05: Bob Chestnutt, 2 nd Interview Transcript, 00:00-05:00 33

35 the other stakeholders and the finance institutions and then reported on energy sectors and projects that could be elevated through financing from the World Bank and the AfDB 123. The SREP mission concluded that - the Kenyan government was committed and had the capacity to adapt to climate change by broadening the use of renewable energy sources. Kenya already had a national energy strategy, Vision 2030, which identifies reliable, clean and affordable energy as a foundation for Kenya s long-term economic and social development and further stated that by 2030 an energy capacity of 2GW or 2000MW should come from wind power 124. The energy act from 2006 gave the Energy Regulatory Commission mandate to control the generation and system planning of Kenyan energy projects and the Ministry of Energy had already pushed for reforms to prioritise renewable energy projects. Besides government reforms and initiatives several energy sectors and projects was selected as candidates for financing in order for the Kenyan government to reach their Vision In the SREP report geothermal energy was rated top priority even though it was associated with high initial drilling costs to tap into this energy source and therefore required huge investments. Wind power was also estimated to be of high priority, since the current projects only amounted to 5MW, however there was a number of issues that held back investments in wind power. Wind is an interruptible resource that requires a reserve power back-up that can come online in a short notice. The grid from which the generated electricity was to be distributed would have to be studied for the need of grid reinforcements, since electricity from wind turbines changes the dynamics of grid behaviour and also a large amount of finances would be required to build transmission lines. Solar power was evaluated to be costly to connect to the national grid and therefore a better option to keep of the national grid 125. Following up on the political initiatives laid by the Kenyan government permits was granted to construction of five new power plants that should increase the energy supply to the Kenyan national grid. The Energy Regulatory Commission, the mandated sector regulator, had approved power buying deals and gave licences for several renewable energy projects among them the 300MW 123 Climate Investment Funds (2011): KENYA Scaling-Up Renewable Energy Program (SREP) Joint Development Partner Scoping Mission February 7-11, 2011, _10_2011.pdf (June 16, 2015) 124 Energy Regulatory Commission (2013): Wind Sector Prospectus Kenya Wind Energy Data Analysis and Development Programme, (May 14, 2015) 125 Climate Investment Funds (2011): KENYA Scaling-Up Renewable Energy Program (SREP) Joint Development Partner Scoping Mission February 7-11, 2011, _10_2011.pdf (June 16, 2015) 34

36 LTWP project that had already received its license the year before on the 16 th December The Power Purchase Agreement between the ERC and the LTWP consortium was finalised and the construction of the LTWP was now set for December following the issuance of letters of support that should express the Kenyan government commitment and goodwill for the project. The Power Purchase Agreement had been signed in November, the year before, laying the ground for construction to begin. So far diesel-powered thermal power plants were preferred due to its quick turnaround, but it added to the high price of energy through its use of fossil fuel. The use of dieselpowered plants therefore pushed the price on electricity upwards in 2011 making renewable energy sources even more desirable 127. Later this year Norway held a conference with the agenda to limit CO2 emissions and increase access to energy in developing countries. This conference was held in collaboration with the International Energy Agency and several other partners. Once more on the agenda was the Kenyan Vision 2030 strategy, which focusses on the need for Kenya to provide secure quality and affordable energy in order to meet goals of economic growth and sustainable development. One of the issues discussed was that only a minority of Kenyan households has access to electricity and many of the public facilities are without electrification 128. Today about 1.4 billion people or 20% of the world s population lack electricity. In Kenya only 20% of the population has access to the generated electricity. The Kenyan economy, population and industry are all expanding at such a rate that there is currently a 13.5% annual increase in electricity demand in the country, with demand expected to reach 15 GW in 2030 (current peak demand is around 1.5 GW) 129. To address this problem the government of Kenya planned to gain 2000MW additional energy to the national grid by This would require huge additional investments in geothermal, wind and solar energy development 130. As the need for energy in developing countries became more and more recognized investors began to set up green energy ventures with an eye on carbon credit earnings. So far, Kenya s power generation had been largely dominated by water-powered turbines so a shift to more dependable geothermal and wind powered plants was desired due to several factors such as climate change, the 126 APPENDIX: Models and Figures 4) Licence for Power Generation 127 Sambu, Zeddy (2011): Five new power plants to sell power, (May 19, 2015) 128 APPENDIX: Models and Figures 5) List of Electrification Status of Public Facilities in Kenya 129 Energy Regulatory Commission (2013): Wind Sector Prospectus Kenya Wind Energy Data Analysis and Development Programme, (May 14, 2015) 130 Solheim, Erik (2011): Governments must increase access to energy, (May 19, 2015) 35

37 cutting down of trees and poor rainfall, which had been sparked by unpredictable weather patterns. As a result of droughts and other climate related issues, Kenya s water- powered turbines had not produced enough energy, this made Kenya increase its imports on fossil fuels which were becoming increasingly expensive, which also were caused by the Arab Springs that made oil prices rise. The World Bank and Kenyan financial institutions therefore shifted focus to backing finances that would lead to an increase in wind and geothermal power plants as the SREP mission findings had suggested, this was also part of reaching other political goals like the UN Millennium Development Goals which describes the aim to provide electricity to more than 10 million rural folks in Kenya. Geothermal power so far only amounted to a 200MW capacity, but the potential has been estimated to peak at 7.000MW creating massive potential for foreign investors in this energy source. Investments would have to amount to 18 billion dollars if just 5.000MW was to be reached. Under a UN lead project local Kenyan firms was also given the possibility to trade in carbon credits to registered green venture projects that then turn in these credits to earn profits. Many energy projects, along with the LTWP project, had been given a Clean Development Mechanism described under the UN Framework Convention on Climate Change (UNFCC); this allows registered companies to change in their carbon credits under the monitoring of the UN. Realizing this potential smaller wind power and renewable energy projects along with the LTWP was offered guarantees by the Kenyan government on bank loans 131. Sponsors of the LTWP have estimated that the project would earn 200 million euros over its lifespan of 20 years. The plant has been registered with the United Nations Framework Convention and part of the income is to be shared with the government and the community. The goal for the next year (2012) was that the LTWP become able to produce 50MW of electricity and reach full production capacity of 300MW later by Part 50MW to 90MW was to be produced by December The project was expected to add 17 % of clean power to the national grid or 17% of Kenya s current total electricity capacity coming from renewables. The consortiums tariff for the power produced was agreed on in the Power Purchase Agreement and had been set at 7.52 eurocents per kilowatt hour. The price negotiated became fixed so Kenya power had to pay for the power produced; meaning that the consortium are ensured payment but suffers if the wind is less than predicted. The power was estimated to be approximately 60 % cheaper than power generated 131 Business Daily (2011): Investors scramble to set up green energy ventures, (May 19, 2015). :: Business Ghana (2011): International Investors In Kenya Energy Sector, (May 21, 2015) 36

38 by fossil fuels, making it the least cost power generation option along with the top prioritised geothermal power. The lead arranger of the debt financing for the project was expected to be the World Bank and the African Development Bank with Standard Bank of London and Nedbank Capital of South Africa as co-arrangers. Most of the financing would be used on the construction of 365 wind turbines, each with a capacity of 850KW 132. The construction of the LTWP was already expected to start in December after its financers completed the due diligence process, but was delayed this year by both the due diligence process and an environmental impact assessment study required by the World Bank. The assessment was posted on the World Bank Web site for 120 days for the public to comment and thereafter it was to be presented before the bank s board for approval. The study was approved and investors now expected the World Bank to provide certain guaranties and credit enhancements on behalf of the Kenyan government. The LTWP power project was now expected to start production after The Middle Over the next three years the Turkana project was to create jobs, mainly in construction. A village was to be constructed to accommodate all the staff working on the construction site. Besides the installation of the wind turbines, road upgrades for bringing in the turbines and road systems that should interconnect the turbines and static synchronous condensers had to be made and construction of a transmission line was a vital part of the project 134. ( ) it is two separate projects which are dependent on one another. So they we still have to coordinate and collaborate. ( ) we are working in parallel so that we finish about the same time. It would not make sense if the transmission line was finished before the wind mills or the other way around, so we try to coordinate on that Sambu, Zeddy (2011): Wind power investors to earn Sh26bn from Turkana project, (May 21, 2015) 133 The Star (2011): Kenya wind power project to start by April, (May 22, 2015) :: Mat McDermott (2012): 310 MW Kenyan Wind Power Project Given Go Ahead, (May 22, 2015) 134 APPENDIX: Models and Figures 2) Project Location Windfarm, Road up-grade and Transmission Line 135 Henrik Frøsig, 1 st interview transcript, 25:00-30:00 37

39 Then the beginning of this year it was estimated that the wind farm would be online at the end of December 2013 and be able to produce 50MW by the beginning of The 300MW LTWP project would in all cost around 600 million euros. About 70 % of the funds were expected to be financed from debts and 30 % of the finances were going to come from shareholders 137. Kenya Power (KPLC), the east African nation s monopoly power distributor, had already agreed to buy electricity over two decades through the power purchase agreement. The turbines would be installed on acres of land. In total the LTWP consortium had leased acres of land which could accommodate an amount of turbines that combined have the capacity of 2.000MW wind power. This was to ensure that the LTWP could expand and produce power as future demand grows 138. Investment companies, banks and Europe based Development Finance Institutions (DFIs) had since 2010 increased their investments in Kenya due to the political initiatives taken by the government of Kenya. The LTWP is among one of the companies that gained the possibility to receive an expansion of funds from these financers. The increasing interest in Kenya or the increasing allocation of funds for developing countries in general, was also partly due to institutional investors desire to avoid slow growth in the developed markets, which had just experienced the financial crisis. Emerging countries as Kenya attracted lenders by having prosperity of better returns. The reason for this was that the return rate on lending was currently higher in Kenya than in developed countries; Europe had an average on 5 % return rate on lending, where Kenya had 10 %. The financial crisis in 2008 pushed investors to look at emerging countries for higher return. A survey made by Invest AD and the Economist Intelligence Unit had found that investors were planning to allocate funds to the African markets, especially Kenya which ranked as one of the favourite countries holding the greatest opportunities for investments 139. This year the Danish wind turbine maker Vestas signed the agreement to supply the equipment for the LTWP. The agreement was for the 365 V52 turbines, each with a capacity of 850KW. The electricity was planned to be delivered through the 428km overhead transmission line. The 400kV 136 Mbugua, James (2012): Turkana project to create jobs, (May 22, 2015) 137 APPENDIX: Models and Figures 3) Lake Turkana Wind Power Financing Structure 138 Ombok, Eric (2012): Lake Turkana Wind Project in Kenya to Break Ground in April, (May 27, 2015) 139 Juma, Victor (2012): Big returns spark foreign funds rush for Kenyan firms, (May 27, 2015) 38

40 transmission line that was going to cost 142 million euros were to be built by the Kenya Electricity Transmission Company Ltd (KETRACO) and Isolux Corsan of Spain, with concessional funding coming from the Spanish and Kenyan government 140. The LTWP would be responsible for financing, constructing and operating the wind farm. Aldwych International responsibility would be to oversee the construction and operations of the power plant while Vestas responsibility would be the maintenance of the plant through a 15 year service contract 141. At a UN conference this year; International Year of Sustainable Energy for All the potential of energy investments in emerging countries was further highlighted. Part of the agenda was the ensuring of universal access to energy, double the global rate of improvement in energy efficiency, and doubling the share of renewables in the global energy mix, all by In relation to this the UN encouraged developing countries to promote efficiency standards, policies and strengthen investments in renewables 142. Which Kenya already had been doing since 2006 making it an even more attractive country for investors that were seeking to profit from development projects. Besides the international exposure through multilateral political institutions, Kenya had, as mentioned, one of the best wind resources in the world. The wind speeds measured was between 3 and 10m/s with record speeds of 11m/s in the northern part of Kenya, but so far the current installed capacity for wind power was only around 5MW this year 143. At the same time electricity prices was among the highest in East Africa and power cuts and power rationing were frequent problems. Now that international finance has become more available the Kenyan government had grown to become increasingly more inclined to invest in reliable power sources, such as wind energy 144. Now after seven years of studies, assessments and funding negotiations, the 600 million euro project was going to take off as soon risk guarantees from financial institutions were finalised. All contracts were in place and the construction was to begin when financial guarantees were in place. First part of the process would be the improvement of the 204 KM of road for the trips the 140 Lake Turkana Wind Power (2012): Lake Turkana Wind Power Project Set To Open Up Myriads Of Investment Opportunities, (May 28, 2015) 141 Senelwa, Kennedy (2012): $756 for Turkana wind power project, (May 27, 2015) :: Lake Turkana Wind Power (2012): Lake Turkana Wind Power Schedules June Construction, (May 27, 2015) 142 Lake Turkana Wind Power (2012): Ministers, Senior UN and International Officials call for Sustainable Energy for All' in Africa by 2030, (May 27, 2015) 143 Lake Turkana Wind Power (2012): Innovation and Diversification Are Key for Kenya s Renewable Energy Industry. (May 27, 2015) 144 Koigi, Bob (2012): Wind energy development booming in Kenya, (May 27, 2015) 39

41 trucks would have to take in order to bring in materials for construction 145. The short delays the project had experienced so far now meant that the wind project was expected to start the production of the first 50MW by mid-2014 and reach full capacity in early In 2008 Kenya s total energy generation was mostly depending on three sources of energy; hydro, oil and geothermal, half coming from hydroelectric power, one-third from oil and 16 % from geothermal power, according to the Global Energy Network Institute. The price per kwh produced by the wind farm was going to be, along with geothermal power, the lowest in Kenya. This made it possible to produce power without subsidies, unlike the case in Europe 147. According to reports from the UN Environment Programme Kenya s wind energy capacity could potentially be as high as 3.000MW, more than double national demand, but still less than the prospects of geothermal power which could be as high as 7.000MW 148. Part of the SREP mission and agendas at institutional conferences was the need to interconnect the region s power sources to meet Kenya s future energy demand. Without the ability to export the national energy production Kenya could lose money since they have to pay for all the excess power produced. Kenya surged toward an estimated MW energy demand by 2030, where only 1.600MW was expected to be coming from imports. Kenya was already interconnected with Uganda, Ethiopia and in a near future it was desired to connect with Tanzania and the oil and gas rich South Sudan. Kenya Electricity Generating Company (KenGen) has stated that Kenya also could become able to export energy trough this interconnection, especially due to low cost energy from wind and geothermal power plants. Other energy resources such as solar power, coal, gas and even nuclear energy was considered as sources for the interconnected grid. Then Tullow Oil, a company which had found oil in Ghana and Uganda, now found oil in Kenya, which made the Kenyan government interested in constructing a pipeline to Tanzania through Nairobi. The Kenyan 145 Lake Turkana Wind Power (2012): Work on Africa s biggest wind farm to begin by June, (May 27, 2015) 146 Lake Turkana Wind Power (2012): Wind power farm takes shape, (May 27, 2015) 147 Lake Turkana Wind Power (2012): Wind power farm takes shape, (May 27, 2015) 148 Andrew (2012): Kenyan Wind Farm, Africa s Largest, to Produce Lowest Cost Electricity, (May 27, 2015) :: Pasolini, Antonio (2012): Kenya, in Africa, Lets Wind Power Blow Stronger, (May 28, 2015) 40

42 vision was now not only to become able to produce or buy power for national use, but also producing enough power to gain profit from exporting and distributing energy to other countries 149. The discovered oil deposits near the Turkana region attracted more investors to this desolate region where 95 % of the people were living below poverty line. A lot of Kenyans in this region are depending on their livestock, small-scale agriculture, herding and fishing for their subsistence. The finding of oil created hope for the people living in this region as the Kenyan government had announced that 20% of the profit from the oil would be used to develop and uplift the community. Part of Kenya s huge interest and commitment in energy production was due to the growing need for Kenya to boost their manufacturing which needed a reliable production and distribution of electricity, where almost 20% of Kenya s electricity generating capacity was expected to come from the LTWP project 151. As consequences of economic growth and investments, electricity usage from renewables had been growing from 780MW in 2002 up to around 1.300MW this year. To respond the Kenyan government, with the support of international organisations, adopted a renewable energy development program, which was part of the World Bank s SREP program. As a result of many factors, including the SREP, Kenya went from almost zero investments in renewables up to approximately 1.3 billion us dollars over a decade 152. Later this year the LTWP project was hailed by the Director-General of the UN s International Renewable Energy Agency (IRENA) and the Executive Director of the Environmental Programme (UNEP). Both considered the renewable energy projects in Kenya to be of vital importance to the economic development of the country, especially wind, geothermal, solar and biomass related projects. This enthusiasm was shared by the World Bank and the Standard Bank of South Africa who was already funding several renewable energy projects across the Eastern Africa region and had signed various agreements with Kenya s state-funded power firm, the Kenya Power and Lighting Company (KPLC) for carbon trading. The Kenyan Ministry of Energy had stated that electricity from wind projects would dominate the energy production generation in the coming years. Data from the ministry had shown that MW would come from renewable sources by 149 Rubadiri, Victoria (2012): Kenya: Tapping Into Regional Power Key for Country, (May 28, 2015) 150 In total Kenya has a population of 43 million people 151 Okoth, Jackson (2012): Oil, wind power project turn fortunes for bandit county, (May 28, 2015) 152 Philip, Denise (2012): Kenya: Potential to Be Sub-Sahara Leader in Wind Energy, (May 28, 2015) 41

43 the next year (2013) and out of this amount 705 MW were to come from wind projects 153. The carbon credits earned would amount to 10 million euro each year and a total of 200 million euro over the lifespan of the project. It would save Kenya 120 million euro each year in fuel imports. Other benefits included tax-revenue estimated at 22.7 million euro per year or 450 million euro over the 20 year life of the investment 154. The project was now relying on the government guarantees in order to attract more finances, but the World Bank now backed out of the project due to concerns over the transmission line and the Power Purchase Agreement. So far the project had been financed from its conception through a complex financing model which began with raising money through private placements to finance each milestone in its development. The final stage in the project was now without the World Bank going to be financed through a syndicated loan arranged by the African Development Bank (AfDB) 155. According to Carlo Van Wageningen, the chairman of the LTWP consortium, one of the biggest challenges had been to resolve the logistics and the ability of getting very heavy and bulky equipment to the site which is why the 365 wind turbines chosen was of a relative small size compared to other models produced by Vestas. ( ) it s 1.200km between the site and the port of Mombasa so with so much transportation it made sense to use small turbines and with such large site efficiency was not really a concern. 156 Other challenges were improving the poor local communities, which was to have the profits from carbon credits invested in the development of schools and health clinics in the region 157. At the end of 2012 the LTWP consortium signed the contract for the road construction. The contract was given to the construction company Civicon whose job it would be to rehabilitate the 204 km of access roads and the 109 km road system within the site of the wind farm. Construction of the road would take approximately 15 months after initiation 158. Shortly after the signing of the construction contract with Civicon, the Kenyan government signed a Memorandum of understanding with the 153 Lake Turkana Wind Power (2012): UN Hails Kenya s Initiative, (June 01, 2015) 154 Lake Turkana Wind Power (2012): East Africa Economic Report Africa s largest wind project still steaming on, (June 01, 2015) 155 East Africa Economic Report (2012): Africa s largest wind Power farm set to start, (June 01, 2015) 156 Bob Chestnutt, 2 nd interview transcript, 05:00-10: Thornton, Stuart (2012): Wild Winds, (June 01, 2015) 158 Sambu, Zeddy (2012): Wind powercompany signs Sh3.2bn road building deal, (June 01, 2015) 42

44 LTWP consortium. The Memorandum included the LTWP project as part of the Kenya Vision 2030 policy statements. The Director General of the Vision 2030 Delivery Secretariat, Mugo Kibati announced that: Kenya is set to further develop as the hub of trade and logistics in the Sub-Saharan Africa in line with the Vision 2030 outcomes for Kenya. The inclusion of a wind farm in Kenya increases the industrialization efforts for Kenya, which are necessary to helping Kenya realize a middle-income status by 2030 by ensuring that there is access to reliable and cost-effective electricity. In addition, the project will bring numerous social and economic benefits to Kenya, which we as the Vision 2030 Delivery Secretariat are totally committed to implementing 159 -Mugo Kibati 2013 The Middle Now with the backing of the African Development Bank (AfDB), Kenya Power (KPLC) and the Vision 2030 the Kenyan government 160 could finally sign a letter of support for the LTWP project, giving it a partial risk guarantee (PRG). So if example there is a war, which in Kenya would cause the project to fail, then the government is obliged to purchase the project for the market value of the project. So this is typical in projects of this nature where you look for government to take the political risk because government is the only party that can control things like war or other apparent issues. 161 The letter committed the Kenyan government to support the LTWP and enabled the project to enter its final phase of financing 162. The project now came closer to the final financing phase in April 26, 2013 The African Development Bank (AfDB) approved large sums in debt financing for the LTWP project. The bank noted that this zero-emission project would enhance energy diversification and save about tons CO2 emissions compared to a fossil fuel fired power plant. The AfDB had now become the spearhead of the projects transactions and the bank has so far helped in building the 159 Lake Turkana Wind Power (2012): Press release 16 October 2012, (June 01, 2015), page 1. line The Kenyan Minister of Energy and Minister of Finance signed the letter of support. 161 Bob Chestnutt, 2 nd interview transcript, 10:00-15: Lake Turkana Wind Power (2012): Press release 28 th February 2013, Lake Turkana Wind Power Government of Kenya Signs Letter of Support, (June 01, 2015) 43

45 confidence of potential investors on mitigation of environmental and governance risks, ultimately attracting additional investors in the project such as commercial banks. Being the mandated Lead Arranger for the LTWP, AfDB was going to raise over million dollars in senior debt and a further 75.4 million dollars of subordinated debt. After approval of the board the AfDB would announce the project to the public and hold presentations for potential lenders in the future. The AfDB also arranged transactions for other energy projects as the banks ultimate aim was to establish Kenya as an ideal place for business and investment through energy supply capabilities 163. Shortly after this the AfDB also issued 20 million euro in guarantees for part of the project. These finances was to ensure the timely construction of the 428-kilometer Kenya Electricity Company (KETRACO) transmission lines from base stations to the national grid, which was the key concern that saw the World Bank back out of the project with its expected guarantees. Construction on the LTWP was to begin earlier, only major hindrance of the project so far was that the World Bank found the project to be too much of a risk. The Bretton Woods twins, The World Bank and the International Monetary Fund, therefore pulled out with its Partial Risk Guarantee 164 that were supposed to protect investors in the event that the project would fall behind schedule and thus fail to generate income. The World Bank was supposed to guarantee the project through its two arms; the International Development Association (IDA) and the Multilateral Investment Guarantee Agency (Miga), but they pulled out of the project in late 2012, but now the Partial Risk Guarantee vacuum had been filled by the AfDB. Besides the World Bank concerns about the completion of the transmission line. The bank had claimed that the power purchase agreement with Kenya Power would be unfair to consumers as they would have been forced to pay for the excess power produced. There were concerns about the transmission line but there were more about the integration, the ability of the Kenyan system to absorb 300MW. I think that if the project had been 100MW, then 3 years later another 100 and then 3 years another 100, it would have been a better configuration, but having 300MW coming on very quickly was the major concern of the Bank Lake Turkana Wind Power (2013): AfDB Facilitates Energy Diversification and Access to Clean Energy with the Approval of USD149.5million Loan to Turkana Wind Power Project, (June 01, 2015) 164 Partial Risk Guarantee is a financial risk instrument used to secure investors against the risk of a possible failure of the Kenyan government to meet its obligations to the Lake Turkana Wind Power project. 165 Bob Chestnutt, 2 nd interview transcript, 05:00-10:00 44

46 As a result of this delay the project was now expected to start construction April 2014 and produce the initial 50MW by March 2016 with full capacity a year later, but the AfDB now expected that the fresh guarantees would increase the likeliness of further investments 166. Then September this year the European Investment Bank announced that it had board approval for 200 million euro to help finance the LTWP project. This means that the project now only needed 120 million euros to reach financial closure. This would help Kenya in coming closer to its energy goal of quadrupling its energy output by 2017 with an additional 5.000MW of renewable energy to the existing 1.664MW. Power costs for the Kenyan industry would then fall 37% to 9c/kWh according to government projections. Investors had concerns that this ambition was too grand for the timeline. Some cautioned that a rapid increase in power supply might lead to a mismatch with demand, which again raised the concern that the World Bank initially had over the ability for the off-taker KPLC to pay for all the added power. In relation to this the head of the European Investment Bank in East Africa stated that demand would have to pick up just as quickly 167. The month after the European Investment Bank approved of the 200 million euro for the project, the Government of the Netherlands, through the AfDB, contributed with a grant of 10 million euro for the construction of the 204 km road to the location of the wind farm. The total cost of the road upgrade was 22.5 million euro and the balance was to be provided by the LTWP under their investment. The construction was to be made in collaboration with Kenya Rural Roads Authority (KeRRA) and the Kenya National Highways Authority (KNHA), which had granted the LTWP the license to upgrade the road system 168. In November 2013 Carlo Van Wageningen, chairman of the LTWP consortium, was interviewed during the COP19 UN Climate Change Conference in Warsaw, where the LTWP project was awarded the climate change award for best Wind Energy Solution Provider. In the interview he explained that the LTWP project had now entered the final development stage. He was proud to announce that the project would become the largest single wind farm in the world. It would power about million households. The farm was not going to have negative influence on the 166 Gachiri, John (2013): AfDB approves another Sh2.4bn for wind power, /index.html (June02, 2015) 167 Lough, Richard (2013): Kenya wind farm to be built early next year, (June 02, 2015) 168 Lake Turkana Wind Power (2013): Marsabit County to Benefit from Dutch Grant for Lake Turkana Wind Power, (June 02, 2015) 45

47 nomadic population as there would not be fences around the compound which are in a region where population density amounts to one person living per square kilometre. The area in this region, leased for the wind project, could potentially be used to create as much as 2.000MW, but Van Wageningen said that it is important only to produce around 20 % of Kenya s electricity needs as diversification of energy forms makes for a more reliable energy supply. Van Wageningen also explained that the turbines are able to produce almost double the amount of MW compared to onshore wind turbines in Europe. The project had now been 8 years in development since 2005 and was now closer to being realised The End of Development Monday the 24 March 2014 The LTWP signed the financing documents with the mandated debt arranger the African Development Bank and the European Investment Bank, the Standard Bank of South Africa, Nedbank, FMO, Proparco, East African Development Bank, PTA Bank, EKF 170, Triodos and DEG, in order for the 300MW wind project to proceed. At the same time the Overseas Private Investment Corporation (OPIC) was in advanced discussion with the LTWP to join the lender group. After 8 years of development with the support of the Government of Kenya, Kenya Power (KPLC), the Energy Regulatory Commission and Kenya Electricity Transmission Company (KETRACO), the signing of the financial agreements was now in place paving the way for the construction to commence. This development meant that the European Union had through the EU Africa Infrastructure Trust Fund provided 25 million euro 171. Same month another interview was made and broadcasted by CCTV news, again with the chairman of the LTWP consortium. Now that the consortium was ready to go ahead with the construction phase of the project concerns was now raised that if the wind farm became operational before the transmission line was completed then Kenya Power would still have to purchase the power produced without being able to distribute and use it. In response Carlo Van Wagenening stated that 169 Van Wageningen, Carlo (2013): COP19: Carlo Van Wageningen talks about wind power in Africa, (June 02, 2015) 170 The Danish Export Credit Fund 171 Lake Turkana Wind Power (2014): Lake Turkana Wind Power Signs Financing Documents with African Development Bank and Other Lenders. (June 02, 2015) 46

48 construction would not begin until the transmission line was closer to being finalised, so that Kenya would not suffer economically 172. The Equity Closing of LTWP came 12 th September this year and the Chairman and founding father of the project, Carlo Van Wageningen, resigned from the post as chairman and took a place as board member. The new chairman became Mugo Kibati whom is a Kenyan national and the former Director General of Kenya Vision 2030 Delivery Secretariat whose purpose had been to implement the Vision 2030 the national strategy aimed at transforming Kenya into a newly industrialized country 173. The 19 December 2014 the LTWP received the first disbursement of funds after having signed financing agreements earlier in March. This made it possible for the consortium to issue a notice to KETRACO that the construction of the transmission line could begin. With the financial closure in September this year of the LTWP equity partners consisting of: KP&P Africa B.V. and Aldwych International as co-developers and investors, and Finnish Fund for Industrial Cooperation Ltd (Finn Fund), Industrial Fund for Developing Countries (IFU), KLP Norfund Investments, Vestas Eastern Africa (VEAL) - meant that LTWP contractors could begin construction of the wind farm. Aldwych Turkana Ltd, an affiliate of Aldwych International, would oversee construction and operations of the project on behalf of LTWP 174. The support of the local communities was also of high priority for the LTWP. Therefore the LTWP adopted a Corporate Social Responsibility (CSR) program which is to be implemented by the Winds of Change Foundation (an owned subsidiary of LTWP). The foundations task is to uplift communities through programs such as the CHAT HIV awareness campaign, water, sanitation, electrification, sustainable development of agriculture and the education of boys and girls. Initially the CSR programme will be concentrated around the wind farm communities and then gradually expand to the wider project areas CCTV Africa (2014): Kenya Wind Power Farm, (June 02, 2015) 173 Lake Turkana Wind Power (2014): NEW BOARD APPOINTED FOR LAKE TURKANA WIND POWER Mugo Kibati appointed new Chairman of the board, (June 02, 2015) 174 Lake Turkana Wind Power (2014): AFRICA S LARGEST WIND POWER PROJECT ACHIEVES FULL FINANCIAL CLOSE, (June 02, 2015) 175 Lake Turkana Wind Power (2014): AFRICA S LARGEST WIND POWER PROJECT ACHIEVES FULL FINANCIAL CLOSE, (June 02, 2015) 47

49 Entering the beginning of 2015 the LTWP was awarded the Thompson Reuters Project Finance International (PFI) African Renewable Deal Award and the African Renewables Deal of the Year at the IJGlobal Awards 2014 Europe and Africa. The project has now entered the construction phase. Translation Process Each actor in the case description has been identified and translated in the table below. In the first column the name of the actor is presented. In the next is a description of the normative purpose or the obligatory point of passage that the actor-network represents. Interessement represents the actors interest in the network. Under enrolment it is described how the actor has been negotiated to join the network and in the last column it is stated how the actor has responded to the enrolment and how the actor are part of mobilizing the network. Actors Problematization Interessement Enrolment Mobilization KP&P Africa B.V. Aldwych International IFU - Industrial Fund for Developing Countries Finn Fund - Finnish Fund for Industrial Cooperation Ltd The purpose of KP&P is to develop renewable power projects in Africa The purpose of Aldwych International is to develop renewable power projects The purpose of the IFU is to lend equity to development projects that favour Danish export interests The purpose of Finn Fund is to lend equity to development projects that favour Finnish export interests The interest of KP&P is to develop the LTWP project to create profit from selling power to KPLC The interest of Aldwych is to develop the LTWP project to create profit from selling power to KPLC Their interest is to make profits by selling their shares at a higher rate of return and support national export interests Their interest is to make profits by selling their shares at a higher rate of return and support national export interests KP&P are the original developers who was introduced to the project opportunity by Willem Dolleman Aldwych was contacted by KP&P to join the project after the initial wind data collection and PPA negotiation IFU was contacted by KP&P after the initial wind data collection and PPA negotiation due to its relations with the Danish wind turbine manufacturer Vestas Finn Fund was invited to join the equity group after the initial wind data collection and PPA negotiation due to its relations with IFU and Norfund KP&P has the second largest amount of shares and are the original developers who negotiated the initial PPA and convinced the other partners to join the consortium Aldwych is the largest shareholder and has Bob Chestnutt as the project director. Aldwych develops the project with expertise in technical contract negotiations The IFU are shareholders and brings equity to the project and have voting rights to elect board members in the LTWP consortium Finn Fund are shareholders and brings equity to the project and have voting rights to elect board members in the LTWP consortium 176 Attended by over 600 of the world s most senior project finance professionals, the PFI awards are widely acknowledged as the premier event in the global project finance calendar and the awards go to the companies that have demonstrated outstanding performance and commitment. 177 The IJGlobal Europe & Africa Awards are a celebration of the best in class deals in energy and infrastructure over the past year. 48

50 KLP Norfund Investments Vestas A/S Debt arrangers 178 Investment companies, banks and Europe based Development finance institutions (DFIs) The purpose of Norfund is to lend equity to development projects that favour Norwegian export interests Vestas manufactures wind turbines and give service in relation to supply and installation of the turbines Lending through debt arrangers is needed in order for the contractors to begin construction projects related to the wind project The DFI s brings equity or debt capital to development projects Their interest is to make profits by selling their shares at a higher rate of return and support national export interests Making profit by selling, installing and maintenance of wind mills and gaining profit from selling the produced power to KPLC The interest of the debt arrangers is to arrange debt to gain profits from interest rates They invest in large projects with the expectation of earning profits over a longer period of investment Norfund was contacted by KP&P after the initial wind data collection and PPA negotiation Vestas was contacted by KP&P to become a shareholder and obligated by contract with the LTWP consortium to deliver the turbines In march 2014 the LTWP signed the financing documents with the mandated debt arranger AfDB Slow growth in the developing markets and low return rates on lending makes it desirable for the DFI s to invest in Kenya Norfund are shareholders and brings equity to the project and have voting rights to elect board members in the LTWP consortium Brings in equity capital and is expected to install the 365 windmills from and give service over a 15 year period Arranged capital amounts to 435 million euros in senior debt finance and 62.5 million in mezzanine debt finance. With 150 million in equity this enables the mobilization of contractors to start construction Capital mobilizing the LTWP gained from DFI s can be viewed above, as part of both equity investments and debt arrangers NEMA National Environmental Management Authority KETRACO - Kenya Electricity Transmission Company Ltd KenGen - Kenya Electricity Generating Company Ltd KPLC Kenya Power and Lighting Company Ltd or Kenya Power NEMA exercise general supervision and coordination over all matters relating to the environment and is the principal instrument of the GoK in the implementation of all policies relating to the environment KETRACO is 100% owned by the GoK. Their mandate is to design, construct, operate and maintain new high voltage electricity transmission infrastructure that will form the backbone of the National Transmission Grid KenGen is charged with managing all public power generation facilities in Kenya Kenya Power owns and operates most of the electricity transmission and distribution system in the country and sells electricity to over 2.6 million customers. The GoK has a controlling stake at 50.1% of shareholding with private investors at 49.9% Their interest is to survey and ensure proper management of environmental resources and to develop policies, plans, programmes and projects in accordance with international agreements and Kenyan law They develop and manage high voltage electricity transmission infrastructure to improve reliability of electricity supply throughout Kenya KenGen interest is to sell power to the distribution company KPLC KPLC mandate is to plan for sufficient electricity generation and transmission capacity to meet demand; building and maintaining the power distribution network and retailing of NEMA approved the Environmental and Social Impact Assessment study made by the LTWP consortium and issued the EIA licence in July 2009 The Environmental and Social Impact Assessment for the transmission line was undertaken in 2008 and a licence for the construction was issued to KETRACO KenGen are part of KPLC and their enrolment and interest are thereby intertwined KPLC are bound to buy the power produced over a 20 year period from the LTWP at a fixed price under the terms of the Power Purchase Agreement The EIA licence is required to make sure that the project is environmentally and socially responsible. The licence makes it possible for the LTWP to construct on the leased land and is a necessary part of progressing in the FiT process The transmission line is vital for the distribution of the produced power and is therefore vital to the GoK in order to use the purchased power KenGen has no direct influence on the mobilization of LTWP KPLC is the off-taker and thereby makes the project economically viable through the negotiated Power Purchase Agreement. This ultimately makes it possible to attract investors to the LTWP. 178 Mandated debt arranger AfDB and the European Investment Bank (EIB), the Standard Bank of South Africa, Nedbank, FMO, Proparco, East African Development Bank, PTA Bank, EKF, Triodos and DEG. 49

51 REA Rural Electrification Authority ERC - The Energy Regulatory Commission The purpose of REA is to evaluate the need of electricity distribution to public facilities and contribute to the planning of Kenya s national electricity infrastructure The ERC creates licences to companies that intend to create power projects in Kenya electricity to its customers Its mandate is accelerate the pace of rural electrification in order to promote sustainable socioeconomic development The interest of the ERC is to use its mandate to regulate the energy sector for fair competition by collecting and maintain data for national energy plans in accordance with Kenyan laws The Rural Electrification Authority was established as part of the Energy Act in 2006 to manage the Rural Electrification Programme and Fund Energy Regulatory Commission is established under the Energy Act, License was given to the LTWP the 16 th December 2010 with a 20 years duration after completing parts of the FiT process (Project plans and ESIA study) The REA has pushed for the need of electrification in Kenya, but has no direct influence on the mobilization of the LTWP The license gives the LTWP consortium the permission to generate power to the national grid DEWI Global Wind Energy Service Provider WFMS - WinDForce Management Services ESIA Environmental and Social Impact Assessment FiT - Feed-in-Tariff PPA - The Power Purchase Agreement The 428 km overhead transmission line The 204 km road and 109 km within the site of the wind DEWI provide wind energy services to turbine manufacturers, component manufacturers, project developers, utilities and other companies within the sector WinDForce provide expert technical and management consulting services for wind energy projects to both the private and public sector In accordance with the Regulations of 2003 the project requires an Environmental Impact Assessment Study FiT is a political mechanism, introduced by the GoK, that requires feasibility studies made by the energy project developer The PPA is vital as it is a written guarantee that the consortium will be paid for the power produced over a 20 year period The transmission line is vital to the project, since the energy created from the wind farm has to be connected to the national grid The roads is necessary for the trips the trucks must take to They make profits by conducting site inspections and wind efficiency calculation with wind data analysis equipment They make profits by conducting project screening of proposed projects by feasibility studies and wind resource assessments The objectives of the ESIA were to identify and evaluate the environmental and social effects, which could arise from the proposed construction and operation of the project s activities FiT takes the form of a standard offer contract that are designed to motivate investments in renewable energy The interest of the PPA is to commit the LTWP and KPLC in a binding agreement The interest of the transmission line is to transfer the electricity to the national grid for distribution The purpose of the road is make it possible to bring in KP&P approached and hired DEWI in 2006 to carry out wind tests in the region around Lake Turkana The GoK and The World Bank hired WinDForce to assess the potential of the Lake Turkana region and to screen the feasibility of the proposed LTWP project The Environmental Impact Assessment (EIA) licence was issued in July 2009 after the ESIA had been submitted to NEMA and the Ministry of Roads who issued a road upgrade licence in January 2011 The FiT process was established as international political agendas pushed for better implementation process on energy projects KPLC has agreed to and are committed by the PPA contract to buy the power produced. The PPA was signed in January 2010 after business plans and ESIA study was accepted The transmission line will be constructed by KETRACO and Isolux Corsan of Spain by contract Kenya Rural Roads Authority and the Kenya National Highways The survey was used to make an expression of interest to the GoK. After the proposal to the GoK, the GoK contacted WinDForce to carry out wind surveys on behalf of the government WinDForce estimated the wind potentials at Lake Turkana to be a vital resource to accommodate the growing demand for electricity The EIA licence makes it possible for the LTWP to construct on the leased land and is a necessary part of progressing in the FiT process. The ESIA was also a requirement for the road upgrade licence The FiT process describe the requirements by which a PPA can be achieved and thereby facilitates a process for energy project developers The PPA ensures that the consortium receives a tariff on 7.52 eurocents per kilowatt hour produced over the life of the investment and gives incentive for equity and debt partners to join the project The building of the transmission line is currently in progress and will deliver the produced power from Lake Turkana to the national grid for national distribution The building of the road system is currently in progress and will be used 50

52 farm The Corporate Social Responsibility (CSR) program Carbon Credit Earnings - CCE Diesel-powered thermal power plants Water-powered turbines Geothermal and wind powered plants Solar power, coal, gas, biomass and nuclear energy Subsidies Financial crisis Oil prices deliver parts for construction The necessity for the consortium to have a CSR programme comes from the instability that inhabitants from local communities have subjected the project to through activism and demands CCE makes it more desirable for investors to invest in green venture projects in developing countries An easy alternative used for producing electricity A power source that generates most of Kenya s energy needs Both are defined as reliable options for power generation in Kenya Other renewable power sources considered possible to be used in the Kenyan energy mix in the future Subsidies are not necessary for the LTWP project Made stock markets drop especially in the Western world Fossil fuels are needed to generate power from diesel powered plants the wind turbines and for the workers to move around on the construction compound The CSR strategy is to uplift the community through a CHAT HIV awareness campaign, water, sanitation, electrification, sustainable development of agriculture, schools and health clinics in areas where the wind project expands to The interest of CCE is to lower emissions and increase viability of renewable energy projects by being turned into profits To supply the national grid with energy from fossil fuel To supply the national grid with energy from water powered turbines To supply the national grid with energy from geothermal and wind power The interest is to connect these sources to the national grid, creating a surplus of energy for export The interest of subsidies is to expand production of a particular product on a market without raising the final price to consumers The interest of the financial crisis is to prevent growth in developed markets Variation in oil prices are dependent on several factors that determines the behaviour of this actor Authority have given the LTWP consortium the license to upgrade the road system and Civicon is bound by contract to construct the road system Winds of Change Foundation (an owned subsidiary of LTWP) has the task of implementing the CSR initiatives, partly with funds from the carbon credits World Bank and the Standard Bank of South Africa have signed agreements with Kenya s state-funded power firm, KPLC for carbon trading. An energy source that are used when cheaper or unreliable energy sources does not accommodate national demand An energy source that are unreliable due to unpredictable weather patterns and droughts Both sources of energy deliver a relative constant amount of power. Advancements within these energy sources are not mentionable and some not deemed economically viable to connect to the grid The wind speeds are so reliable that production output is considered profitable and the PPA ensures a fixed price The financial crisis made investors look to the African markets for a higher rate on return Fossil fuel dependence increase when other sources do not meet energy demands for logistics and possible future energy projects in the northern region of Kenya The expected effect is to lower the risk of sabotage from the populations that live in the Turkana region and around the area the transmission line pass through The carbon credits earned would amount to 10 million euro each year and a total of 200 million euro over the lifespan of the project. Which will be used for other parts of the project such as the CSR programme It is currently an expensive and undesired energy option for the Kenyan government compared to Wind Energy Energy produced from water powered turbines are unreliable and therefore not a desirable power option compared to wind Energy from these sources are about 60% cheaper than power generated from fossil fuels and attracts investments due to the Kenyan government favouring of these sources These renewable sources does not take the investment focus away from wind or geothermal power projects Subsidies has no impact on the project as they are not needed The financial crisis are part of the reason for lenders and equity investors to join a project such as the LTWP When fossil fuel prices rise the Kenyan government loses money compared to cheaper alternatives such as wind making wind more desirable 51

53 Tullow Oil Climate change Wind speeds acres of leased land Nomadic population in the region Finding of oil might shift political interest in the future as it could drive down oil prices and shift the focus from renewables Increases the unstable weather patterns in Kenya partly caused by CO2 emissions The wind speeds are necessary for the turbines to produce electricity The area is needed to set up a large amount of wind turbines, infrastructure and accommodations for workers The construction on the leased land lies in a region where nomadic people move around The oil could be used to add more energy to the national grid from diesel powered plants Climate is an actor whose behaviour becomes more visible as global temperatures rise The wind speeds are relatively high in the region but ranges from 3m/s to 11m/s and 7m/s on average The area is so large that it can sustain a maximum amount of turbines, able to produce 2.000MW Their interest is free passage through the region for them and their livestock The PPA is already in place and therefore it is not expected that the consortium will suffer from an decrease in oil prices Lowering CO2 emissions will possibly counter or slow down the rise in global temperatures DEWI, Ministry of Kenya and WinDForce collected data on wind speeds in Kenya and found the region at Lake Turkana to be a very high wind potential zone The total land area has been leased by KP&P in agreement with the Kenyan government There will not be build fences around the compound to minimize conflict The finding of oil is only a risk if the Kenyan government withdraw from its contracted obligation to buy the power from the LTWP consortium Political focus on the backing of energy sources that has low emissions of CO2 and carbon credits The wind speeds at Lake Turkana has high but changing speeds making production efficient but with changing impact on the transmission Construction has begun and covers only acres of the area making room for future turbines or other projects that KP&P wish to develop Free passage minimizes the risk of conflicts with the nomadic population Communities around the wider project area The World Bank Scaling up Renewable Energy in Low Income Countries Program (SREP) Kenyan Vision 2030 strategy Memorandum of Understanding (MoU) between LTWP consortium and the Kenyan government Government Letters of Support Inhabitants will be affected by the transmission line which will pass through thousands of local communities The World Bank facilitates interaction between national banks and gives guaranties and credit enhancements to nations with investment plans A pilot project facilitated by the World Bank and the AfDB that invites selected countries to assess their energy infrastructure The 2030 strategy describes the political commitments of the Kenyan government toward renewable energy sources A memorandum of understanding is used in cases where parties do not engage in a legal or legal enforceable commitment, it is an alternative to a gentlemen s agreement The Letters of Support outlines the terms under which the government Their interest is to get benefits from the project and to protect what they regard as their land The World Bank interest is to give financial and technical assistance to developing countries to reduce poverty and support development The interest of the SREP is to encourage selected countries to make feasible energy plans that could receive finance A vision created with the intention to set goals of providing reliable and affordable energy to meet the future demands for development The purpose is to express a convergence of interest or will between the two parties indicating a common line of action It is a political risk that the GoK has to accept to guarantee The CSR programme is made to counter the activism/sabotage that is expected from disputes with communities The World Bank associated to high risks with the ability for KPLC to distribute the large amount of power produced and the construction of the transmission line Geothermal power was given priority and wind energy was determined to be a source of energy that the Kenyan government had to finance trough other programs or sources The LTWP are part of the vision 2030 strategy by the memorandum of understanding given by the GoK Kenyan government signed a Memorandum of understanding with the LTWP consortium in 2012 Signed February 28, 2013; the GoK had to sign the letters of support Sabotage has occurred, whether it would be more frequent without the CSR programme is not estimated but likely World Bank backed out of the project with its expected guarantees (in 2012) delaying the development of the project by creating uncertainty amongst investors The SREP made the Kenyan government asses their energy plans and future political vision for energy production, which eventually made the AfDB support the LTWP Being part of the 2030 vision gives legitimacy to the project and possible investor attraction The Memorandum included the LTWP project as part of the Kenya Vision 2030 policy statements If national political issues occur that threatens the project, then the GoK is 52

54 Signing of Financial Agreements of Kenya will support the project The signing of the Financial Agreements is needed to release the funds for the project the project if any apparent national political issues should threaten the project The interest of the financial agreements is to make the funds available for the LTWP project to proceed before the financial agreements could be signed. Without them Kenya would not be able to reap the benefits of the 300MW project The financial agreements was signed after the GoK guaranteed the project by signing the Letters of Support obliged to purchase the project at market value. This lower risks and makes it possible to sign the financial agreements needed to mobilize construction through contracted agreements The released finances mobilises all contractors and thereby takes the project into construction Descriptive statement 1 st Problematization The Obligatory Point of Passage (OPP) for the Lake Turkana Wind Power project (LTWP) was established when KP&P contacted DEWI to make wind feasibility studies. Later this was confirmed by the Kenyan government who hired WinDForce as an independent consultant to make their assessment of the regions potential. Without favourable wind in the region there would have been no basis for the Government of Kenya or any of the partners in the LTWP consortium to enter into negotiations. 2 nd Interessement The equity partners in the LTWP consortium interest are to make profit by selling the power from the wind farm to Kenya Power (KPLC). At the same time the equity partners consisting of the DFI ; Norfund, IFU and Finn Fund also have an interest in increasing their national export. ( ) we can invest in all projects where there is a Danish interest. It is defined as Danish suppliers, components or technology. 179 Vestas is both a contracted supplier and equity partner so their interest is to gain profit from delivering, installing and maintaining the turbines and selling the produced power. The debt arrangers are interested in gaining higher return rates from projects in regions that are associated with a higher risk, such as Africa and financial guarantees. 179 Henrik Frøsig, 1 st interview transcript, 05:00-10:00 53

55 KPLC s interest is to buy the power from the LTWP and to distribute the power to customers through the national grid. KenGen s interest is to sell the power produced from the national owned power generation facilities to the KPLC and therefore have no direct interest in the LTWP project. Their interest is more related to the construction of the transmission line which increases the market for KenGen as distribution capability is a necessity to accommodate national demand for electricity. The Rural Electrification Authority also has no direct interest, but since they are charged with the responsibility of evaluating and promoting the distribution to public owned institutions, facilities etc. they also have an interest in increasing the amount of generated power to the national grid and to develop a larger distribution infrastructure to accommodate the needs of Kenya. The Energy Regulatory Commission analyses and manages the amount of power that Kenya is capable of using. Therefore their interest is to assess which energy projects can have licences to operate power generation in the country. KETRACO s main interest and purpose is to develop and operate the national transmission infrastructure and to ensure a reliable supply of electricity to the customers. The National Environmental Management Authority (NEMA) is charged with upholding Kenyan law and international treaties concerning every project that involves impact on the environment. Their interest is to review the Environmental and Social Impact Assessment (ESIA) required for any energy or construction project in Kenya. The interest of the EIA licence that NEMA hands out to projects which are deemed socially and environmentally sound is to make sure that the benefits of the project outweighs the possible negative impacts on Kenya. The Feed-in-Tariff (FiT) process is one of the political mechanisms introduced by the Kenyan government. The interest of the FiT is to make it easier for investors to develop power projects in Kenya. FiT facilitates a process in which requirements such as wind data analysis and the ESIA study are made and results in the negotiation of a Power Purchase Agreement (PPA). The PPA is evident, it represents the confidence that we have in being paid for the power that is being produced over the next 20 years 180 The interest of the Power Purchase Agreement is to guarantee that the energy project will be paid for the power produced over a 20 year period. The interest of the transmission line is to connect the distribution from the various power generating plants to the national grid. The 204 km of access road is to enable logistics from the port of 180 Henrik Frøsig, 1 st interview transcript, 30:00-34:30 54

56 Mombasa to the construction site at Lake Turkana. The 109 km of roads within the construction compound is to make it possible for the workers to construct, maintain and erect the turbines on the site. The interest of the Corporate Social Responsibility (CSR) programme is to give something back to the community around the site of construction and along the transmission line, which passes through several communities. The interest of the Carbon Credit Earnings (CCE), which is to be used through the Winds of Change Foundation, is to implement the CSR strategy as construction expands through several land claims. At the same time the interest of the CCE is to attract investors to renewable energy projects. The interest of diesel-powered plants is to supply the national grid with electricity when other sources do not accommodate current demand or when other sources do not create enough power to accommodate demand. Water-powered turbines is the most used power generating option in Kenya and its interest is also to supply the national grid with power. The same goes for geothermal and wind powered plants and other resources such as solar, gas, coal, biomass or nuclear energy. The interest of the nomadic population around Lake Turkana is to have free passage through the large leased area. The communities affected by the wider project area, such as the area that the transmission line will pass through, has an interest in projects that pass through what they regard as their land. They expect benefits such as paid work, schools, wells, health clinics or anything that can benefit their livelihood. The interest of Scaling up Renewable Energy in Low Income Countries Program (SREP) was to make Kenya asses their energy infrastructure so that the government could make feasible energy plans that could receive finances from the World Bank or African Development Bank. The interest of the Kenyan Vision 2030 strategy is to respond to the evaluated energy demand that Kenyan expect to have in the future. The interest of the Memorandum of Understanding (MoU) is to express a convergence of interest or goodwill between the government of Kenya and the LTWP consortium and to include the LTWP project as part of the Kenyan Vision 2030 Strategy. The interest of the Governement Letters of Support is to legally bind the Kenyan government to purchase the project at market value if any apparent national political issues should put the project into default. 55

57 The financial agreements release the funds needed to move onto the construction phase of the project. 3 rd Enrolment The Dutch farmer Willem Dolleman was the first who noticed the windy conditions at Lake Turkana and contacted Anset Africa who then created KP&P to develop the project. KP&P who then labelled the project Lake Turkana Wind Power (LTWP) enrolled DEWI to make wind measurements in the region. When the wind data assessment was completed and an initial business plan was completed, KP&P then made an Expression of Interest to the Government of Kenya. The Kenyan government received the business opportunity and enrolled WinDForce to make an independent assessment of the projects feasibility. Having assessed the project and found the wind speeds at Lake Turkana favourable for producing energy to the Kenyan national grid, the LTWP entered the Feed-in-Tariff process for renewable projects, which was enrolled by the Kenyan government as a political mechanism to attract finances to renewable energy projects. Besides deciding on the acres that had to be leased for the project the LTWP also needed an Environmental and Social Impact Assessment, which eventually was accepted by the National Environmental Management Authority (NEMA) with the procurement of an EIA licence required for undertaking construction. Having accommodated the requirements of the Feed-in-Tariff process the project developers was now able to enrol KPLC, the off-taker and distributor, through a negotiated Power Purchase Agreement. The LTWP consortium also enrolled a financial strategy to make the project a reality. So they made several meetings with the Scandinavian Development Financial Institutions (DFI s). Norfund, Finn Fund and IFU were presented with a business plan, they found to be within their mandate, and they then became enrolled through a shareholder agreement. Finn Fund was enrolled due to its political ties with the other Scandinavian DFI s and IFU was invited due to their close relation with the Danish Turbine manufacturer Vestas. Aldwych was enrolled in the project because of its experience in developing energy projects and found the project to be a profitable opportunity. The LTWP consortium applied for the licence from the Energy Regulatory Commission after having already negotiated and enrolled a wind feasibility study, an EIA licence for construction, a Power Purchase Agreement and having equity partners to realise the project. 56

58 The World Bank and the African Development Bank (AfDB) was already enrolled in the network as Kenya was part of the Scaling up Renewable Energy in Low Income Countries Program (SREP) initiative, but the World Bank s concern over the ability of Kenya to utilize the power produced eventually de-rolled the World Bank from the LTWP project with its expected financial guarantees. Well I guess the World Bank not deciding to support the project was a major problem because it is such an important player in the market, it took some time to restore confidence amongst the other investors and the other investors still thought the project was a good idea when the World Bank decided not to support it. 181 The AfDB and the equity partners still found the project to be feasible and continued with the AfDB as leading debt arranger. The Memorandum of Understanding between the government of Kenya and the LTWP enrolled the project as part of reaching the national Vision 2030 Strategy. When the Kenyan government signed the Government Letters of Support it made possible enrolment of the equity and debt finances through signed agreements. This made it possible to enrol the contractors and start the construction of the project. The transmission line became enrolled in the network by contract with the Spanish company Isolux, who are responsible of building the transmission system. Preceding this; KETRACO gained a licence from NEMA before it was possible to involve this contractor. Land rights are also currently being negotiated to make it possible to enrol the line. The upgrading of the access roads within the wind farm site and the roads from the Turkana area to Mombasa was enrolled by contract with CIVICON, who are responsible for the construction and licence for the road upgrade was also given by NEMA before this was possible. The CSR strategy was enrolled to counter the expected disputes with the communities that the project expands through. We have a large program where we help the populations in the area, simply to avoid conflicts with them Bob Chestnutt, 2 nd interview transcript, 15:00-20: Henrik Frøsig, 1 st interview transcript, 15:00-20:00 57

59 Nomads in the Turkana region wishes to have free passage through the land, therefore no fences will be made around the compound in order to successfully enrol this population. The communities around the transmission line and the road construction are also accounted for, as the CSR project will expand along the areas where construction is needed. 4 th Mobilization The project is mobilized by a network consisting of several actors. The LTWP consortium mobilizes the project by bringing equity and technical expertise in negotiating contracts, which are valuable when enrolling other partners needed to mobilize the project. The debt arrangers also bring debt capital and with the equity it is possible to mobilize contractors for construction. The two wind energy service providers both measured the wind speeds to have high potential for energy production. This initially mobilizes the project as there otherwise would be no interest for the Government of Kenya, the debt arrangers or the LTWP consortium to support the project if there were no winds to make the project economically viable or to accommodate the energy needs of Kenya. The Environmental and Social Impact Assessment makes it possible to construct on the leased land and the areas in to which the project expands. The assessment eventually enrolled the licences that are needed to mobilize construction. This was required be the Feed-in-Tariff process introduced by the Kenyan Government. The Feed-in-Tariff process has in this case successfully mobilized a process that culminated in a Power Purchase Agreement between Kenya Power and the LTWP consortium. The Power Purchase Agreement is just as vital to the project as the measured wind speeds as it ensures the economic viability of the project and thus mobilizes the incentive for the equity partners and the debt arrangers to join the project. We have raised a lot of money to build the project so we need certainties that the power will be purchased during the life of the project. 183 The signing of the financial agreements eventually mobilized the contractors and road construction and the construction of the transmission line has begun. The transmission line will eventually mobilize the produced power onto the national grid for distribution and the road upgrades will 183 Bob Chestnutt, 2 nd interview transcript, 10:00-15:00 58

60 makes logistics possible for the construction of the wind farm. The CSR strategy was supposed to minimize the likeliness of sabotage from the local communities. Yes, I think of it as the single biggest challenge and for that reason we have had teams that very actively work with communities for over 3 years along the area of the transmission line. So we have anticipated this and have an active community engagement, consultation, negotiation along the 428km. 184 Resistance has occurred and it is difficult to estimate to what extend that the CSR initiative have mobilized a lowering of the risk that the local communities pose to the project. *Other indirect factors The financial crisis in 2008, oil price variations, climate change, the finding of oil in the Turkana region and the potential, or lack off, of other energy sources also affects the LTWP project. The financial crisis made investors look to the African market for higher rates on return of investments. The climate change affects the political agenda to focus on alternative energy sources. Events such as the finding of oil might prove to be a resistance to the project as lower oil prices might make it more desirable for the Kenyan Government to use fossil fuels for energy production, but the Power Purchase Agreement ensures that this will not affect the Turkana project. I understand that it is very waxy oil so for it to be transported to the coast you will need heated pipelines. So I think it will be a challenge to develop that particular oil deposit given the current oil price, but if it is developed it will be helpful that Turkana has already brought development into the broader Turkana area. 185 The finding of oil might even be beneficial to the project as the oil is very waxy and needs heated pipelines to be transported by, which would increase the need for electricity to extract the oil from the region and the upgrading of the road system could prove beneficial for other large projects in the region. Other energy sources also play a vital role in the network as energy from water-powered turbines and diesel-powered plants are less desirable options for Kenya. Only real competition could come from geothermal power plants which were evaluated as the most desirable option in the 184 Bob Chestnutt, 2 nd interview transcript, 15:00-20: Bob Chestnutt, 2 nd interview transcript, 15:00-20:00 59

61 SREP mission findings initiated by the World Bank, but still the Power Purchase Agreement ensures a fixed price for the power produced by the LTWP project. Global political factors affecting the project worth mentioning throughout its development is the: UN Millennium Development Goals (MDG s), The UN Framework Convention on Climate Change (UNFCC), The Clean Development Mechanism (CDM), The COP19 UN Climate Change Conference in Warsaw, the Conference in Norway with the International Energy Agency, UN conference in 2012 International Year of Sustainable Energy for All - The MDG s describe areas that are to be uplifted by the Kenyan government such as access to electricity. The interest of the MDG s is to political commit the Kenyan government to environmental, social and economic development. Kenya s vision 2030 strategy is part of achieving the MDG s and has been negotiated on conferences in the international political environment. The MDG s encourages the Kenyan government to create and follow up on long-termed political and institutional reforms within the energy sector that makes it easier to develop energy projects. UNFCCC is an international environmental treaty with no enforcement mechanisms or legally bindings. The interest of the treaty is to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent interference with the climate. The CDM mechanism is defined in the Kyoto Protocol and allows certified countries to trade in carbon credits. The interest of the CDM is to achieve sustainable development and contribute to the objective of the UNFCCC. The common impact these conferences has on the Lake Turkana project is that they facilitate negotiations between national delegates with the purpose of reaching global climate agreements. The conferences were held with the desire to push for the increase of energy availability and the lowering of CO2 emissions in developing countries. The conferences ultimately encouraged developing countries to promote efficiency standards, policies and investments in renewable energy sources. 60

62 Discussion Mobilizing the Project According to actor-network theory we can to understand the mobilization, or the extent to which the Lake Turkana Wind Power project (LTWP) have been mobilized, as a result of the translation process that each actor is subjected to. The LTWP consortium has since the beginning of development managed to mobilize the project by negotiating with actors which in one way or another has an impact on the project. The success of the project depends on the ability of the developers to turn mediators into reliable intermediaries which can exert the force and desires of the developers. The wind at Lake Turkana was the first mediator that had to be made into a reliable intermediary. This negotiation was done by making measurements of the wind speeds in the region. In recording the wind speeds the project developers contacted a Global Wind Energy Service Provider to make the measurements; this actor is then considered a reliable intermediary because they accepted to make the measurements and thereby give momentum to the project. Knowing the wind speeds means that we now know how this actor is likely to respond to the network. It is then not any more considered an unreliable mediator but as a reliable intermediary. It is an actor-network which can be puntualized or black-boxed because it is functioning and acts accordingly in line with the purpose of the network. Now that wind is a reliable ally more actors gets interested in the project and thereby wind is an intermediary which creates a link between the European wind mill production and the Kenyan power needs. Creating a link or an Obligatory Point of Passage (OPP) was the first necessary part of mobilizing the project by interesting more actors. When the Kenyan government realized the potential of the project even more actors were interested, such as development finance institutions, equity partners and lenders. This way the consortium was created and allowed the developers to tap into an already existing network of utility companies in Kenya. Now that the project developers had tapped into a network consisting of interested actors, these mediators had to be turned into reliable intermediaries in the network. The Feed-in-Tariff processes were a reliable intermediary which had already been negotiated into existence, pushed by an international and national political agenda. This made it possible to mobilize more allies into the network, such as licenses, agreements and contractors. In this regard it was a snowball effect where the attainment of allies or intermediaries helped the consortium in convincing other mediators to join the network by trial of negotiation. All actors which accepted the negotiations are now expected to behave as intermediaries as they are bound by contracts and guarantees and in the end enough actors joined the network which resulted in the signing and release of equity and debt 61

63 financing for the project. Although most actors after many years of development accepted to join the network there have been and might be resistance in the future as not every actor found in this research accepted the negotiation process and can still be labelled as mediators. During the development process the World Bank backed out of the project which caused some concern among other actors and problems with finances, but the network was so far stable enough to deal with this resistance and finances were attained by negotiating with other actors. Still, the concerns raised by the World Bank were of resistance to the project. The most pressing concerns were, and still are, the land right disputes between the consortium and the population which the transmission line passes through. If the local population does not feel that their voice is being heard and their needs accommodated, sabotage is very likely to happen and it is something that has to be dealt with. This might not threaten the LTWP as they have financial guarantees from the Kenyan government and a power purchase agreement with the off-taker to pay for all the produced power, but if the transmission line is sabotaged in the future then the Kenyan government will suffer as they still have to pay for the power that is produced even though the government owned utility companies will not be able to export, distribute or use it. Yes, the risk is within the Kenyans, they pay for the power they take. If they are unable to take the power they still pay for the power that is available, so the Kenyans are then incentivised to use the power and market that power. 186 This again reflects the stability of the Turkana project, which rest on intermediaries of non-human nature. The signing of the financial agreements solidifies the project and can be said to be a result of a successful development phase. This was only possible since most of all the necessary actors; companies, finance institutions, wind, licences, business plans, studies, contracts etc., had an interest that was not to divergent from the network, which allowed the LTWP to enrol them by negotiation. We had what you call financial closure. It is like the projects birthday where you move into construction. ( ) We signed all the documents and loans and now the project has been under construction for half a year Bob Chestnutt, 2 nd interview transcript, 10:00-15:00 62

64 Now the project is in construction and this process is also relying on actors which by now should behave as expected due to their contractual obligations. All in all it can be said that the project has from the developer s point of view been mobilized to an extent where they now only need to upgrade the road systems, ship the wind mills, install and erect them. After almost a decade of development it looks like the LTWP will be realized and make profit to investors and lenders. Other relevant actors that have played a part in mobilizing the project are the ones labelled indirect in the analysis. They all make part of the existing network that the Turkana project has been embedded within, but to what extent they influence the project can be challenging to estimate by the process of translation, considering all the actors, interests and negotiations that are black-boxed within semiotic expressions like climate conventions, climate change, international treaties, national strategies etc. Attempting to follow all actors and relations within these types of actors requires an amount of data investigation that can be quite overwhelming. As Bob Chestnutt puts it: These visions that people have are the reason why they are going to support energy projects. 188 So the state of affairs of the environment and the international political scene makes a context worth of investigation for the innovation manager of any project as they play a vital role in the success of an innovation. Actor-Network Theory and Innovation Management Research In this project it has been shown how innovation managers or developers can describe the context that an innovation has to adapt to or how a context has to be adapted to the innovation. The model of translation can be used to understand the process by which entities consisting of human and nonhuman actors are intertwined in a network that makes up the durability of an innovation. If an innovation is to be mobilized it is evident that the actors act as intermediaries if control, power, domination or dislocated action is to be exerted through the network. Knowing the actors and defining their interest, whether it be the interest of organisations, institutions, people, documents, climate or wind mills, is evident in order to negotiate and attract more allies to mobilize the innovation. With each ally joining the innovation, the more likely it is that a projection of dislocated action can be made with success. In this way an ANT analysis reveals to what extent actors behave 187 Henrik Frøsig, 1 st interview transcript, 15:00-20: Bob Chestnutt, 2 nd interview transcript, 10:00-15:00 63

65 reliable or to what extent they pose resistance or betrayal to the purpose of the network. A negotiation strategy has to be made to counter each actor which behaves as a mediator; this will most likely succeed if the interest of that mediator is already known by the innovation manager. The concepts deployed in this research show how actors can behave, how they associate and the model of translation can be used to frame how each actor are related to the innovation or the actor-network. This makes the elements that give durability to the innovation more comprehensible and it becomes easier to spot resistance or failure in compliance with the network. This way we can explain the success or failure of innovations by attempting a saturated description of the innovation project. Just as the Turkana project had its durability from enrolled actors, this research has increased in validity the more actors I enrolled in the narrative of the project by the translation process. Since each actor is both an actor in this network and a network consisting of actors in itself, it is an endless task of finding and describing them. Thereby the goal of saturation is impossible considering both the amount of unrevealed actors and the methods available to extract the information needed to make a sound description of these actors. The notion that all action is dislocated in time and space through objects, which is the relativist position endorsed by ANT, has the consequence, that a lot of data has been lost in the abyss of time and the many constellations between networks overlapping reduces the human cognition and understanding of reality to a fogged puzzle of intuition. ANT acknowledges that sociology should be the task of putting together the puzzle no matter how many pieces or constellation choices there should be. This is why the model of translation has some utility as it breaks down the innovation into comprehensible fractions; into actors and the process by which they affect the network. ANT can be said to be an approach that deconstructs the social constructivist sciences by questioning several dichotomies; explanation is saturated description, theory or generalization is unreachable and objects are as much part of the social as humans. Social constructivist approaches typically seeks to theoretically explain how structures such as society, political systems, organisations emerges and flourish, but to ANT the only interest is the smaller elements that gives these meta-concepts their structure. Since reality is an ongoing process and every context is changing, each case has to be treated in the same manner, without the quest for generic explanations. 64

66 At first glance it might look very different from other theories, but it can be argued that ANT is more different in description than in reality. Since a political system, an airport or a utility company can be reduced to the concept of an actor, then why is it considered to be so much different from the structural language of the social sciences? The term actor can mobilize just as large and incomprehensible data amounts as the structural language of the social sciences. When Latour criticise the social sciences for their explanations or for being drunk with power in a quest for generic theories, is he not himself seeking power by trying to substitute their explanations with his concepts and descriptions? The concepts or metrology deployed in this research can be used to trace associations and make descriptions of the creation of innovations, but other concepts might as well hold this utility. Maybe the point made by Latour is more about the discipline in tracing connections by being empirically grounded or as he says, less talk and more walk. There are many different theories and concepts within the social sciences and a standard in metrology would likely make it easier to compare research within this field, whether we should choose ANT or any other approach. One characteristic that makes ANT different from other constructivist approaches is that ANT denies the intrinsic properties of humans or innovations. Diffusion theory explains the success of innovations by these properties and the quest for critical realists is to illuminate the hidden reality behind the actual, such as intrinsic properties. ANT on the other hand insists that the hidden reality and the success of innovations are actual and can be found in the empirical domain. By insisting on this approach ANT reminds us that meta-concepts such as power in a network can be explained by following the actors and their associations. By treating non-humans and humans in the same relational manner we discover that power are not hidden in the basement of a deep ontology, but is dependent on a constellation of objects and human action. The diffusion theorist and critical realists would call these structure and agency, but instead of explaining these black-boxes, they (sometimes) hide them away in meta-concepts. If we put aside the dispute and similarities between ANT and the social sciences, I still found ANT to be useful in this project. In the beginning when I was making the description of the Lake Turkana Wind Power project it was extremely challenging to make sense of such a large project that has been underway for almost a decade. By combining the model of translation with concept-driven coding and condensation, I could manage the large amount of data that I attained from my investigation. Whenever an actor was identified I plotted the actor into the translation model and afterwards into the description of the Lake Turkana project. The more actors I found and put into 65

67 the model, the more coherent the description became. During this process I found that the hypothesis behind ANT increased in validity as the process slowly began to resolve in a more coherent narrative. So if any generic statement or generalization should be made from this thesis, it is that the more data we manage to attain on actors, the stronger an explanation we can deploy on the stability and durability of the specific innovation that we study. In this sense ANT could benefit innovation managers on how to manage and engineer innovation projects of a very large and complex nature. 66

68 Conclusion In conclusion it can be said that the Lake Turkana Wind Power project has been mobilized by turning wind, people, institutions, policies, roads, transmission lines into allies. The accumulation of allies or intermediaries depends on the negotiations with other allies that strengthen the project managers ability to convince more actors to join the network. The inclusion of actors that agree with and have an interest in the network brings stability and ultimately mobilization to the innovation project. The actors mobilize the Turkana project because dislocated action is transmitted through each actor without enough resistance to de-enable the innovation project. Actor-Network Theory can be used to understand the process by which actors make or break an innovation. By treating humans and non-humans in the same relational manner Actor-Network Theory reveals how power and other intrinsic meta-properties can be explained as result of alliances between objects and action. This paper shows how networks can be traced and associated with one and another by using the concepts or metrology offered by Actor-Network Theory. Actor-Network Theory can be used as a tool to explain anything if we have the methodologies to attain the data needed for a saturated description. It is not desirable to use Actor-Network Theory to make generic suggestions, strategies or theories as it is an approach that requires to be empirically grounded. On the other hand it is an approach that can be used to understand the complexities of an innovation and thereby contribute with specific suggestions on how to manage that innovation project. Perspectivation In this paper it has been investigated how Actor-Network Theory can be used as a tool to explain the mobilization of an innovation project and how this approach can be used to benefit managers of innovations. There are similarities between classical approaches such as critical realism or diffusion theory even though Actor-Network Theory has attempted to deconstruct these social sciences. So when I reflect on how this paper contributes to innovation management research, or personal development, I have to refer to a poem about five blind men and an elephant: 67

69 Moral of the story- ( ) So oft in theologic wars, The disputants, I ween, Rail on in utter ignorance Of what each other mean, And prate about an Elephant Not one of them has seen! 189 So no matter what approach we use to explain reality or the best way to manage an innovation we have to acknowledge that the human cognition are not capable of grasping the overwhelming complexities of the elephant. Therefore we have to use tools such as Actor-Network Theory to make reality comprehensible and to some extent manageable. A dispute about which approach is the better one I will leave to the academics who in their quest for power try to convince others that their language, concepts and descriptions are better than the others. I am now content with being multi-lingual. 189 Mintzberg, Ahlstrand & Lampel (2009):

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75 Appendix The appendix contains the interview guides, transcripts and list, models and figures related to the Lake Turkana Wind Power project. 1 st Interview Guide When did you first get involved in the LTWP? How did you get involved? What are the reasons for getting involved in a project such as the LTWP? What is the primary function of your organisation in relation to LTWP? What do you think makes you indispensable in the LTWP? What tools do you use to gain influence on the process of a project? How have you used these in relation to the LTWP? Why are these tools important in the development of a project as the LTWP? What other organisations and institutions do you collaborate with? What makes these partners interested in working with you? Why is it important for you to have these partnerships when you engage in a project such as the LTWP? How have you made use of this network? What have been the necessary preconditions for you to engage in the LTWP? How do you coordinate the efforts of each partner? - How do you make sure that each partner does what is expected of them? Which obstacles did you have to overcome in relation to the LTWP? How did you react to these problems? 74

76 From your point of view; how have your organisation contributed to the creation of the LTWP? What are you currently engaged with in relation to the LTWP? How do you think the LTWP will develop in the future? Will you still be engaged with the further development of the power project? Transcript of 1 st Interview (Henrik Frøsig) Interviewer: Mikael Østergaard Nielsen (MØN) Interviewee: Henrik Frøsig (HF) Interview time: 00:00 34:30 00:00 MØN: Hvornår blev du først involveret I projektet? HF: Det var i februar MØN: Hvordan blev i involveret? HF: Nu snakker du mig personligt, jeg blev ansat i IFU 2005 og fik ansvaret for det her projekt. Men IFU som virksomhed har været involveret i det her projekt det sidste 5 år. Projektet har taget 9 år at udvikle fra første ide dukkede op. MØN: Hvordan blev IFU involveret i det? HF: Jamen altså vi blev inviteret med af de oprindelige developers KP&P. De søgte investorer og banker. Til sådan et stort projekt spørger man alle og snakker med alle og så sætter man et konsortium sammen. Så vi blev spurgt sammen med alle andre for en del år siden, jeg tror det er ca. 5 år siden. MØN: Hvad er grundene til at i så bliver involveret, hvad er jeres interesse i det? HF: Jamen grunden til at man spørger sådan nogen som os, du kan se på listen på deres hjemmeside hvem der er ejere og hvem der er banker på. Det her det er jo realkredit lignende lån i et Afrikansk land. Det laver almindelige banker ikke. Det kan man ikke bruge Danske Bank og Nordea til. Det er kun sådan nogle banker som os, som er internationale udviklingsbanker, det er kun sådan nogle som 75

77 os der gør sådan noget. Så du kan se nede over listen at der ikke er nogen private almindelige banker ligesom Danske Bank og Nordea. De er ikke på listen, de løber ikke den form for risiko. MØN: Hvad er jeres funktion i forhold til projektet? HF: Vi er ejere, vi ejer 6.25% af projektet. MØN: Så i er medejere? HF: Vi er en egenkapital der ejer. MØN: Hvad er jeres arbejdsopgaver så primært i forhold til projektet? HF: Jamen der er ikke Der er ikke rigtigt nogle arbejdsopgaver på den måde. Som ejer så leverer man egenkapital og vi skal sørge for at der bliver lavet en bestyrelse det er det samme som ethvert andet bestyrelsesarbejde. Der skal ansættes en ledelse og sørge for at tingene kører helt overordnet. Vi har ikke en rolle i det daglige. Der er en ledelse, en direktion på projektet som vi er med til at ansætte. Men der er jo alligevel et pænt stykke arbejde for de holder i øjeblikket bestyrelsesmøder en gang om måneden. MØN: Så jeres primære værktøjer til at få indflydelse på projektet er finansielle instrumenter? HF: Nej, vores indflydelse det er hovedsageligt at ansætte en ledelse og så kører det, så kører projektet. MØN: Dem der kommer med i den ledelse er det så en repræsentant fra hvert firma i konsortium et typisk? 05:00 HF: Nej nej, altså ledelsen er ansat af bestyrelsen og som ejere er vi med i bestyrelsen og med til at ansætte ledelsen. Og vi har 6.25% af aktierne, så vi har ikke rigtigt noget at skulle have sagt. Dem der har stemmeflertallet de bestemmer. Vi leverer ikke arbejde til at udvikle projektet eller med til at finde ud af om der skal være Vestas møller eller Nordics eller GE, det er ikke os. MØN: Jeg snakkede med udenrigsministeriet og de sagde at der var en key-account manager, altså en der arbejdede på det her projekt som bragte kapital fra udenrigsministeriet, hvilket jeg regnede med var igennem jer IFU, og at der så var noget samarbejde mellem Vestas og jer i forhold til at gå ind i sådan her et projekt? HF: Det kan du da godt sige, men det er ikke os der er involverede i den beslutning. Altså en af de vigtigste beslutninger er om der skal være Vestas møller eller GE, det har vi ikke noget med at gøre. Vi kan sige nej til at investere hvis vi ikke bryder os om det, at det er en forkert type vindmøller, men det er ikke os Dem der styrer den proces, det er udvikleren af projektet. Udvikleren af 76

78 projektet er i det her tilfælde KP&P og Aldwych og det er de to største aktionærer. Det er de to der i fællesskab har udviklet projektet og det er specielt KP&P. MØN: Hvad er det for nogle forudsætninger der har været for at i er gået med i projektet, hvordan har de fået jer med i projektet, de fremlægger ideen for jer og så? HF: Jamen de inviterer os med og så viser de os en forretningsplan og så holder man et halvthundrede møder. Hvor man diskuterer budgetter og forretningsplaner og kontrakter og struktureringen af projektet. Der har man selvfølgelig indflydelse på hvordan projektet bliver udviklet. Der har man så lejlighed til at sige, selvom vi kun har 6.25% af aktierne, så har vi lejlighed til at sige at hvis de vil have os med så skal det være Vestas møller, som eksempel. Men det ikke os der forhandler med Vestas. MØN: Jeg kan se at i har nogle principper, ligesom andre investeringsfonde som i Norge og Finland, at jeres investeringer skal sørge for at fremme dansk eksport muligheder. Så i vælger vel de her projekter ud fra nogle kriterier der kommer fra regeringen? HF: Jamen altså vi kan kun deltage i projekterne hvis de opfylder det man mandat vi har fra udenrigsministeriet. Der er et ret præcist mandat fra udenrigsministeriet om hvad vi må lave og hvad vi ikke må lave og det skal det opfylde. MØN: Hvor står det beskrevet henne, på jeres hjemmeside? HF: Ja det kan man også finde der. Men vi har jo forskellige pengekasser. Og den pengekasse der er blevet brugt til at investere i Lake Turkana projektet er en fond der hedder Danish Climate Investment Fund og den har et mandat fra udenrigsministeriet, hvori man kan investere i alle projekter hvor der er dansk interesse. Det er defineret som danske leverandører, danske komponenter eller dansk teknologi eller et og andet dansk. MØN: Har i fået finanser fra andre puljer, som eksempelvis private i har blandet ind i..? HF: Ja, det har vi i den her klima fond, Danish Climate Investment Fund, den får penge fra forskellige kilder. Både fra udenrigsministeriet og fra os selv og fra forskellige pensionskasser. Bla. Pension Danmark og PKA, det kan du også finde på vores hjemmeside. Så du kan sige at den investeringsfond har fået penge forskellige steder fra. MØN: Hvilke problemstillinger har i mødt i forhold til Lake Turkana projektet? HF: Hvad tænker du på? Problemstillinger i forbindelse med hvad? 10:00 MØN: Jamen det kunne være i forbindelse med at få finansiering, garantier fra verdensbanken eller den Kenyanske regering, så byggeriet kan gå i gang. 77

79 HF: Men altså jeg vil sige at hovedudfordringen med det her projekt, som tager 9 år, det er jo lang tid, det er at projektet er for stort. Jeg tror der er 8-9 banker og 6-7 ejere og det er for stor en klub. Så jeg vil sige at hovedproblemet med det her projekt er at der har været for mange kokke involveret. MØN: Hvordan har i så fået kogt det ned? HF: Jamen det har vi ikke, der er jo, jeg kan ikke huske det helt præcist, men der er en 6-7 investorer og en 8-9 banker og det er det der er. Det er betydeligt flere end der plejer at være på sådan et projekt. Det er et meget stort projekt og det ligger i Afrika så det bliver betragtet som risikofyldt. Derfor vil investorerne bruge mindre beløb og bankerne bruge mindre beløb. Så det er delt mellem mange, det er syndikeret mellem mange både på egenkapital siden og på bank siden. MØN: Hvor er det så bankerne kommunikerer omkring det her projekt, er det igennem verdensbanken? HF: Nej, der er en syndikat leder og det har været African Development Bank, de har været syndikats lederen i en lang periode, men der er også en der hedder Standard Bank som også delvist har den rolle. MØN: Hedder den Standard Bank of South Africa? HF: Jo, jo det er dem der er hovedsyndikats lederen ellers har det været African Development Bank, som er en udviklings bank der er ejet af alle lande i Afrika. MØN: Er det en slags fond lidt ligesom IFU? HF: Nej, det er det der hedder en udviklingsbank. Det er de alle sammen, dem der er involveret i det her. Og det er vi jo også, vi er ikke nogen bank, men vi er stadig et udviklings lands institut. Vi kalder os selv en DFI, Development Finance Institution. Det betyder jo altså at de er statsejede, i den sidste ende er det jo statsejede penge der er investerede i det her projekt. Både på lånesiden og på egenkapital siden. Du vil ikke se de sædvanlige banker, altså hvis man var en stor virksomhed, arbejde internationalt Hvis du kigger på Mærsk, de ville ikke bruge de her banker. Mærsk ville bruge Deutsche Bank, Citi Bank, Danske Bank og sådan nogen. Men det her projekt kan ikke bruge den slags banker, det er for risikabelt. Man skal jo tage risikoen på at den Kenyanske stat vil betale for den strøm vi producerer i 20 år. MØN: Så jo flere multilaterale selskaber man får ind, des bedre spredt bliver risikoen også? HF: Det kan du også sige, ja. Men sådan nogle projekter, det jeg prøver at forklare er at sådan en vindmøllepark den har 20 års levetid og når du bygger den og bruger penge på det, så skal du være sikker på at staten de køber din strøm i 20 år. Og man aftaler en bestemt pris på forhånd i 20 år. Det vil sige at du skal stole på at den Kenyanske stat betaler den aftalte pris i 20 år. MØN: Så i har lavet en Power Purchase Agreement med staten? 78

80 Ja. MØN: Er der andre vigtige dokumenter der gør at i er sikre på projektet? HF: Vi har en garanti fra den Kenyanske stat. MØN: Blev den underskrevet her i 2013, et letter of commitment? HF: Ja, letter of support fra den Kenyanske stat. MØN: Hvad betyder det i praksis? 15:00 HF: Det betyder at staten garanterer. Vi sælger jo strømmen til det lokale elektricitetsselskab. Den PPA du har fundet, den er underskrevet af det lokale elektricitetsselskab, som er det der svarer til Dong i Danmark. Så har vi forlangt at der er en statsgaranti, så i Danmark ville det fungere på samme måde som hvis den Danske Stat har garanteret Dong. Det ville man ikke forlange i Danmark fordi at Dong er en meget solid virksomhed, men når man laver forretninger i et Afrikansk land, som Kenya, så tør man ikke tage risikoen på 20 år på det lokale elektricitetsselskab. Og almindelige banker tør heller ikke tage risikoen på staten i 20 år. MØN: Nej, de politiske vinde kan vel også svinge meget dernede. HF: Lige præcis. Du ved ikke om der kommer en ny regering om 10 år, som ikke syntes at det her er en god ide. MØN: Hvad er i igang med nu i forhold til Lake Turkana, hvor langt er i nået i projektet? HF: Jamen altså, der var det der hedder financial closure og det er jo ligesom projektets fødselsdag, hvor der går man i gang med at bygge. Det var der den 4. December eller 3. December, omkring en af de første dage i December. Så der underskrev man alle dokumenterne og lånene blev underskrevet og egenkapitalen blev indbetalt osv. Så der gik man i gang og nu har man så været i gang med at bygge et lille halt års tid. Det man er kommet til i øjeblikket, er at vi er ved og bygge veje og vi er ved at bygge vandbrønde i området og vi er ved at bygge boliger, faciliteter til de ca mennesker der skal arbejde der. Så det er det man starter med. MØN: Jeg har læst mig til at Verdensbanken skulle have givet nogle garantier også, er det den Kenyanske regering man har ventet på? HF: Nej, de sprang fra, det gjorde de ikke. MØN: Hvad har det så betydet for projektet? Har det sat noget på pause? For jeg ved at man skulle have sat projektet til at skulle producere 50MW 79

81 HF: Nej, altså det har ikk Verdensbanken sagde nej til at garantere projektet for 2½ år siden. Det gav nogle problemer, men det har ikke skabt nogen forsinkelser her de sidste 2 år. MØN: Jeg læste mig til at projektet skulle have produceret 50MW i slutningen af 2013, så hvor langt er i nået med vejene? HF: De er ikke færdige endnu. Vejene vil blive bygget og der vil blive boliger og faciliteter og der skal være vand og strøm til de 1000 mennesker der skal arbejde deroppe. Vi skal bygge en hel by, som skal servicere der. Der skal også, når parken er færdig om nogle år, så skal der være operatører der skal bo der og servicere de her vindmøller. De skal også bo der. Så der bliver bygget en hel by for at supportere det her projekt. MØN: Hvad er så jeres fremtidige visioner for udviklingen af projektet? Jeg har læst at den Kenyanske regering har en Vision 2030 plan, hvori de også vil integrere med andre renewable energy sources HF: Vi har ikke nogen vision andet end at vi skal være færdige med det her hurtigst muligt. Senest 2017, det er vores vision. Så bliver vi færdige med det her, så er vi mere end glade. MØN: Så trækker i jer ud med HF: Nej, vi trækker os ikke ud på det tidspunkt, vi bliver inde i en årrække. Det jo ikke nogen garanti, men vi forventer at blive inde i det her projekt i 7-9 år. MØN: Overvåger man så bare hvordan det går med projektet? HF: Ja, vi er ikke en del af den daglige drift. MØN: Har det betydet noget for økonomien at projektet er blevet en smule forsinket? HF: Nej, det har det egentlig ikke. Nej det her det ikke. MØN: Ikke det store..? HF: Det ville betyde noget for økonomien hvis projektet bliver forsinket nu her byggefasen. Men under udviklingsfasen har det ikke rigtigt betydet noget for økonomien. Hvis der kommer problemer nu, så vil det have økonomiske konsekvenser, for nu har vi jo investeret penge. Forsinkelser indtil begyndelsen af December, hvor vi ikke havde investeret nogen penge, Der havde det ikke betydet noget, det har det nu. 20:00 MØN: Så det vigtigste er at have alle garantierne på plads, så er projektet ligesom mobiliseret? HF: Ja, jeg ved ikke Den udfordring vi har i øjeblikket. Vi er jo i første fase af byggeperioden. Der bliver ikke lavet fundament af vindmøller endnu, det kommer først når vejene er klare. Og de 80

82 der vandbrønde, der er brug for meget vand til at lave cement og beton, så det er det man arbejder på, man forbereder at kunne gå i gang med byggeriet af vindmøller. Den største udfordring vi har i øjeblikket, det går samlet ind under det område der hedder CSR, Corporate Social Responsability, det er lokalbefolkningen i området, det er et stort område, vores byggefelt er på størrelse med Bornholm. Der bor nogle mennesker og der bor også nogle mennesker i større områder rundt om projektet. De har et krav om at de skal have nogle arbejdspladser og de har også et krav om at de skal have noget ud af det her projekt. Så kan man sige om det er rimeligt eller ej, det kan man gøre op med sig selv, men det er et krav fra de stammer og befolkningsgrupper der bor i området, de vil have noget ud af det her. Det er meget normalt, at rundt omkring i Afrika, når der bliver bygget sådan noget her, så de forskellige stammer der bor i området, de lægger pres på projektet for at få en andel, en gevinst ud af det her projekt. MØN: De har måske ikke nogen politiske veje udover aktivisme til at få indflydelse? HF: Det er rigtigt. Det kan du sige og det vi har været ude for, for en måneds tid siden, det var at der var Masaikrigere, som gik i cortege ind med machetesværd igennem byggepladsen. Det skræmte arbejderne en hel del, så de stoppede arbejdet. Det gjorde de fordi at de havde et ønske om at få flere arbejdspladser ud af projektet, de mente ikke at de havde fået nok arbejdspladser, at de ikke havde fået nok ud af projektet. De gjorde ikke andet end at de truede, men det er jo også nok. Det kan godt være at de ikke burde gøre det, men det gør de altså og det er en udfordring vi bliver nødt til at adressere på forskellige måder. Vi har afsat en større pulje til at støtte de befolkningsgrupper der bor i området og vi giver dem nogle nye boliger, vi giver dem vandboringer, vi giver dem noget elektricitet og vi bygger en skole hist og pist. Vi har et større program hvor vi hjælper befolkningerne i området simpelthen for at undgå at få problemer med dem. MØN: Okay.. Jeg læste også at man ville bruge profitten fra karbon-kreditterne, man kan optjene, til at finansiere den CSR plan? HF: Det har du delvist ret i, ja. Det er nogle af de penge der vil blive brugt. MØN: Hvordan fungerer salget af de karbon-kreditter, jeg hørte at det var den Syd Afrikanske Bank der havde lavet aftaler med HF: Ja, men det der med karbon-kreditter er individuelt fra land til land med hvad reglerne er. Det er noget specielt noget og man kan ikke altid regne med de karbon-kreditter. Der er fastsat nogle regler i de forskellige lande, så der er ikke nogen der ved hvad det ender med at give. MØN: Udover lokalsamfundet, hvilke andre trusler kunne der være mod projektet i fremtiden? HF: Den vigtigste trussel det er at beboerne i området, eller i landsdelen, at de vil modsætte sig det her af forskellige årsager. 25:00 81

83 HF: Du kan kalde det afpresning eller at de simpelthen bare har et krav om at de skal have noget ud af en eller anden økonomisk gevinst nu når deres område bliver brugt. Det kan man syntes er rimeligt eller urimeligt, men det stiller de altså krav om og det bliver man nødt til at tage alvorligt. Så det er den største trussel der er. Det er også en trussel at man jo ikke rigtigt kender ejerene på jorden. I Afrika har man jo ikke et tinglysningssystem, så du ved ikke hvem der ejer jorden. MØN: Hvem leaser man den så af? Det er vel den Kenyanske regering ikke? HF: Det er den Kenyanske regering jo, men der er jo nogle stammer der bor på jorden, som siger at det ikke er regeringens jord, det er vores jord. Det er vores jord fordi vi har boet der i generationer og haft vores geder græssene i 400 år, så det er vores jord. Det er svært Der er ikke et tinglysningsinstitut man bare ringer til og siger hvem er registreret ejer af den her jord. Staten siger at det er deres jord, men hvis stammerne også siger at det er deres jord og de ikke vil finde sig i det og de saboterer projektet, så har man et problem. De her vindmøller de står jo langt væk fra transformerstationen, så der skal bygges en transmissionslinje på 430 kilometer og den går igennem ca Der skal laves aftaler med ca jordejere, det er også en trussel. Det er igen af samme årsag, det er ikke altid let at finde ud af hvem der ejer jorden og der kan være flere stammer der gør krav på den samme jord. MØN: Det er den Spanske regering sammen med den Kenyanske der finansierer den transmissionslinje? HF: Ja, det er to forskellige projekter. Transmissionslinjen har vi egentlig ikke noget med at gøre rent økonomisk. Transmissionslinjen er finansieret af den Spanske Eksport Kredit og skal bygges af en Spansk entreprenør der hedder Isolux. MØN: Okay, jeg troede at de måske var i samtale med jeres konsortium? HF: Ja, men det har vi også, vi samarbejder, men det er to forskellige projekter som er afhængige af hinanden. Så du kan sige at de er ikke mere adskilte end at man er nødt til at samarbejde. MØN: Er det så igennem nogle intuitioner i Europa man snakker sammen? HF: Nej, det gør vi nede i Kenya, det foregår nede i Kenya. De to konsortiummer snakker sammen nede i Kenya, Vindmøllekonsortiummet og transmissionline konsortiet, de snakker dernede og forsøger at planlægge tingene, så man arbejder parrallet og bliver færdige samtidigt. Det går jo ikke at vindmøllerne er færdige, men at transmissionslinjerne ikke er færdige eller omvendt. Så vi forsøger at koordinere det og samarbejde om det. Men nu spørger du til hvilke trusler der er og så er det jo at jordrettigheder er en risiko og jeg nævnte også at man skal tage en 20 årig risiko på staten. Det kan godt være at vi har en garanti fra staten, men 20 år er lang tid. MØN: Ja okay I er jo gået med til at sælge energien til en fastsat pris, så man skal vel også være sikker på at vindmøllerne producerer i det område? HF: Ja, det er vores risiko, men det vi nu ikke så bange for. 82

84 MØN: Der har man lavet målinger nok til at man er sikker? HF: Ja det kun en risiko hvis det holder op med at blæse, så har man et problem, men det tror vi nu ikke det gør. Vi er ret sikre på at den vind vi har målt, at den holder de næste 20 år. Vi er også ret sikre på at Vestas vindmøller virker. Men det er jo rigtigt at det er en forretningsmæssig risiko man tager, men den betragter vi som meget lille. MØN: Var det noget der skulle til for at få den Kenyanske regering med på projektet? HF: At hvad skulle til? Vindmålingerne? MØN: ja og at man satte PPA til en lav fikseret pris. HF: Ja ellers ville vi ikke investere ca. 5 milliarder kr. i projektet. Hvis ikke vi er garanteret en eller anden indtægt. 30:00 MØN: Har der været andre krav fra den Kenyanske regerings side? HF: Krav? MØN: Ja har der været nogen krav i forhold til byggeriet eller fra nogen af de andre aktører? HF: Nej, det har der ikke. Det kan godt være at der har været noget småtteri ind imellem, men nej det har der ikke. MØN: Okay.. Har man fået supplerende finansiering fra sådan noget som FN s miljøprogrammer eller udviklingsprogrammer? HF: Nej Jo altså du kan jo sige at det hele er udviklingsfinansiering. MØN: Går det ind under de forskellige landes udviklingsbistand? HF: Ja, det gør det. Og vi har jo også fået nogle grants, et grant er sådan en donation, så vi har fået nogle forskellige grants fra forskellige lande til forskellige dele, men det er småpenge. Danida har jo også givet lidt penge, Danida som er den Danske U-landsbistand, de har også givet et mindre beløb til projektet. MØN: Så det har ikke været nogen afgørende beløb der satte byggeriet i gang? HF: Nej, det er småting. Selvfølgelig tager man det med man kan få, men det er ikke det der har været afgørende. Det der er altafgørende er den der PPA, at man har tillid til at man bliver betalt for den strøm der bliver produceret i 20 år. Det er afgørende. MØN: Ja, så hele supply-linien kan blive fodret. 83

85 HF: Ja. MØN: J, men det var egentligt det hele, så tak for det. HF: Du kommer sikkert i tanke om noget, så ringer du bare eller sender en sms, nu har du mit nummer her. MØN: Nu er der i hvert fald information, så jeg kan gå ned af forskellige veje og få lidt mere indsigt projektet. Så tak for det. HF: Der er i hvert fald også meget beskrevet på nettet. MØN: Jamen tak for det, du må have en god tur til Kenya. 34:30 2 nd Interview Guide When did you first start the development of the LTWP project? How did you get started? What were the main concerns in the beginning of the LTWP project? What are the reasons for creating a project such as the LTWP? How have you convinced the other parties to join the consortium? How have the other parties, debt lenders and shareholders influenced the project? What other organisations and institutions have been part of the project? What made these partners interested in supporting the project? What are the most important partners to collaborate with? Have you had any use of the international political network? How has the Kenyan government supported the project? 84

86 Have any of organisations that you collaborate with had any conditions for supporting the project? - How do you make sure that each partner does what is expected of them? Which major obstacles did you have to overcome in relation to the project? How did you react to these problems? From your point of view; how have your organisation contributed to the creation of the LTWP project? What are you currently engaged with in relation to the LTWP? What is your future vision for the development of the LTWP project? What responsibilities will your organisation have in the future development of the LTWP project? Transcript of 2 nd Interview (Bob Chestnutt) Interviewer: Mikael Østergaard Nielsen (MØN) Interviewee: Bob Chestnutt (BC) Interview time: 00:00 29:16 00:00 MØN: Well my first question is; when did you first start the development of the project and how did you get started? BC: Well we were not the original developer; Aldwych International is the technical partner. Our local partner, a group called KP&P initially began the development as early as We only became involved in the project at the end of 2009 and initially entered the project in January The local partner is a Dutch farmer which became aware of the windy part of Kenya, he then mix up with the Dutch wind industry who confirmed that this is a very promising sight. So the early negotiation of the power purchase agreement was completed by the local partner KP&P, before we became involved as a technical partner in December

87 MØN: When you say that you are a technical partner, what does that mean, what are your tasks then? BC: Oh well Aldwych, we, develop power projects throughout Africa so we have expertise in negotiating contracts, risk and financing, in negotiating technical agreements, so we specialize in developing power projects. This is the only power project that the local developer has been involved in. MØN: What were your main concerns in the beginning of the project? BC: The main concern is the size of the project relative to the Kenyan system. It is a 300MW project the size of the system is 1.4GW, so it is a very large project relative to the size of Kenya. The second concern is the need for a transmission line which will run from the project site. It is a 428km transmission line to run from the project site and down to where the load is in Kenya to a place called Suswa. So we have what is called project risk. So there are two parallel projects that both need to happen. The transmission line is being built by a government owned company and the power project is being built by the private sector. MØN: How did you create the consortium? BC: The consortium was made by the local partner who invited us in and they had already been in discussion with other partners, such as Norfund. IFU came in because we are using Vestas technology and IFU is a Danish development institution and they work regularly with Vestas. Finnfund was the last partner who came in and they came in because of its link to the Scandinavian neighbours. The last partner then is Vestas. Vestas came in as part of its broader business deal where Vestas supply the turbines and owns 12.5% of the shares of the company. MØN: How have these other parties influenced the project? BC: I guess we have had a very active range of equity negotiation and the partners have negotiated a shareholder agreement under the terms of which the project is being run going forward, then of course the provision of money. So it has been an active shareholder initiative, typically the shareholders get together and discuss how many board members will be in the board of directors, what voting rights do directors have on various issues, what happens if one party wants to sell its shares, what happens if there is default all of these provisions are negotiated among the shareholders under the terms of our shareholder agreement for how the project will be run going forward. 05:00 MØN: You say that Norfund and all these development banks have invested in the project and that they are part of the consortium, some of them, how did they meet? Are they invited by KP&P or have they met through some international political institutions or? 86

88 BC: It was not really an organized process, it was more, the case of KP&P or meetings at Aldwych or, you know, there were discussions with other partners about being involved who decided not to become involved with the project. So it was not an organized process it was more relationships and various parties who joined the consortium through time. MØN: How could it be that you chose to use wind mills from Vestas? BC: At the very early stages in the project, prior to The project was not very sexy if that makes sense. There were not many wind turbine manufacturers that were interested. So the one manufacturer that was interested was Vestas and they discussed this with Vestas Netherlands and I think the initial relationship was due to the Dutch nationality so the original developer was Dutch the Vestas team involved were Dutch, so Vestas took an interest in what were a very Dutch project. And the fact were that very few other manufacturers were interested, in fact it was only really Vestas who took the project seriously, because it was such a challenging project. MØN: To convince the other parties, before what did you do? Did you make a sound business plan or how did you convince?... BC: It was before Aldwych involvement and I think it was more just talking to them, there was requests for pressing and requests for proposals, but Vestas was the only party that took this opportunity seriously. MØN: How could it be that the other suppliers did not want to support the project? BC: Well I think that there were other and better opportunities on the market at that stage; you remember that this was before the global crisis. Also the turbines that we needed for this opportunity would be the small turbines. MØN: Because of the logistics? BC: Because of the logistics yes, its 1.200km between the site and the port of Mombasa so with so much transportation it made sense to use small turbines and with such large site efficiency was not really a concern. MØN: Have you had any other important partners to collaborate with within the international political network? Like the U.N or the World Bank or other institutions BC: Well the World Bank did consider becoming a lender to the project but decided not to. Its concerns were that the project was very large and was too large for Kenya. Other institutions, for example the European Investment Bank in Africa, are involved in the project as lenders. The U.N was not directly involved in the project. MØN: I read somewhere that the World Bank backed out because of concerns around the transmission line 87

89 BC: There were concerns about the transmission line but there were more about the integration, the ability of the Kenyan system to absorb 300MW. I think that if the project had been 100MW, then 3 years later another 100 and then 3 years another 100, it would have been a better configuration, but having 300MW coming on very quickly was the major concern of the Bank. Also you are correct that the transmission line was the second concern. 10:00 MØN: Is it correct that you are getting a fixed price through the power purchase agreement, but all the excess energy that the Kenyan grid does not distribute and use, and then they still have to pay power? BC: Yes, the risk is within the Kenyans, they pay for the power they take. If they are unable to take the power they still pay for the power that is available, so the Kenyans is then incentivised to use the power and market that power. MØN: And that was really the reason for the World Bank to back out? BC: That was part of the consideration. MØN: How has the Kenyan government supported the project? In what way? BC: The government of Kenya provide what is called a government letter of support. So that outlines the terms under which the government of Kenya will support the project. Under the terms of that letter the government takes what we call political risk. So if example if there is a war, which in Kenya would cause the project to fail, then the government is then obliged to purchase the project for the market value of the project. So this is typical in projects of this nature where you look for government to take the political risk because government is the only party that can control things like war or other apparent issues. The other political risk is that the government will simply take the project. MØN: In a worst case scenario; couldn t they just say that we are not going to buy at market price we will just leave it there and let it be a European project? BC: Well we have a long term contract with Kenya Power to purchase power; if it does not then it will be in default. We have raised a lot of money to build the project so we need certainties that the power will be purchased during the life of the project. MØN: Is the letter of support the same thing as a memorandum of understanding? BC: No, a memorandum of understanding is typically a very early stage document that is made before you develop the project in detail. The government letter of support it picks up a certain obligation it outlines the support that the government will give to the project. MØN: A show of good will you might say? 88

90 BC: Well it is more than goodwill there is a real obligation on government to compensate the lenders and the investors if government does not keep its side of the bargain. For example if the government decides to nationalise, what we call expropriate, the project, then compensation will be given to investors and lenders. MØN: Have you felt that the political times we are in, all the conferences that are around the globe like the COP19 and the energy conference in Norway and the strategy vision 2030, in some way supports the project that it elevates? BC: These visions that people have are the reason why they are going to support energy projects. MØN: So it makes it easier to attract investors? BC: Yes, it does because what you can see is that investors know what the government intend is and the intention is to support more energy projects in Kenya for the next years. MØN: Have the government made any policies, like the energy act in 2006 that makes it easier to make such a project in Kenya? BC: Yeah absolutely, unless you have a law that makes it possible then no energy projects can be completed by the private sector. 15:00 MØN: Have there been any major problems that you had to overcome in relation to the project? Anything that did not go as planned? BC: Well I guess the World Bank not deciding to support the project was a major problem because it is such an important player in the market, it took some time to restore confidence amongst the other investors and the other investors still thought the project was a good idea when the World Bank decided not to support it. So I think that was probably our biggest challenge. MØN: I have read that the project should initially have started some of its production in , so is this partly why you have become shortly delayed? BC: Any large infrastructure project of this nature is very much subject to delay and in the early stages you think that somethings is going to take 2 years, when it actually takes years. It is quite usual of projects of this size to have delays, because of the size and because this is the largest renewable energy project in Saharan Africa. You have the challenge of structuring a transmission line project in parallel or working with government for infrastructure. You have the challenge of raising a lot of equity and a lot of debt. So I do not think there is one particular cause of delay, I think the World Bank exiting was a significant cause, but I think delays do happen in large projects. 89

91 MØN: I have read that a company called Tullow Oil has found oil in the region. Do you think that in the future this could have any impact on the government s willingness to still support the project or do you think that this could make any complications, the finding of oil or a drop in oil prices? BC: I do not think there will be complications; I think it will be very helpful that the Turkana project will have already opened up. For example we are upgrading 200km of road to Lake Turkana, so that road will be very useful. There will be a transmission line coming into that area of Kenya. So I think that road access and electricity will be very helpful for those looking to develop oil and whether the oil is developed or not, I do not know. I understand that it is very waxy oil so for it to be transported to the coast you will need heated pipelines. So I think it will be a challenge to develop that particular oil deposit given the current oil price, but if it is developed it will be helpful that Turkana has already brought development into the broader Turkana area. MØN: What about the transmission line, its more than 400km long so do you expect any problems from the communities that the line passes through? I know there have been some recent stories about activism from the Kenyan communities, because they expect to get something from this project like jobs BC: Yes, I think of it as the single biggest challenge and for that reason we have had teams that very actively work with communities for over 3 years along the area of the transmission line. So we have anticipated this and have an active community engagement, consultation, negotiation along the 428km. 20:00 BC: Because, as you know, anywhere we build transmission line there are problems because Kenyans perceive this as perhaps a threat or an opportunity. MØN: Okay, what are you currently engaged with in relation to the project? I know you started construction, is that the primary task now? BC: Yeah, the project is in construction. The road is being upgraded, the buildings are being built. We are also supporting Isolux, which is a Spanish contractor; Isolux is the contractor responsible for building the transmission line for KETRACO. KETRACO is the government owned transmission company in Kenya, so the work is ongoing. It will be some time before we see wind mills coming up in Kenya. MØN: How far are you with the transmission line? BC: Well the transmission line, the most of the work so far has been work in purchasing land rights and survey work, so I think there is very little actual building of transmission towers as yet. MØN: What is your future vision for the development of the project? I know you have leased a lot of land in and you are only using a third of it. 90

92 BC: The larger project area is KP&P land and the smaller part of that land is for the project company. So the larger leased land of that area is still excessively for the use of KP&P, which is the original partner. A subset of that land is being used by LTWP for the project. MØN: Do you know if KP&P might want to expand the project? BC: I do not know, they might expand they might do something different with the land. It is their opportunity I guess. MØN: Are KP&P part of Aldwych in some way? BC: No, KP&P is a completely different company, they are Dutch/Kenyan, so they are a private sector company. A lot of the investors in KP&P are Dutch farmers and dentists, who are familiar with the wind industry in the Netherlands. MØN: What will Aldwych future responsibility be in the development of the project? BC: Well Aldwych is the largest shareholder in the project and we will be an active participant on the board and overseeing the project throughout construction and operations. MØN: Okay, I only have a few questions left now. How do you negotiate the power purchase agreement? Do you have a standard contract or BC: Well there was a standard contract for the feed in tariff renewable energy projects in Kenya, but that was only for very small projects. So that became the initial contract that KP&P used, remember KP&P negotiated the power purchase agreement before 2009, before Aldwych became involved, so they used that standard contract but such a contract does not work for such a large project. They then amended that project making it considerable for a large project. MØN: What other licenses did you get; you also had to get a license for the road system, right? 25:00 BC: Yes, and in projects like this you have many many many licenses. Licenses from everything from bird monitoring, to road, environmental licenses, also business permits, health and safety, the extraction of water, we have pages and pages of summaries of licenses required. So the whole area of licensing is one of the major tasks to be undertaken for a project such as this. MØN: And the main important documents or licenses is of course the power purchase agreement and BC: And the generating license that is given by the regulator, without that you do not have the ability to generate. The second is the environmental and social impact approval from the national environmental ministry, NEMA, you need to have their approval. MØN: What were they called? 91

93 BC: NEMA, N-E-M-A, National Environmental Management Agency. MØN: Did you have to make an assessment in order to get their approval? BC: We had to carry out a full environmental and social impact assessment, that then is revived by NEMA who then provides our license. But importantly that document and all of the environmental studies need to be approved internationally, for the international lending. MØN: Is that the assessment that has been posted on the World Banks webpage? BC: Yeah, I was not aware that it was still there, but yes it would be. MØN: Okay, well I that is all. You gave me a lot of rich information, thank you. BC: Who else have you spoken to? MØN: I have mostly done some investigation myself. I went through all the articles on the Lake Turkana homepage and I have been speaking with Henrik Frøsig from the IFU. I have also considered speaking with someone from Vestas and someone from the government of Kenya. But im not sure whether they have a person who has been that involved with project, from the Kenyan political side. Are there some politicians in Kenya I could contact or are they mainly just doing their day-to-day work. BC: Well the politicians in general the people involved are the technical people within the regulators office in the Kenya Power and Lightning Company, they are the individuals who negotiated the contract. I guess the politicians make the broader decisions to do the project. Well the key person, I am not sure if he would take your call or not, is Joseph K. Njoroge. He is the principal secretary of the ministry for energy. Because he used to be the managing director of KPLC, but now he is principal secretary of the ministry for energy, so he was a key official when we negotiated the contract and now he is a key official in the ministry. MØN: Well thank you for your time, it was great that you were able to speak to me. BC: Well I wish you success with your master degree. MØN: Thank you, and good luck with the rest of the project. 29:16 92

94 Models and Figures 1) Wind Speed Measurement 190 2) Project Location Windfarm, Road up-grade and Transmission Line Energy Regulatory Commission (2013): Wind Sector Prospectus Kenya Wind Energy Data Analysis and Development Programme, (May 14, 2015) 191 LTWP Consortium (2011): Updated Environmental and Social Impact Assessment Summary, (May 14, 2015) 93

95 3) Lake Turkana Wind Power Financing Structure 192 4) Licence for Power Generation - Energy Regulatory Commission Lake Turkana Wind Power: (June 16, 2015) 193 Energy Regulatory Commission: (May 14, 2015) 94

96 5) List of Electrification Status of Public Facilities in Kenya Rural Electrification Authority: Electrification Status (June 21, 2015) 95