Wind Giant Vestas' Next Target: Africa

Denmark's Vestas (PINK: VWDRY), the world's largest maker of wind turbines, has increasingly focused on growing its business in North America and Asia, as U.S. and Chinese government-backed renewable energy initiatives pick up steam—it plans to invest more than $1 billion in the U.S. alone over the next two years to expand its manufacturing presence and beef up its regional sales force.

Now, the manufacturer of wind energy equipment is targeting growth in an unlikely place: Kenya, an economic and diplomatic hub in eastern Africa.

Vestas, with backing from the African Development Bank, is set to build the continent's biggest wind farm at Loiyangalani in Northern Kenya's Chalbi Desert, near Lake Turkana, the largest permanent desert lake in the world. Scheduled for completion in 2012, the $874 million project will be home to 365 turbines providing 300 megawatts of power, about a quarter of the country's current installed capacity, giving Kenya one of the highest proportions of electricity produced from wind energy anywhere in the world.

Although currently fewer than 20% of Kenyans have access to electricity, the country's electrical supply is already green by global standards, with nearly three-quarters of nation's installed capacity coming from hydro, and a another 11% from geothermal sources. But surging demand for energy (largely from businesses and rural areas) along with power shortages have left Kenya and many other Sub-Saharan African nations looking for alternative solutions.

Recently, state-run utility Kenya Electricity Generating Company (KenGen) has been relying on imported fossil fuels as a short-term fix, but renewable technologies figure prominently into the government's future plans: Over the next five years, it hopes to add some 800MW of wind energy and 500MW of geothermal power to the grid.

The east African nation is currently struggling with a dry spell caused by erratic rainfall. Low water levels have severely affected hydroelectricity output, leading to the closure of Masinga Dam, the country's largest hydropower facility, in June.

Kenya, once celebrated for its peace and stability in a tumultuous region, is also having a rough time in other areas. Since a disputed election sparked a wave of ethnic and political violence and bloodshed, there have been a string of political scandals, and drought and economic troubles has left millions of Kenyans facing the real prospect of starvation.

That said, the wind farm project faces some logistical and safety challenges. First, conflicts in Somalia, Sudan and Ethiopia have all negatively affected security in northern Kenya, where gun-toting bandits has become a real problem. And, the wind farm's remote location nearly 300 miles north of the capital Nairobi means transporting turbines will be a daunting task, requiring thousands truck trips and more than a little road and bridge work along the route.

But Vestas is undeterred. The Danish company is committed to bringing more wind power to Kenya. KenGen already operates a 5.1MW site powered by Vestas turbines that is eyeing expansion in the windy Ngong hills near Nairobi, a place frequented by Kenya's elite long-distance runners and local Maasai warrior herders. The firms are also conducting field tests at 14 other sites across the country for wind power potential.