KenGen's half-year profits jump 79%

From the newsletter

Kenya's and East Africa's leading electricity producer, Kenya Electricity Generating Company (KenGen), has reported a net profit of $41 million, a 79% growth in profit after tax for the six months ending December 2024. This comes as the company plans to expand its generation targeting commercial & industrial customers in Kenya.

• The company has a portfolio of installed generation capacity of 1,785 MW, of which over 93% is drawn from green sources, namely hydro (826 MW), geothermal (754 MW), wind (25.5 MW) and thermal (179.5 MW).

• KenGen plans to expand its renewable energy portfolio under its 2034 Good-to-Great (G2G) Transformation Strategy, a 10-year blueprint supporting Kenya’s green energy transition. It plans to add 194.4 MW of geothermal, hydro, and solar projects between 2025 and 2027. The company also plans to add 100 MWh of battery energy storage during this period.

More details

• Kenya has the most power-generating capacity in East Africa, with 3.2 GW of power plants. This doesn't even include the 532 MW captive power, the energy that companies generate privately for their own use. Uganda and Tanzania each have 2.4 GW of installed capacity, with renewables accounting for a larger share of these countries' grids.

• KenGen generates more than 60% of Kenya's electricity, and the rest comes from independent power producers. In the second half of 2024, it generated 4,291 GWh, up from 4,211 GWh, mainly from renewables.

• The company was the first in Kenya to register under the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) program and has registered six projects in geothermal, wind, and hydro, offsetting approximately 1.5 million tonnes of CO2e annually.

• In 2024, the company sold part of its carbon credits and received about $32 million from the sale of its Certified Emission Reductions (CERs). Last week, KenGen invited interested firms to bid for the sale of 1.8 million CERs.

• The company's diversified portfolio in renewables gives it a strong market appeal. Renewables, particularly solar and hydro, have been embraced in Kenya's commercial and industrial segment as grid prices and unreliability continue to increase. Solar power is the most prevalent technology, contributing 229 MW. This is followed by biomass (162 MW), waste heat recovery cycle (84 MW), hydro (33 MW), thermal (21 MW), and geothermal (4 MW).

• KenGen has recently expressed interest in venturing into the captive power market and rolled out an advert seeking consultancy services to explore the market potential and risks.

• At the launch of the report, Eng. Peter Njenga, Managing Director and CEO of the company (pictured above) said, "We are shaping the future of energy in Kenya through our commitment to operational excellence and innovation, ensuring that Kenyans will continue to benefit from reliable and affordable electricity for years to come."

Our take

• KenGen's continued profitability puts it in a better position as it plans to enter the captive power market. Setting up energy plants is highly costly, and this will require a lot of capital. Luckily, KenGen seems to have what is needed. Their experience and expertise in the energy sector will allow them to make better investment decisions.

• The company's registration of its projects for certified emission reduction gives them market appeal. They can not only build energy plants but also help in designing and structuring projects for certified emission reduction credits, which can generate additional revenue for customers installing renewable energy projects.

• This does not mean KenGen will have a smooth market entry. Numerous companies, including large foreign companies with substantial capital and more specialised experience in solar energy (which KenGen currently lacks), operate in the energy sector. To compete effectively, they need to be cautious of the potential challenges they will face when entering the market.