Kenya Electricity Generating Company (KenGen) has posted a remarkable financial performance for the fiscal year ending June 30, 2024, reporting a 35% increase in net profit. The boost in profitability, amounting to Ksh 6.8 billion from Ksh 5.02 billion the previous year, is attributed to higher electricity sales driven by geothermal and hydroelectric power production. KenGen’s revenue grew by 4.3%, reaching Ksh 56.3 billion, underscoring its strategic shift toward renewable energy projects and the anticipated shareholder benefits. The company’s forward-looking investments in green energy are aimed at fulfilling Kenya’s ambition of transitioning to 100% green energy by 2030.
Strong Performance Indicators
The year-on-year growth in profit comes at a time when energy demand in Kenya has been steadily increasing, driven by population growth, urbanization, and industrialization. KenGen’s 4.3% revenue increase from Ksh 53.96 billion to Ksh 56.3 billion in 2024 underscores the effectiveness of its strategic focus on renewable energy. In his remarks, KenGen Managing Director Peter Njenga emphasized the importance of this achievement in strengthening the company’s financial base and enhancing returns for shareholders.
“This impressive growth not only strengthens our financial position but also signals greater returns for shareholders now and long into the future, while enhancing our ability to invest in critical renewable energy projects providing more affordable, reliable electricity for our consumers,” Njenga stated.
Shifting to Green Energy and Increased Electricity Dispatch
KenGen’s operations were also influenced by its electricity dispatch, which saw a 4.4% rise to 8,384 GWh, compared to 8,027 GWh the previous year. The company’s dispatch growth is noteworthy given the challenges presented by the decommissioning of over 130 MW of fossil-fuel-powered plants at Kipevu and Muhoroni. This shift is part of KenGen’s strategy to meet Kenya’s rising energy demands sustainably, while aligning with the government’s renewable energy goals.
The company’s efforts align with Kenya’s broader push toward renewable energy, which has seen significant uptake across East Africa in recent years. KenGen’s transition away from fossil fuels and its expansion of renewable energy options has positioned it as a key player in Kenya’s energy landscape.
Role of Geothermal and Hydroelectric Power
Geothermal and hydroelectric power have emerged as pillars of KenGen’s green energy strategy, ensuring the country meets its peak electricity demand. These renewable sources are less vulnerable to external shocks, such as global oil price volatility, compared to fossil fuel-based generation.
During the review period, KenGen’s geothermal and hydroelectric power plants were instrumental in satisfying Kenya’s peak electricity demand of 2,149 MW. Geothermal energy, particularly, has proven to be a consistent and reliable power source due to its base-load capabilities, a feature that allows the energy source to run continuously without interruption. KenGen’s geothermal installations at Olkaria, which constitute one of the largest geothermal power projects in Africa, have played a crucial role in stabilizing Kenya’s energy supply.
Key Renewable Projects in KenGen’s Pipeline
In its 10-year strategy, KenGen has laid out ambitious plans to expand its renewable energy capacity by 1,500 MW. This includes major projects like the Seven Forks solar plant, which will add 42.5 MW, as well as the rehabilitation of the Olkaria I geothermal power plant to add 63 MW. Additionally, the redevelopment of the Gogo hydropower station is expected to contribute 8.6 MW.
The Seven Forks solar project represents a significant shift for KenGen, as it ventures into solar energy to complement its geothermal and hydroelectric capacities. Solar power’s scalability and decreasing costs make it an attractive option for Kenya’s energy landscape, especially in regions with high solar irradiation levels. Once operational, the Seven Forks solar plant will further reduce Kenya’s reliance on imported fossil fuels and contribute to the country’s energy security.
The Olkaria I rehabilitation project aims to extend the life of Kenya’s oldest geothermal plant, increasing both efficiency and output. KenGen’s commitment to enhancing its existing facilities, as well as building new ones, demonstrates a balanced approach to energy capacity expansion. The Gogo hydropower station redevelopment further complements this strategy, as hydroelectric power remains a reliable source in areas with suitable water resources.
Economic and Environmental Impact
KenGen’s renewable energy projects not only promise economic returns but also environmental benefits. By reducing reliance on fossil fuels, KenGen is contributing to Kenya’s carbon reduction goals, a significant factor in addressing climate change and promoting sustainable development. This commitment aligns with Kenya’s goal to be a global leader in green energy, particularly among developing nations.
The economic benefits of KenGen’s renewable projects extend beyond the energy sector. They are expected to create job opportunities, both during the construction and operational phases of the projects, thereby supporting local communities. Additionally, by producing more affordable and reliable electricity, these projects are likely to benefit businesses across the economy, lowering operational costs and enhancing productivity.
Navigating Challenges and Ensuring Sustainable Growth
Despite KenGen’s progress, the path toward full reliance on green energy is not without challenges. The decommissioning of fossil fuel-based plants has required careful planning to avoid disruptions in energy supply. KenGen has taken proactive measures to manage these challenges, ensuring that renewable sources are scaled up effectively to offset any potential power shortages.
Furthermore, as KenGen expands its renewable energy capacity, the company must contend with the financial implications of large-scale capital investments. While renewable energy projects can offer long-term savings and profitability, the initial capital outlay can be significant. KenGen’s current financial performance, however, suggests that the company is well-positioned to fund these investments, thanks to its growing revenue base and shareholder support.
KenGen’s renewable projects are also supported by various stakeholders, including the Kenyan government, international donors, and investors who see value in Kenya’s renewable energy transition. The company’s partnerships have been instrumental in securing funding and expertise for its projects, ensuring that KenGen can navigate the complexities of large-scale energy transformation.
Meeting Future Energy Demand and Securing Kenya’s Energy Future
With a population of over 50 million and a rapidly expanding industrial sector, Kenya’s energy demand is expected to continue rising. KenGen’s proactive approach to expanding its renewable energy capacity ensures that the company will be able to meet this growing demand sustainably. By investing in a diverse range of renewable projects, KenGen is not only safeguarding Kenya’s energy future but also reducing the country’s exposure to external energy shocks.
The company’s 10-year strategy reflects its commitment to addressing both current and future energy needs. By diversifying its renewable energy portfolio, KenGen is enhancing its resilience against climate-related challenges, such as droughts that can impact hydroelectric power generation. This balanced approach to renewable energy ensures that KenGen can maintain a stable supply of electricity, even under changing environmental conditions.
Concluding Thoughts
KenGen’s robust financial performance and commitment to renewable energy make it a cornerstone of Kenya’s energy sector. The company’s focus on sustainable growth through renewable projects like geothermal, hydroelectric, and solar power is positioning Kenya as a leader in Africa’s green energy transition. With ambitious plans to expand its renewable capacity, KenGen is not only meeting the energy needs of today but also preparing for the future by aligning with Kenya’s goal of 100% green energy by 2030.
Peter Njenga’s leadership has been instrumental in driving this transformation, and as he noted, “The shift to green energy is part of our broader push to meet the rising energy demand while reducing our carbon footprint, aligning with the Government of Kenya’s ambitious renewable energy goals.”
KenGen’s success story reflects the broader potential of renewable energy in Africa, where countries are increasingly recognizing the benefits of investing in green energy. As KenGen continues to grow, its achievements in 2024 serve as a blueprint for other nations aiming to transition toward sustainable energy, fostering both economic growth and environmental stewardship in Kenya and beyond.
