Page 11 - AfrElec Week 49 2021

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Ormat earns high revenues from

Kenya’s Olkaria wells

KENYA US power company Ormat continued to earn subsidiary OrPower.
huge payouts from Kenya Power despite lower Curtailment is the deliberate reduction in the
output at its Olkaria geothermal wells, exposing output below what could have been produced to
the downsides of protective electricity purchase balance energy supply and demand or due to
contracts. transmission constraints.
Kenya Power contributed 16.3% of Ormat’s The company said the sustained revenue
total revenues in the nine months to September streams are a result of its PPAs that have fixed
despite the reduced uptake of its power, Kenya’s capacity charges irrespective of output.
the Nation reported. The firm also said it has a letter of support
This was a marginal drop from 16.5% of total from the Government of Kenya that covers cer-
revenue in September last year despite the limits tain cases of Kenya Power non-payment – such
in output called curtailments. as those caused by government actions or the
Ormat earned $421.5mn (KES47.5bn) from political situation.
its global electricity sales in the nine months to Kenya Power hopes to negotiate its way out
September. This means it earned about KES- of the expensive PPAs that have squeezed its
7.83bn from electricity sales to Kenya Power revenues.
over the nine-month period. An analysis by the Auditor General revealed
“The company continued to experience cer- Kenya power was buying 1 kWh from inde-
tain curtailments in the first nine months of 2021 pendent power producers (IPPs) for as high as
by KPLC in the Olkaria complex. The impact of KES195 and was only able to sell the same power
the curtailments is limited, as the structure of at KES15.66.
the PPA (power purchase agreement) secures KenGen supplies 70% of Kenya Power’s
the vast majority of the company’s revenues energy at KES5.3 per kWh, with IPPs supplying
with fixed capacity payments unrelated to the only 30% of the energy, yet the former makes
electricity actually generated,” Ormat said in US more money than KenGen.
Securities Exchange filing. KenGen earned KES44.8bn in the year ended
Ormat operates in Kenya through its local June 2021, while IPPs made KES56.3bn.™

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