Finance: Hydro, geothermal plants drive up profits at KenGen
Strong growth in revenues from its geothermal and hydroelectric power plants has improved profits for the Kenya Electricity Generating Company PLC (KenGen).
The company reported on Tuesday (29 October) that it has seen a 35% surge in profit after tax for the fiscal year ending June 30, 2024, climbing to KSh6.8 billion (around $52.7m) up from KSh5bn (around $38.7m).
It attributed this financial growth to the success of its geothermal and hydroelectric power plants.
The company reported dispatching 8,384GWh of electricity during the year, up from 8,027GWh in 2023.?
The increase came despite volatile weather conditions and inflationary pressures that have affected many businesses in Kenya.
The NSE-listed generator said its finance income skyrocketed by 149% to KSh.4.2bn (around $32.5m) in 2024, nearly tripling the KSh1.7bn recorded in 2023.?
Have you read? Kenya: Securing dams for water flow, hydropower generation
KenGen said this sharp increase bolstered the company’s overall profit jump, underscoring its strategic financial management amid a volatile economic landscape.
“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,” said Peter Njenga, KenGen’s Managing Director and CEO.
Maintaining stability in the face of volatility
The company said this year’s financial results underscore its ability to adapt to environmental and market challenges.?
Njenga said the company was able to maintain a stable operating profit of KSh9.6bn (around $74.4m) by focusing on cost management and efficiency improvements.?
He said KenGen’s power plants, particularly its geothermal and hydroelectric facilities, were critical to meeting the country’s peak electricity demand of 2,149MW during the period under review.
“Despite the harsh global macroeconomic challenges, characterised by high inflation and foreign exchange fluctuations, we were able to instil financial discipline and prudent cost management measures in our operations which has seen us flatten the operational costs,” said Njenga.
“We are beginning to see the results of hard decisions taken on austerity measures implemented in the year and prudent financial management further supported by our ability to generate value from financial investments.”
According to the new financial results, KenGen’s revenues rose to KSh56.3bn (around $436.3m), a gain of KSh2.3bn (around $17.8m) from the previous year.?
Green energy push proving profitable for Kenya
The company’s power generation output grew by 4% despite the decommissioning of more thanb 130MW of fossil fuel-powered plants in Kipevu and Muhoroni in the year.
“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 of transitioning to 100% green energy by the year 2030,” said Njenga.
The CEO went on to say the company’s performance reflects its strategic focus on scaling up renewable energy capacity while maintaining operational efficiency.
Kenya has long been regarded as a leader in renewable energy on the African continent, with up to 90% of its electricity generated from renewable sources.?
KenGen revenue diversification rooted in hydropower, geothermal projects
KenGen, which produces about 70% of the electricity consumed in Kenya, has played a critical role in this transition, particularly through its geothermal projects.
Looking ahead, KenGen says it plans to focus on revenue diversification through projects such as the establishment of a Green Energy Park at Olkaria, which will provide industries with a platform to operate sustainably. The company is also providing commercial drilling services for geothermal development across the region, a move that is expected to further bolster its financial performance.
KenGen’s outlook for the future is firmly anchored in its Good-2-Great (G2G) 2024– 2034 Corporate Strategy, which is designed to propel the company into its next phase of growth.?
The strategy focuses on increasing renewable energy capacity by about 1,500MW, enhancing operational efficiency, and leveraging cutting-edge technologies.
Have you read? Geothermal energy to power Microsoft data centre in Kenya
KenGen is confident that this plan will not only ensure continued success but also support Kenya’s broader socio-economic development goals, particularly through improved energy access and environmental sustainability.
“We have several major renewable energy projects in our pipeline, the 42.5MW Seven Forks solar plant, rehabilitation of Olkaria I geothermal power plant to give us 63MW and redevelopment of Gogo hydropower station targeting a total of 8.6MW,” said Njenga.
Now watch