Geothermal and recovered energy firm Ormat Technologies increased revenues last year on the back of electricity sales from three sites including the Olkaria III power plant in Kenya.
The American company’s revenues increased 4.7 per cent from $314.9 million (Sh27.2 billion) in 2012 to $329.7 million (Sh28.5 billion) in 2013.
“The increase in electricity revenues was primarily due to a revenue contribution of $37.3 million (Sh3.2 billion) from Olkaria III Plant 2, McGinness Hills and Tuscarora (US),” said the firm in a statement Thursday.
Ormat, which is listed on the New York Stock Exchange, did not give a breakdown of how much its Kenyan operations earned. Historically, however, Olkaria has been known to account for close to 10 per cent of the group’s revenues.
Ormat’s total revenues, which include proceeds from power equipment like generators, stood at $533.2 million (Sh46.1 billion), with sale of products accounting for $203.5 (Sh17.6 billion) million.
Annual regulatory filings made to the Securities Exchange Commission show that revenues from selling electricity to Kenya Power have been growing marginally over the last three years.
“Kenya Power accounted for 7.9 per cent, 8.0 per cent, and 9.4 per cent of the company’s total revenues for the years ended December 31, 2012, 2011, and 2010, respectively,” said Ormat’s 2012 annual report.
Ormat sells electricity produced in Olkaria to Kenya Power and has signed a 20 year power purchasing agreement (PPP) that will expire in 2029.
It operates locally through OrPower 4 Inc, a wholly-owned subsidiary.
Kenya Power’s annual report for the year ended June 2013 says the utility distributor bought 503 gigawatt hours (GWh) from OrPower 4 worth Sh3.89 billion ($45 million).
A year earlier it bought 329 GWh worth Sh3.27 billion ($37.8 million).
More revenues for the geothermal power producer are expected after Ormat doubled Olkaria’s capacity towards the end of 2013 to 110 megawatts from 52 megawatts
Analysts also say the government’s support for geothermal power will act as an assurance for future revenues to producers.
Treasury allocated Sh12.5 billion for geothermal development and Sh23.8 billion for power transmission in the current national budget.
“This decision insinuates that electricity generation and distribution companies will be supported in the long term via considerate regulations and financial backing to enable achievement of set targets,” says an energy report by Genghis Capital.