In addition to plugging the power deficit, the 280MW—some 210MW of which has come between October and December—is expected to reduce the average cost of power.
Analysts said that power bills should begin to reduce but not substantially since other factors such as system losses during distribution and transmission have to significantly change and absorption capacity by the economy improve.
More geothermal power is expected to come through in the next four years as new plants are completed.
Kenya Electricity Generating Company (KenGen) has added the entire 280 megawatts produced at its Olkaria geothermal plant to the national grid, sparing users power blackouts.
The listed utility company said the final 72MW put out by Unit V of its Olkaria I plant has now been added to the national grid. This adds to Olkaria I’s Unit IV that generates 70MW and Olkaria IV producing 140MW.
KenGen chief executive Albert Mugo said the additional 72MW came at just the right time as it will spare users rationing that would have begun due to the low production at its main hydroelectric plants.
“We have had below average inflow of water into our hydrodams and the commissioning of this unit is nothing short of a Christmas and New Year gift to the country,” said Mr Mugo in a statement.
In addition to plugging the power deficit, the 280MW—some 210MW of which has come between October and December—is expected to reduce the average cost of power.
“We not only see it as a score for KenGen, but also for Kenyans in general as it helps to further reduce the cost of power by displacing the expensive thermal fuel. At the same time, it will help to stabilise the country’s power supply by reducing dependence on hydro which is prone to weather variations,” said Mr Mugo.
Analysts said that power bills should begin to reduce but not substantially since other factors such as system losses during distribution and transmission have to significantly change and absorption capacity by the economy improve.
Eric Musau, a research analyst at Standard Investment Bank, said since Power Purchase Agreements (PPAs) signed with electricity distributor Kenya Power guarantee that all output from Olkaria will be bought, the additional power has to be consumed by more users so that the average cost per user falls.
“There also has to be extra consumers so that the average power bill comes down,” said Mr Musau.
The government has assured Kenya Power of additional customers with its plan to connect all public schools and hospitals to the national grid by the June 2015.
For KenGen, the additional geothermal power is expected to grow revenues by up to 20 per cent, said Mr Musau, but with a rider that this will not necessarily result in higher profitability since the interest on loans borrowed for the projects will begin to reflect in tandem with power production.
More geothermal power is expected to come through in the next four years as new plants are completed. Ormat Technologies plans to add 24MW in its Olkaria plant by end of 2015 while Akiira One, a company partly owned by Centum Investments, will add another 140MW by 2018.
