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KenGen ventures into solar power kits production
Kenya Electricity Generating Company (KenGen) workers walk at the Olkaria II Geothermal power plant near the Rift Valley town of Naivasha, Kenya on February 15, 2018.
Kenya Electricity Generating Company (KenGen) will start manufacturing solar power kits as the firm seeks to diversify its revenues by tapping into the growing uptake of solar by homes and businesses.
Disclosures show that the Public Private Partnership (PPP) approved the concept note for the project last month, paving the way for the onboarding of advisors to guide KenGen in setting up the solar panel manufacturing plant that will later make inverters and battery storage for solar. KenGen aims to tap a transaction advisor for this project by September this year.
The plant, whose estimated cost remains undisclosed, will be in Olkaria and marks KenGen’s plan to tap into the fast-growing local demand for solar power, as more homes and businesses seek cheap and reliable electricity compared to reliance on Kenya Power.
KenGen’s main revenue earner is sale of electricity to Kenya Power, accounting for at least 73 percent of the total revenue that the company makes in a financial year.
“The proposed scope includes the design, construction and operation of a manufacturing facility that will produce solar photovoltaic (PV) modules, and potentially extend into the assembly or production of complementary components such as inverters and battery storage systems,” the PPP Directorate says in the disclosures.
The number of homes and businesses setting solar power systems has been on the rise over the years, in a bid to reduce operational costs by significantly cutting electricity bills and also easing reliance on Kenya Power supplies, which are characterised by high frequency of blackouts.
Data by the energy regulator shows that solar PV systems accounted for the highest contribution to the country’s captive generation capacity, making up 47.21 percent of the total which was 574.6 Megawatts (MW).
Captive power refers to electricity that a business or residential premise produces using its own systems, primarily for internal use rather than sale to the public.
KenGen’s revenues grew 4.32 percent to Sh56.29 billion in the year that ended June 2024, with sale of electricity to Kenya Power accounting for Sh41.25 billion followed by pass-through revenue at Sh8.09 billion and Sh6.87 billion from sale of steam.
But KenGen is now turning to new and largely untapped markets, notably sale of carbon credits, exploring and drilling geothermal power for African governments keen to tap the energy resource.
KenGen expects to pocket $32.05 million (Sh4.14 billion at current exchange rates) from the sale of 4.62 million Certified Emission Reductions.
Additionally, the firm has also made at least Sh8 billion from deals to drill wells in Ethiopia and Djibouti. KenGen is also seeking similar contracts in Tanzania and Eswatini.
Besides the local market, KenGen’s solar panels manufacturing plant will also target the regional market as the firm seeks to eat into a market largely dominated by imports from China.
“The facility is expected to serve both domestic and regional markets, thus playing a role in increasing energy access and electrification across East and Central Africa,” the PPP Directorate added.
KenGen is set to build its first solar power plant at Seven Forks scheme, with a capacity of 42.5 MW, further underscoring the critical role of having a local plant to produce solar energy kits.
