When did the rain start beating @KenyaPower?
My take on Kenya Power.
In 2011, The Least Cost Power Development Plan (LCPDP) 2011-2031 was updated, the electricity supply interconnected system in Kenya had a total installed capacity of 1,533 MW made up of 761.0 MW of hydro...
My take on Kenya Power.
In 2011, The Least Cost Power Development Plan (LCPDP) 2011-2031 was updated, the electricity supply interconnected system in Kenya had a total installed capacity of 1,533 MW made up of 761.0 MW of hydro...
...,525 MW of thermal, 198 MW of geothermal, 5.45 MW of wind, 26MW from cogeneration and
17MW of isolated grid.
The registered national sustained peak demand was 1,178 MW.
In the updated projections, demand was forecast to be between 2,301 MW on the lower side and 2,951...
17MW of isolated grid.
The registered national sustained peak demand was 1,178 MW.
In the updated projections, demand was forecast to be between 2,301 MW on the lower side and 2,951...
...on the higher side in 2018. The reference point was set at 2,566 MW.
To cater for the energy requirements of the Vision 2030 flagship projects, amendments were made to the projected demand figures.
To cater for the energy requirements of the Vision 2030 flagship projects, amendments were made to the projected demand figures.
The amendments were based on the expected date of completion and the updated estimated capacity and energy requirements.
The projects considered were those that were expected to require a lot of energy and cause a spike or shock in the peak demand in the country.
The projects considered were those that were expected to require a lot of energy and cause a spike or shock in the peak demand in the country.
The energy requirements were estimated based on the following assumptions:
• The ICT Park was based on the Malaysian technology parks consumption. This is estimated at
181kWh/m2/year assuming energy efficiency measures are in place.
• The ICT Park was based on the Malaysian technology parks consumption. This is estimated at
181kWh/m2/year assuming energy efficiency measures are in place.
The total consumption for the entire 5,000 acres ICT Park was estimated at 440MW.
• The consumption estimate for the port of Mombasa second container terminal was based on the NYK line container terminal in Japan which consumes 13GWh/year giving a capacity requirement of 2MW..
• The consumption estimate for the port of Mombasa second container terminal was based on the NYK line container terminal in Japan which consumes 13GWh/year giving a capacity requirement of 2MW..
The Lamu port was assumed to require double the energy requirements of one container terminal.
• Standard gauge railway consumption was computed based on the German ICE High Speed whose consumption varies from 19-33kWh/km. The maximum consumption of 33kWh was assumed...
• Standard gauge railway consumption was computed based on the German ICE High Speed whose consumption varies from 19-33kWh/km. The maximum consumption of 33kWh was assumed...
The distance covered was on 3 trips Mombasa –Nairobi, 1 trip Nairobi –Malaba and
1 trip Juba- Lamu.
• Consumption for the special economic zones was based on the current consumption of EPZ.
1 trip Juba- Lamu.
• Consumption for the special economic zones was based on the current consumption of EPZ.
• The light rail consumption was based on London’s underground trains which consume on average 15kWh/km. An assumption was made that the light rails will be doing 500 trips/week in the Nairobi metropolitan region.
• The resort cities assumption was based on the current Malindi consumption of 8MW with the possibilities of increasing to 10MW by the year 2017.
• Iron and steel smelting industry in Meru consumption was assumed to consume 315MW over a period of 7 years based on an...
• Iron and steel smelting industry in Meru consumption was assumed to consume 315MW over a period of 7 years based on an...
...average production of 13.5 million tones. This figure was to be revised when the feasibility study on the potential of iron and smelting in the area is done.
The estimates assumed the projects will be implemented as indicated above and that the peak demands of every project..
The estimates assumed the projects will be implemented as indicated above and that the peak demands of every project..
...will occur simultaneous to the global system load.
Following these adjustments, the estimated capacity and related energy requirements for Vision 2030 flagship projects were incorporated in the projections thus increasing the forecast according to the schedule of project...
Following these adjustments, the estimated capacity and related energy requirements for Vision 2030 flagship projects were incorporated in the projections thus increasing the forecast according to the schedule of project...
...implementation.
Based on those adjustments, the peak demand projections for 2018 was adjusted upwards to 3,408 on the lower side and 4,322 on the higher side; almost three times the capacity that had been built since independence.
Based on those adjustments, the peak demand projections for 2018 was adjusted upwards to 3,408 on the lower side and 4,322 on the higher side; almost three times the capacity that had been built since independence.
It was based on that report that the Jubilee Party in its manifesto promised to ramp up generation capacity to 5,000 MW in its first term.
What followed, based on the unrealistic demand projections, was an aggressive investment in both generation and transmission capacity.
What followed, based on the unrealistic demand projections, was an aggressive investment in both generation and transmission capacity.
Massive amounts of capital was injected into the energy sector and supply or generation capacity grew to the current 2,351 MW against a peak demand of slightly over 1,800 MW, clearly below their demand estimates of between 3,408 MW and 4,322 MW in 2018.
What followed was heavy CapEx spend by kplc to among other things strengthen, upgrade the network and connect more customers to the grid. As a result, both fixed and variable costs like depreciation, capacity charges and finance costs shot up.
The result of which we are seeing today in the form of lower profitability.
It's a supply problem...the capital cycle at work.
The source of Kplc's problem is over supply. Even the corruption that is often talked about has its source in the least cost power development plan.
It's a supply problem...the capital cycle at work.
The source of Kplc's problem is over supply. Even the corruption that is often talked about has its source in the least cost power development plan.
The heavy CapEx spend created an opportunity to loot and led to misallocation of capital.
The unrealistic demand projections of the Least Cost Power Development Plan led to over investment in the energy sector and is the reason why we have kplc trading at current prices.
The unrealistic demand projections of the Least Cost Power Development Plan led to over investment in the energy sector and is the reason why we have kplc trading at current prices.
What's happening right now is a consolidation of sorts. Gradually, the excess capacity will be done away with and kplc will recover.
But investors are thinking linearly even though this phenomenon is cyclical.
CapEx to depreciation ratio. That's the 'magic' ratio.
But investors are thinking linearly even though this phenomenon is cyclical.
CapEx to depreciation ratio. That's the 'magic' ratio.
If you look at Kenya Power's CapEx spend, it's been dropping consistently. FY 2019 CapEx spend was the lowest in a long time at Sh21B. This is the consolidation phase in the capital cycle.
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