Thread by @mmnjug

US power company Ormat continued to earn huge payouts from @KenyaPower despite lower output at its Olkaria wells, exposing the downsides of protective electricity purchase contracts. - @NationAfrica

.@KenyaPower is the biggest revenue basket for the US firm outside America contributing 16.3% of total revenues in the nine months to September despite the reduced uptake of its power.

This was a marginal drop from 16.5% of total revenue in September last year despite the limits in output called curtailments.

.@OrmatInc earned Kes47.5B from its global electricity sales in the nine months to September. This means it earned about Sh7.83B from electricity sales to Kenya Power over the nine-month period.

The company continued to experience certain curtailments in the first nine months of 2021 by KPLC in the Olkaria complex....

...The impact of the curtailments is limited as the structure of the PPA (Power Purchase Agreement) secures the vast majority of the company's revenues with fixed capacity payments unrelated to the electricity actually generated - @OrmatInc SEC filings.

Curtailment is the deliberate reduction in the output below what could have been produced to balance energy supply and demand or due to transmission constraints.

The company said the sustained revenue streams are a result of its power purchase agreements that have fixed capacity charges irrespective of output.

The firm also said it has a letter of support from the Government of Kenya that covers certain cases of KPLC non-payment — such as those caused by government actions or political situation.

.@KenyaPower hopes to negotiate its way out of the expensive power purchase agreements that have squeezed its revenues.

An analysis by @OAG_Kenya revealed @KenyaPower was buying 1 kilowatt hour unit from independent power producers (IPPs) for as high as Sh195 and was only able to sell the same power at Sh15.66.

.@KenGenKenya supplies 70% of @KenyaPower energy at Sh5.3 with IPPs supplying only 30% of the energy , yet the former makes more money than KenGen.
KenGen earned Sh44.8 billion in the year ended June 2021 while IPPs made Sh56.3 billion.

IPP @OrmatInc is the US company that makes money from @KenyaPower and by extension Kenyans even when its sells less power to KPLC bit.ly/3oybAVH by @NationAfrica