KenGen earns Ksh4.1b from sale of carbon credits

Kenya’s largest power producer KenGen has earned Ksh4.14 billion from contracts for the sale of carbon credits from its renewable energy projects.

The company, which is listed on the Nairobi Securities Exchange (NSE), revealed the income in its annual report for the financial year 2023/24. The income was however booked in the year ended June 2023.

Carbon credits, also known as carbon offsets, are permits that allow the owner to emit a certain amount of carbon dioxide or other greenhouse gases. One credit permits the emission of one ton of carbon dioxide or the equivalent in other greenhouse gases.

KenGen PLC was the first Kenyan Company to earn Carbon Asset funds under the Clean Development Mechanism (CDM). The company has a generation portfolio of 86% renewable energy sources, and says it is taking deliberate steps to reduce carbon emissions with actions and commitments locally and internationally.

To date, the power generator has cumulatively earned 6,900,366 carbon credits, including an additional 1,843,113 carbon credits from three geothermal CDM projects this year.

The Company’s actions in carbon emission reduction towards a net-zero future has earned KenGen global funds and status of climate champion and accorded us a prestigious position of industry leader in climate change action

kengen

The carbon market is still nascent in Kenya, but companies such as KenGen have leapt to the front of beneficiaries in the trade. Kenya enacted the Climate Change Act, 2023 (the Act) in September 2023 and further gazette the Climate Change (Carbon Markets) Regulations, 2024 in May this year to further operationalize carbon markets.

The Act defines a carbon market as “a mechanism that allows public and private entities to transfer and transact emission reduction units, mitigation outcomes or offsets generated through carbon initiatives, products, programmes and projects subject to compliance with national and international laws”. 

The sale of carbon credit is one of the strategies that KenGen is deploying to diversify its revenues. The company made a record Ksh56.29 billion revenue in the year to June 2024, but 73% came from electricity sales to Kenya Power.

Meanwhile, 14% was pass-through revenue, 12% was stream revenue and just 0.14% was from diversification revenue. It is this segment that KenGen seeks to grow by doing consultancies abroad in countries such as Ethiopia, Djibouti and Eswatini.

brian@theenergyreview.com