Kenya reaps the wind

By Reuters


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From a distance the highlands look like a giant fist resting on the landscape, a series of knuckles forming the peaks of the Ngong Hills. From the top of the escarpment Kenya's capital Nairobi spreads out to the east, the breathtaking Great Rift Valley to the west.

Maasai herdsmen shepherd their cattle across the hilltop pastures, some dressed in traditional colorful red tartan-print blankets, beads round their necks, earlobes hung with heavy rings, a stick in one hand and leather sandals on their feet.

Every afternoon the gentle morning breeze that sweeps up from the Rift Valley grows into a strong wind and by nightfall it has become a blustering gale. Now, Kenya's government hopes to harness that power. Next month the country's first wind farm will open on the top of the Ngong Hills.

For now the six 165-foot tall steel shafts with their 82-foot fiberglass blades are shiny white, stark against the horizon, and motionless.

Jackson Odhiambo, 30, is an IT technician working for a company that hopes to bring fiber optic cables and broadband internet to Kenya for the first time later this year. One recent morning he had driven up to take a look at the turbines that now watch over the hills.

"These will generate power which is good and with wind it doesn't pollute the air or disturb people with the noise. There are a lot of advantages," he said.

"Kenyans won't mind the landscape being changed because there is such a need for cheap power," Odhiambo went on, adding, "and they look nice."

Nearby a bunch of cows nibbled at the grass beneath one of the gleaming white towers. Their owner — a herdsman who had walked all the way from neighboring Tanzania with his cattle — had no idea what the strange sculptures were for but thought they looked great, a glimpse of the future.

Hezron Ng'iela certainly thinks the wind turbines are the future. He is the senior projects engineer for wind and renewable energy at KenGen, the state-owned power company responsible for the wind farm at Ngong and, if tests go well, at 11 more sites across Kenya.

"We have in Kenya a lot of wind potential, probably enough to sustain us for a number of years if we exploit it properly," Ng'iela enthused. "Right now we are gathering data with a view to developing other wind farms in the future." That will include a further seven turbines on top of the Ngong Hills.

"We are going more and more green," he said excitedly.

The $15 million pilot project funded by the Belgian government started in April last year. The turbines chosen were the largest ones KenGen could manage. The towers and blades were shipped in from Europe then loaded onto trucks which had to navigate Kenya's appalling roads until they reached the foot of the Ngong Hills themselves.

From there a precipitous dirt track wiggles its way up to the top. Quite simply bigger turbines on bigger trucks could not have made the journey. "The limiting factor is our infrastructure," Ng'iela said.

The blades begin to turn when wind speeds reach 13 feet per second, at 40 feet per second the turbines are running at maximum capacity. If the wind blows too strong — say 82 feet per second — the turbine shuts down.

Once operational each of the turbines will produce up to 850 kilowatts of power, meaning another 5.1 megawatts will feed into the national grid. It may not sound like much but in rural Kenya where electricity consumption is low each turbine can produce enough power to supply as many as 1,000 homes.

Kenya — like much of Africa — is facing a looming power crisis with regular power cuts becoming more and more frequent. Today in Kenya potential production slightly outweighs demand but that will change fast.

If everything works at full capacity, Kenya's various hydroelectric, geothermal and thermal plants produce 1,200 megawatts while Kenya's citizens use 1,050 MW. But with global warming causing the rains to fail with depressing regularity and deforestation also reducing the flow of rivers, hydropower generation is down.

"Kenya is facing a crisis of power generation," said Christian Lambrechts, program officer at the United Nations Environment Program in Nairobi, "and electricity is key to economic development."

Demand is increasing by around 6 percent per year partly thanks to population growth and partly because of efforts to expand the national grid. The government hopes to connect another 150,000 homes a year to the network. In some rural areas only one in five homes have electricity.

It is that desperate need that perhaps explains why Kenya's first wind farm being built on top of one of its natural wonders has not caused an outcry. Wind farms in Europe are frequently greeted with a not-in-my-backyard attitude. But here, Ng'iela said, "because of the shortages people want electricity, so they welcome this."

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OPG Credit Rating affirmed by DBRS at A (low) issuer and unsecured debt, R-1 (low) CP, Stable trends, backed by a supportive regulatory regime, strong leverage metrics, and provincial support; monitor Darlington Refurbishment costs.

 

Key Points

It is DBRS's confirmation of OPG at A (low) issuer and unsecured, R-1 (low) CP, with Stable outlooks.

✅ Stable trends; strong cash flow-to-debt and capital ratios

✅ Provincial financing via OEFC; Fair Hydro Trust ring-fenced

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DBRS Limited (DBRS) confirmed the Issuer Rating and the Unsecured Debt rating of Ontario Power Generation Inc. (OPG or the Company) at A (low) and the Commercial Paper (CP) rating at R-1 (low), amid sector developments such as Hydro One leadership efforts to repair government relations and measures like staff lockdowns at critical sites.

All trends are Stable. The ratings of OPG continue to be supported by (1) the reasonable regulatory regime in place for the Company's regulated generation facilities, including stable pricing signals for large users, (2) strong cash flow-to-debt and debt-to-capital ratios and (3) continuing financial support from its shareholder, the Province of Ontario (the Province; rated AA (low) with a Stable trend by DBRS). The Province, through its agent, the Ontario Electricity Financial Corporation (rated AA (low) with a Stable trend by DBRS), provides most of OPG's financing (approximately 43% of consolidated debt). The Company's remaining debt includes project financing (31%), including projects such as a battery energy storage system proposed near Woodstock, non-recourse debt issued by Fair Hydro Trust (Senior Notes rated AAA (sf), Under Review with Negative Implications by DBRS; 11%), CP (2%) and Senior Notes issued under the Medium Term Note Program (12%).

In March 2019, the Province introduced 'Bill 87, Fixing the Hydro Mess Act, 2019' which includes winding down the Fair Hydro Plan, and later introduced electricity relief to mitigate customer bills during the COVID-19 pandemic. OPG will remain as the Financial Services Manager for the outstanding Fair Hydro Trust debt, which will become obligations of the Province. DBRS does not expect this development to have a material impact on the Company as (1) the Fair Hydro Trust debt will continue to be bankruptcy-remote and ring-fenced from OPG (all debt is non-recourse to the Company) and (2) the credit rating on the Company's investment in the Subordinated Notes (rated AA (sf), Under Review with Negative Implications by DBRS) will likely remain investment grade while the Junior Subordinated Notes (rated A (sf), Under Review with Developing Implications by DBRS) will not necessarily be negatively affected by this change (see the DBRS press release, 'DBRS Maintains Fair Hydro Trust, Series 2018-1 and Series 2018-2 Notes Under Review,' dated March 26, 2019, for more details).

OPG's key credit metrics improved in 2018, following the approval of its 2017-2021 rates application by the Ontario Energy Board in December 2017, alongside the Province's energy-efficiency programs that shape demand. The Company's profitability strengthened significantly, with corporate return on equity (ROE) of 7.8% (adjusted for a $205 million gain on sale of property; 5.1% in 2017) closer to the regulatory allowed ROE of 8.78%. However, DBRS continues to view a positive rating action as unlikely in the short term because of the ongoing large capital expenditures program, including the $12.8 billion Darlington Refurbishment project, amid ongoing oversight following the nuclear alert investigation in Ontario. However, a downgrade could occur should there be significant cost overruns with the Darlington Refurbishment project that result in stranded costs. DBRS notes that the Darlington Refurbishment project is currently on budget and on schedule.

 

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Aurelia Boat Club delivers electric boat membership in Seattle, featuring zero-emission propulsion, quiet cruising, sustainable recreation, and a managed fleet with maintenance, insurance, moorage, and charging handled for members seeking hassle-free, eco-friendly boating.

 

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Aurelia Boat Club is a Seattle membership offering all-electric boats, with maintenance, insurance, and moorage included.

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✅ Power demand dropped for a third month, signaling weak industry.

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India's power demand fell at the fastest pace in at least 12 years in October, signalling a continued decline in the industrial output, mirroring how China's power demand dropped when plants were shuttered, according to government data. Electricity has about 8% weighting in the country's index for industrial production.

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India's industrial output fell at the fastest pace in over six years in September, adding to a series of weak indicators that suggests that the country’s economic slowdown is deep-rooted and interest rate cuts alone may not be enough to revive growth.

Annual industrial output contracted 4.3% in September, government data showed on Monday. It was the worst performance since a 4.4% contraction in February 2013, according to Refinitiv data.

Analysts polled by Reuters had forecast industrial output to fall 2% for the month.

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The industrial output figure is the latest in a series of worrying economic data in Asia's third largest economy, which is also the world's third-largest electricity producer as well.

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Sector-Specific Targets

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  • Agriculture and Food: The roadmap includes measures to reduce emissions from agriculture by 9%, promoting organic farming and reducing the use of nitrogen fertilizers.

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Implementation and Governance

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Paris's finalisation of its energy roadmap for 2025–2035 marks a significant step towards achieving carbon neutrality by 2050. The ambitious targets set across various sectors reflect a comprehensive approach to reducing greenhouse gas emissions and transitioning to a more sustainable energy system amid the ongoing EU electricity reform debate shaping market rules. The imminent decree will provide the legal framework necessary to implement these plans and drive the necessary changes across the country.

 

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