Kenya's New Baseload Pipeline Could Shift Curtailment Risk to Wind

How the contract and dispatch terms for 339 MW of new capacity will determine which generators reduce output when overnight demand falls. 

The balance between electricity supply and demand in Kenya shifts throughout the day. During high-demand hours, variations in wind and solar generation can increase the need for firm capacity. After midnight, lower demand can leave more generation available than the system requires, prompting the system operator to reduce output from some plants. 

The Energy and Petroleum Regulatory Authority (EPRA) recorded 668.7 GWh of curtailed electricity in the year ended June 2025, all from geothermal plants. During the next six months, total curtailment fell to 245.35 GWh, including 11.28 GWh from wind generation. Kenya Power has also identified 339 MW of domestic baseload projects and another 200 MW of electricity imports for addition to the system. The commercial and dispatch terms for that capacity will affect which plants reduce output during low-demand hours and which generators receive payment for electricity the grid does not take. 

Executive Summary 

• EPRA recorded 668.7 GWh of curtailment in the year ended June 2025, all from geothermal. Between July and December 2025, the regulator attributed 11.28 GWh, or 4.6%, of the 245.35 GWh curtailed to wind generation. Geothermal plants accounted for the remaining 95.4%. 
• Kenya Power's August 2026 project list comprises 311 MW of geothermal capacity and the 28 MW Nabuyole hydropower project, bringing the domestic total to 339 MW. Increased imports from Ethiopia would add a further 200 MW. 
• Physical curtailment and revenue loss are separate risks. Power purchase agreements can protect generators through capacity or deemed-generation payments. Without the commercial terms for the planned additions, investors cannot determine which parties will bear curtailment and payment risk. 

Curtailment remains concentrated in overnight low-demand hours 

EPRA defines curtailment as a reduction in output from a plant that could otherwise generate electricity. Kenya Power's system operator uses curtailment to maintain frequency when available generation exceeds demand. EPRA reports that this occurs most often between midnight and 5 a.m. 

Geothermal plants account for most of Kenya's curtailment because they provide steady baseload generation. Kenya's annual curtailed energy rose from 285.5 GWh in 2021/22 to 812.8 GWh in 2023/24 before declining to 668.7 GWh in 2024/25. Higher night demand and the temporary unavailability of some geothermal units contributed to the decline, while curtailment remained substantial. 

Figure 1: Annual curtailment rose from 285.5 GWh in 2021/22 to 668.7 GWh in 2024/25, with a peak of 812.8 GWh in 2023/24. 

The 668.7 GWh recorded in 2024/25 equaled the annual output of a plant operating at an average of about 76 MW. This output-equivalent measure indicates the volume of electricity available to the system but not used. Financial exposure depends on the payment provisions in each plant's power purchase agreement. 

EPRA recorded 11.28 GWh of curtailed wind generation in the second half of 2025 

EPRA reported 245.35 GWh of curtailment between July and December 2025. The regulator attributed 234.07 GWh, or 95.4%, to geothermal generation and 11.28 GWh, or 4.6%, to wind generation. 

Figure 2: EPRA attributed 11.28 GWh, or 4.6%, of curtailment between July and December 2025 to wind generation; geothermal accounted for 95.4%. The reporting periods shown are not equal in length. 

EPRA reported that night demand rose from 1,152 MW in December 2024 to above 1,400 MW during the second half of 2025. Kenya Power used a 1,200 MW low-load reference in an August 2026 statement. Because the two figures cover different periods and may use different operating definitions, they cannot establish a single low-demand threshold. 

Estimating available headroom requires hourly demand and generation data, transmission constraints and contractual dispatch rules. New baseload capacity could increase curtailment during low-demand hours, but available public data does not permit a precise system-wide estimate. 

Kenya Power's domestic baseload list comprises geothermal and hydropower 

Kenya Power's August 2026 list identifies five geothermal projects totaling 311 MW: 61 MW at Olkaria I, 80 MW at Olkaria VII, 35 MW each from Globeleq and OrPower at Menengai, and 100 MW at Paka Silali. The 28 MW Nabuyole hydropower project brings the domestic total to 339 MW. 

Kenya Power also listed a 200 MW increase in imports from Ethiopia, raising the total named additions to 539 MW. The projects differ by technology, ownership and development schedule, and their commissioning and dispatch profiles will also differ. 

Figure 3: Kenya Power's named baseload additions total 539 MW, comprising geothermal, hydropower and electricity imports. 

The different technologies create distinct dispatch and payment exposures. Olkaria, Menengai and Paka Silali may use different power purchase and operating arrangements. Nabuyole is hydropower and may provide more dispatch flexibility than a geothermal plant designed to run as baseload. Imports from Ethiopia follow an interstate supply agreement rather than a domestic generation PPA. The relevant curtailment and payment provisions will therefore differ by project. 

Contract terms determine who receives payment during curtailment 

Kenya Power's system operator makes the physical dispatch decision. Each power purchase agreement determines the payment consequence. Kenya's 2021 Presidential Taskforce on Power Purchase Agreements described two common mechanisms. Capacity payments compensate a generator for making plant capacity available. Deemed-generation payments compensate some renewable generators when the grid cannot take electricity that the plant could have produced. 

The taskforce reported that large wind projects, including Lake Turkana and Kipeto, have annual deemed-generation thresholds linked to agreed capacity factors. A wind producer may therefore absorb some curtailment before it reaches the threshold. Once the threshold applies, Kenya Power can owe payment for electricity it did not take. EPRA cited these thresholds when explaining why no wind curtailment payment exposure arose in the first half of 2024/25. 

System operators determine which plants reduce output, while power purchase agreement terms determine whether those reductions affect generator revenue. Investors need both answers because a project can face high physical curtailment and limited revenue loss, or modest curtailment with weak contractual protection. 

Kenya's PPA taskforce recommended retaining take-or-pay contracts while improving demand forecasting and the balance between contracted supply and demand. It also recommended closer review of deemed-generation thresholds. For the new baseload projects, PPA terms and dispatch rules matter alongside nameplate capacity. 

Commercial disclosure varies by technology and project 

Kenya's Renewable Energy Auction Policy provides competitive procurement for wind and solar projects and for other renewable projects above stated capacity thresholds. The policy's stated scope does not include geothermal. Geothermal development therefore follows a different route through public developers, independent producers and project-specific agreements. 

Kenya Power has identified the planned baseload projects, but public documents do not disclose their final dispatch, curtailment or deemed-generation terms. No public document identifies a single negotiation covering the 339 MW domestic project list. 

Access to draft commercial terms will depend on each investor's role in the transaction. Development finance institutions involved in a project or in government policy dialogue may see proposed terms before financial close. Public documents do not identify such involvement in the planned projects. Private lenders and infrastructure investors outside the transactions will obtain a clear view only when sponsors, regulators or financing documents disclose the relevant PPAs. 

Lake Turkana separated transmission and payment risks 

Lake Turkana Wind Power used separate mechanisms for contract and infrastructure risk. The African Development Bank arranged EUR436 million in senior credit facilities and supplied a EUR20 million partial risk guarantee for delays to the publicly delivered transmission line. The guarantee protected lenders and the project company against a defined government obligation. 

Kenya's PPA taskforce later identified Lake Turkana as one of the large wind projects with a deemed-generation threshold. The transmission guarantee covered connection delay, while the PPA framework addressed payment when available electricity could not be taken. The two arrangements assigned those risks to separate contractual mechanisms. 

For each planned baseload project, investors will need the dispatch status, curtailment order, deemed-generation threshold and payment counterparty. Technology labels alone do not specify those terms. 

Curtailment exposure varies by capital source 

Development finance institutions will assess whether new capacity improves reliability without increasing unused contracted generation. Project finance, guarantees and policy dialogue provide channels for addressing this exposure. Once parties execute the PPA and financing agreements, changing flexibility provisions becomes more difficult. 

Infrastructure equity and private credit investors will model revenue under low-demand scenarios. Installed wind capacity reached 436.1 MW by June 2025, but installed capacity does not equal simultaneous output. Accurate revenue modelling requires hourly or seasonal production profiles, dispatch rules and the applicable deemed-generation formula rather than a comparison of nameplate capacity with one demand point. 

For climate and transition investors, the gap between installed clean capacity and electricity delivered to the grid affects realized emissions impact. Curtailment reduces the energy that reaches customers and can weaken the emissions benefit associated with each unit of capital. Contract protection may preserve project revenue, but it does not recover the unused electricity. 

What We're Watching 

EPRA's next statistics report will provide updated figures on curtailed wind generation and night demand after December 2025. Those figures will strengthen estimates of the direction and rate of curtailment pressure. 

Project-level disclosures for Olkaria, Menengai, Paka Silali and Nabuyole should specify dispatch status, minimum output, curtailment order, capacity payments and deemed-generation thresholds. 

EPRA's draft renewable-resource regulations address exploration, permitting, safety, environmental safeguards and geothermal licensing. They do not set PPA prices or dispatch terms. Final regulations could improve project development without resolving the commercial allocation of curtailment risk. 

Bottom Line 

Kenya has a persistent low-demand curtailment problem. Geothermal accounted for all 668.7 GWh curtailed in 2024/25 and 95.4% of curtailment during the next six months. EPRA attributed the remaining 4.6% between July and December 2025 to wind generation, with exposure determined by demand, plant availability and contract thresholds. 

Kenya Power's planned additions will increase firm supply. The 339 MW domestic total includes geothermal and hydropower, while another 200 MW would come from imports. Assessing the effect on curtailed wind generation requires hourly demand data, commissioning schedules, and project-level dispatch terms. 

Investors still lack the published PPA and dispatch terms needed to estimate curtailment, identify which plants will reduce output during low-demand hours, and determine which party bears the cost.