Fresh of their Tour de France success in July, Sky covered the 27.9km course in the quickest time and Kennaugh leads the race by virtue of the fact he crossed the line first.
Tour winner and team leader Chris Froome, who won a bronze medal at the Olympics in the individual race against the clock, finished safely with his teammates.
Other pre-race favourites Alejandro Valverde and Nairo Quintana – who did not compete in Rio – were both part of a Movistar team which finished runner-up to Sky, conceding just less than a second in the process.
Home hero Alberto Contador has more work to do after the first day of three week stage race however, after losing 52 seconds with his Tinkoff team.
Froome and Kennaugh are two of five British riders taking part in the race, which also includes Simon Yates, brother of the Tour de France’s best young rider Adam, Scott Thwaites and Hugh Carthy.
Saturday’s stage was the first of twenty one that will see the race tackle some of the countries toughest mountain roads before finishing in Madrid on Sunday September 11th.
Kennaugh will be the seventh rider to wear the red jersey when the riders roll out of Ourense Thermal Capital on Sunday morning joining Mark Cavendish, David Millar,Michael Wright, Robert Millar, Sir Bradley Wiggins and Froome, whose best result in the event is a runner up spot in 2011.
2015 champion Fabio Aru of Italy is not in Spain to defend the title he won twelve months ago.
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