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ELECTRICITY

Government puts on hold private power proposals as demand slows

Alternative energy sources

In Summary

• Addition of power to the national transmission grid would lead to destabilization of the entire grid with the low uptake.

• The policy is expected to increase competition in different regions as well as deal with the land policy challenge which is mostly privately owned.

Solar panels.
Solar panels.

The government will not license new alternative power producers, due to low demand for the commodity.

It said Ministry of Energy is reviving the Energy Auction policy that is expected to reduce the cost of power to consumers.

"There would be no need to approve any more plants when the effect would reflect on tariffs while there is no demand," the Ministry's director of renewable energy Benson Mwakina said.

 
 
 

The pending proposals for solar, wind and geothermal power projects could give over 4,000 Megawatts in power to the national grid if approved.

He said the agreements involved in the take or pay model have so far proved to be expensive.

The policy is contained in the new Energy Act signed in March by President Uhuru Kenyatta. It will allow the government to select electricity generation projects based on their ability to offer lower tariffs depending on costs of transmission to the national grid.  

Currently, the government is operating on a feed-in-tariff system policy with the independent power producers that set the high cost for the power to government and end-user.

The freed-in-tariff system allows investors to identify viable power projects and then acquire licences to operate them at pre-determined rates without any requirement for tendering.

The policy is expected to increase competition in different regions as well as deal with the land policy challenge which is mostly privately owned.

They hope the Industrialization and Housing Ministry will drive demand for power.

 
 

Currently, the highest consumers are in the manufacturing sector composing of more than 6000 industries generating over 60 per cent revenue to Kenya Power. Households take up to 7 million connected to the national grid.

 
 

While KenGen is the main player in electricity generation accounting for 1,238MW (53.3 per cent) of total 2,651 MW installed electricity generation capacity for the national transmission grid, additional of even single 1200 MW solar plant would lead to destabilization of the entire grid with the low uptake.

The peak demand is estimated at 1,802 MW as at June 2018.

The country is rushing to match demand and supply at the same time avoiding to stifle private sector.

Kenya Power and Lighting Company general manager for customer service Rosemary Oduor said the demand growth so far has not matched the predicted amount five years ago.

The country had projected 10 per cent annual growth in power generation by 2030 with a corresponding projected growth in the economy.

However, it has only been able to register a 4-5 per cent growth annually.

"The move is under consideration to lower tariffs as there is no demand now. We hope with time it will change with the inclusion of other projects raising up in the economy to increase consumption," Oduor said.