KenGen sees ease in power cost on cheaper hydro output

Hydropower generation by Kenya Electricity Generating Company (KenGen) grew by seven per cent for the six months period to December 2023.

This, the firm said in a statement greatly eased pressure on the costly thermal generation which coupled with forex pressures earlier necessitated higher tariffs.

“This helped in mitigating high fuel costs associated with thermal generation which dipped by 3.5 per cent, thus shielding consumers against further electricity tariff surges,” said KenGen's CEO Peter Njenga in the six-month financial results brief.

The increase in hydro generation was attributed to the heavy rainfall experienced during the review period that raised water levels in major hydropower dams.

Power price hike has been witnessed in the past 12 months, forcing manufacturers to turn to alternative power sources like solar or cut on staff to ease the cost of doing business.

The Kenya Association of Manufacturers (KAM) has protested the high cost of power saying it will roll back gains made when the cost of power was cut by 15 per cent in 2021, adding that it will make Kenya’s manufacturing sector uncompetitive.

Latest price review by Energy and Petroleum Regulatory Authority (EPRA) raised the energy charges by 8.7 per cent to Sh4.33 per unit from Sh3.98 in December.

This means Kenyans are now paying as much as 16.5 per cent more for electricity after the energy regulator raised fuel and foreign exchange charges.

The regulator also increased the Foreign Exchange rate fluctuation adjustment (Ferfa) charge by 103.7 per cent to a new record high of Sh6.46 per unit up from Sh3.17 set in January.

However, sources that spoke to the Star early this month hinted that the cost of power in the country is expected to drop by about Sh3.44 on eased forex pressure.

They noted that the actual forex adjustment on power bills will drop by half to Sh3.21/kWh compared Sh6.45/kWh reported in January. EPRA is however yet to announce the changes.

This is expected to see people at the bottom of the economic pyramid spending 0-30 kilowatts of power per month pay Sh23.60 per kilowatt from Sh27 in January.

The rate is however higher than Sh22.45 charged per unit in December.

This means, for Sh300, low-power consumers will get 13 units of electricity up from just 10 in January.

This is a pointer towards Kengen's statement that consumers are unlikely to see further price hikes on the back of increased cheaper hydro power generation.

The energy producer said the increase in hydro generation boosted the overall generated electricity units by 0.3 per cent from 4,200GWhs during the same period in 2022 to 4,211GWhs in 2023.

This is against the national demand that continues to grow, reaching a peak of 2,170.56MW in December.

“Similarly, the highest energy gross demand of 40,409.85MWh was recorded in August,” it said.

KenGen further reiterates its commitment to maintain a positive outlook in line with the national demand for clean energy, which is on the rise.