TAXPAYERS BURDEN

Wind power project no respite for Kenyans’ high power bills

Stakeholders say we are bound by contracts to independent producers that must be honoured

In Summary

•The wind power will not make any difference to your power bill as the state is bound by power purchasing contracts

•The wind power will only have a positive effect on the bills if the manufacturing sector widens and grows. 

Some of the turbines in the Lake Turkana power. The $680 million project was launched by President Kenyatta on Friday, July 19, 2019.
Image: COURTESY

Kenyans will continue paying high electricity bills despite President Uhuru Kenyatta launching the 310 megawatts wind power project in Loyangalani, Marsabit, last Friday. 

It was expected that the project touted as the biggest wind farm on the continent would lower the cost of power because it is clean energy. However, not so fast.

 

Chairman of Lake Turkana Power board Mugo Kebati, the private entity that is generating the green power, told the Star that consumers will still pay high cost for power. 

 
 

In fact, Kebati said Kenya is producing excess power due to low consumption which pushes the cost up. The country produces around 2,500 megawatts of power from the various generation mixes but only needs about 1,850 megawatts.  He said about 700-800 megawatts is excess, but taxpayers have to pay for it.

"The issue of cost of power is a fairly complex matter because the government has numerous contracts that it has to honour. Some of these contracts run for as long as 20 years," Kebati said.

Kebati said the tax payers are bound to pay for the excess power generated because some of the generators have a binding contract with the state. The state pays even when the power is not consumed. 

A task force formed in December 2016 to review the power purchasing contracts between independent power producers with Kenya Power, particularly those operating thermal plants, said in its report that the pacts were skewed in favour of the firms.

At inception of the task force, it was expected that it would recommend modifying or terminating some of the agreements. The panel, however, found that it would be too costly to terminate some of the contracts and recommended that the Energy ministry leaves the contracts to lapse.

Kebati, however, said there is a bit of relief in that some of the contracts are expiring, meaning the taxpayers will not be burdened to continue paying for them. 

 

Not so soon though, as some of the contracts extend beyond 2030, which would mean that Kenyans will continue paying capacity charges for the thermal plants as well as contend with fuel cost charges on their bills for more than a decade.

 
 

Carlos Van Wageningen, a member of the board of the Lake Turkana Power backed Kebati. He said power bills will remain high because of the capacity charges the country is bound to pay despite consuming less. He said since power is not consumed during off-peak time, that also affects the cost.

"The off-peak is from around 11.30pm to 5am, meaning only about 1,000 megawatts are consumed. The taxpayer still has to pay for the balance, even though not used," he said. 

Rizwal Fazal, the executive director of the wind power project said heavy power consumption will be the only way of reducing the power bill. "The economy must grow, especially the manufacturing sector that consumes a lot of power to reduce the excess. If the economy becomes 24-hour, it will even be better," he said.

Kebati said the domestic consumption, like the one spearheaded by the last mile project, does not result in high demand, leaving the power cost still high.

"Let's pray that the economy holistically grows, particularly in manufacturing, steel industry that result in bulk consumption. This will make the demand to shoot, meaning that the cost will go down," he said. 

Kebati said in their contract with Kenya Power, the electricity cost is supposed to go down by 50 per cent  for two to three months after one year of launching the project. This could be September next year, he said. 

Observers, however, say that the wind project is a boost to the energy security and a huge leap towards eliminating fossil fuel energy base, a development that, if true, could shield Kenyans from the vagaries of global oil prices and unpredictable rainfall pattern.


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