Electricity consumers are set to suffer high bills as more than 41 firms angle to supply power to the national grid in the next five years, even as the consumption levels stagnate.
This will result in huge amounts of idle electricity whose bills will be footed by the public in what is referred to as capacity charges. This is because it is factored in the power purchase agreements to cushion producers.
“It (the pandemic) has led to the reduction of electricity demand by about 15 per cent. Consumption by small commercial as well as commercial and industrial customers has been the most affected,” said Energy and Petroleum Regulatory Authority (EPRA)
The move comes at a time when Kenya Power said it will renegotiate contracts signed with electricity producers, whereby it pays them whether they supply electricity or not.
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The money runs into billions of shillings every year, with the electricity generators in many instances earning more from capacity charges than the power supplied to the electricity grid.
The charges are usually passed on to consumers as regardless of whether they are feeding the electricity grid with power or are idle, guaranteeing returns for investors even when they supply nothing.
Dozens of power producers are currently at different phases of completing their power plants, which are over the next five years expected to increase the electricity generating installed capacity.
This will see the amount of electricity generated increase substantially to over 4,900 megawatts (MW). This will be a 75 per cent increase on the current installed capacity, which stood at 2,818.9 MW by the end of 2019.
“There are currently 41 approved PPA’s with a total capacity of 2,115 MW that is proposed to be implemented in the next five years. The main generation technologies are geothermal, hydropower (small hydropower plants), wind, solar and biomass,” said EPRA acting Director-General Mueni Mutunga.
The new capacity could increase the divide between the installed capacity and peak demand.
Currently, it stands at 30 per cent, with peak demand standing at 1,900MW as of December last year, which industry players have said is ideal as it gives the power generators room to undertake repairs of power plants as well as a backup in case some plants are down.
Installed capacity has in the past growth at a faster pace when compared to demand. Between the end of 2017 and end of 2019, peak demand has growth 11 per cent from 1,710MW to 1,900MW.
In comparison, installed capacity grew 20 per cent to 2,818.9MW by end of last year from 2,339.9MW at the end of 2017.
Projections by EPRA paint two scenarios, whereby if demand grows fast, it will have hit 3,700MW by 2025 but a slow growth might see it reach 2,560MW by 2025.
If demand grows fast such as the peak demand is at 3,700MW within five years, it would still mean the country has an excess or reserve power margin of 1,200MW.
The energy regulator however dispelled fears that the new power plants would result in excess energy and in turn result on higher bills.
EPRA noted that most of the power plants are either wind or solar, which are available during specific times of the day, which is factored in the PPAs and hence would not result in unnecessary spikes in
The new plants will be linked to the grid when recent developments have cast doubt on sustainability of the existing PPAs that power producers sign with Kenya Power.
Following the reduction in the demand for power in the early days when the country reported its first case of coronavirus, Kenya Power served the Independent Power Producers (IPPs) with Force Majeure notices notifying them that it will not be able to buy power from them as agreed in the PPAs owing to drop in consumption.
Epra, however, said recently that demand for power has started going up as the economy reopens
“Energy consumption is showing recovery after easing of the lockdowns in the country. Electricity demand is stabilising and we expect the recovery in the coming months depending on the level of new infections and the global impact of the coronavirus as well.”
