Incessant blackouts: Which way for Kenya's ageing power network?

Energy and Petroleum CS Opiyo Wandayi flanked by Kenya Power Alex Wachira the Principal Secretary, Ministry of Energy and Petroleum, State Department of Energy and EPRA Director General Daniel Kiptoo Bargoria media brief following a nationwide blackout. [Jonah Onyango, Standard]

In the last week, the country experienced two major power outages, crippling not just businesses and households but essential services providers such as hospitals.

It is not the first time that the country has been thrown into darkness. Major outages have become the norm in recent years.

On Friday, a widespread outage was caused by what Kenya Power said was the tripping of the 220kV Loiyangalani transmission at the Suswa substation followed by a failure on the Ethiopia-Kenya interconnector, leading to a partial grid collapse. 

A similar nationwide outage occurred on August 30, which was attributed to a breakdown at the Suswa substation.

Last year, the country suffered three major nationwide power outages, which took hours to restore, with the worst being on August 26 and which took more than 24 hours for the power sector players to fully restore electricity.

The Energy Ministry has mostly blamed weaknesses on the electricity transmission lines.

These outages have resulted in a major drop in Kenya’s electricity supply reliability as seen in the country’s System Average Interruption Frequency Index (SAIFI), a measure of the average number of interruptions that a customer experiences.

Kenya’s score stood at 44.9 in 2023, which was a drop from 38.18 in 2022. The higher the score, the more unreliable a country’s power supply is. In 2021, Kenya’s SAIFI stood at 29.29, indicating a drastic slide in recent years.

Energy Ministry officials attribute the blackouts to years of under-investment in transmission. The government admits it hasn't allocated enough funds to maintain or expand transmission infrastructure over the years and is unlikely to do so due to budget constraints. 

Kenya Electricity Transmission Company (Ketraco) estimates Sh620 billion ($4.8 billion) is needed for new power lines over the next two decades, with only Sh127.14 billion ($978 million) committed, mostly from development partners, leaving a Sh492.7 billion ($3.79 billion) gap.

The government hopes to bridge this through Public-Private Partnerships (PPPs), with international firms already showing interest. Ketraco's Transmission Master Plan 2023-2042 outlines the need for 6,500 km of new high-voltage lines.

“In the medium term, we need to invest about $5 billion in power transmission lines.  These are a lot of resources, and that is why we want to bring the private sector to be able to bridge the gap,” said Energy Principal Secretary Alex Wachira.

Mr Wachira noted that the major outage that was experienced on the night of Saturday, August 30 had been caused by a breakdown at the Suswa substation and without alternative power lines, electricity from key sources such as Olkaria could not be rerouted to some parts of the country. 

“Suswa is Kenya's largest substation, receiving power from Ethiopia, Lake Turkana Wind Power plant, and Olkaria. Currently, there is no alternative evacuation line to Nairobi and the coast, which is why we plan to build one from Gilgil to Thika, Malaa, Konza and eventually Isinya,” said Mr Wachira last week when he gave an update on electricity restoration efforts.

“With this alternative, in case of a challenge at Suswa, power can be rerouted without affecting the country. This highlights the need for more infrastructure, which is why we are considering PPP lines.”

He added that the government expects additional lines constructed through the PPP framework can cure some of the challenges that the grid faces.

“The private sector will help build lines using the Build, Own and Transfer (BOT) model, where companies construct, operate, and eventually transfer the asset to Ketraco after recovering their investment,” said the PS.

The government, he said, had reviewed two proposals from two investors for the construction of some transmission lines through the PPP framework. 

“Africa50 and Adani Group are interested in building transmission lines, and we are currently in negotiation. We hope to finalise the deals in the coming months,” said Mr Wachira. 

“These PPP projects will provide the necessary funding since we lack borrowing capacity, making PPP lines essential.”

Africa50 will finance, construct, and operate the 165km, 400kV Loosuk-Lessos line and the 72km, 220kV Kisumu-Musaga line, along with a 400kV switch station at Loosuk and several substations. The project will cost $313.25 million (Sh40.72 billion).

Adani Energy Solutions plans to build three transmission lines totalling 371km and three substations, including the 206km, 400kV Gilgil-Thika-Malaa-Konza line. The projects will cost $907 million (Sh117.91 billion).

“This will open up the country and achieve N-1 status. These are a lot of resources and that is why we want to bring the private sector to be able to bridge the gap,” he said.

A power transmission system is described as N-1 secure if it has redundancies that ensure that the grid continues with normal operations in the event of a fault on a major transmission line.

Private sector players operating power transmission lines will be paid a fee, which will be passed on to power users, similar to what Kenya Power pays Ketraco for using its high-voltage transmission lines.

The fee, called the wheeling charge, is set by the Energy and Petroleum Regulatory Authority (Epra) when developing tariffs. In the year to June 2023, Kenya Power paid Ketraco Sh2.72 billion in wheeling charges. The electricity retailer also owed Ketraco Sh2.59 billion.

It is still unclear how private sector players will be compensated, but it is expected to be higher since they will use their own funds in building the power lines, unlike Ketraco which is funded by the taxpayer.

Chief Economist at Mentoria Economics Ken Gichinga said private sector involvement could improve efficiency but emphasised the need for proper regulations to manage risks.

“There is an increasing realisation that the private sector can introduce efficiency and competitiveness into electricity transmission in a way that the government cannot achieve on its own, hence the PPP approach,” he said.

“However, PPPs face several challenges, such as inappropriate risk sharing mechanisms between partners, incomplete legal contracts and political interference affecting the performance of partners.”

Mr Gichinga also noted that in some jurisdictions, full privatisation with an adequate regulatory framework to check on both government and private sector players has worked in relieving the pressure of building electricity transmission infrastructure from the government.

“The best solution would be to fully privatise the sector which will allow for competition and innovation. The government's role would involve policy-making and regulation. This is the approach adopted in the United States to great success,” he said.

The power transmission sector now faces a situation similar to what the generation side experienced in the late 1990s and early 2000s.

At that time, heavy reliance on hydropower led to shortages during droughts, forcing the electricity sector agencies to implement power rationing measures. 

To bridge the supply gap, Kenya Power signed Power Purchase Agreements (PPAs) with Independent Power Producers, especially thermal, which have since been criticised for contributing to high electricity costs.

These long-term contracts, averaging 20 years, require payment even when no power is supplied, leaving consumers to bear the costs while offering little room for renegotiation.

In bringing private sector players into the electricity transmission sector, Mr Gichinga said there is a need to get the tariffs right to balance the investor and consumer needs.

“This is a significant risk (that tariffs could be higher) and if not well mitigated it can disadvantage households and businesses,” he said.

Energy Cabinet Secretary Opiyo Wandayi said Kenya needs new power transmission lines to limit the frequent countrywide power outages.

He said that the ministry is making efforts to stem the frequent power outages. This will be achieved by investing in infrastructure at generation and transmission levels.

“The move is part of Kenya's broader plan to upgrade the ageing infrastructure while reducing leakages and frequent outages. The initiative also serves as part of the country's strategy to turn to private-sector investment to cut government spending on infrastructure,” said Mr Wandayi.