Will Kenya meet ambitious 5,000MW electricity plan?

The clock is ticking for Kenya as it races to keep its promise to inject an additional 5,000 megawatts of electricity to the national grid by next year.

Two years ago, the Jubilee government made an ambitious target to grow the installed power capacity from 1,708 megawatts to 6,708 megawatts to spur industrial growth and light more homes.

With about a year left to the deadline, it has only managed to add 586 megawatts to the grid, including the celebrated additional 280 megawatts of cheaper geothermal power from Olkaria wells in Naivasha between August and December last year.

Currently, Kenya’s total installed power capacity stands at 2,294 megawatts. Will the country, which looks to tap nuclear energy, meet the deadline?

Energy ministry is optimistic, it maintains that there would be no time overruns despite the glaring delays in the construction of key power projects like coal and geothermal, whose turnaround time is about two years from now.

“We are firmly on course,” says Energy PS Joseph Njoroge.

Several projects have run into headwinds, hit by delays in resettling residents occupying the land and financial constraints, bringing home the reality that the country will most likely not realise the set target to inject the remaining 4,414 megawatts by next year.

For instance, the construction of the 981.5-megawatt plant in Lamu was set to start in September and end in June 2017 but will instead commence early next year and be completed by 2019 due to land resettlement row.

READ: Land disputes delay coal-fired electricity

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Menengai geothermal plants in Nakuru were supposed to inject 105 megawatts into the grid by December but delay in getting partial risk guarantees for investors has pushed the completion date to June 2017, according to Geothermal Development Company (GDC).

Additionally, the construction of a 61-megawatt Kinangop wind farm in Nyandarua was in September frozen due to land acquisition hurdles while similar land resettlement setbacks have hit a 400-megawatt wind power plant in Meru.

READ: Sh15bn Kinangop wind park halted as land protests swirl

German solar energy experts who were recently in the country for deal scouting, reckon that on top of Kenya’s untapped geothermal energy potential of 10,000 megawatts, the country stands to benefit from increased investment in solar energy.

Germany is the world leader in solar energy production with an installed capacity of 40,000 megawatts from solar alone despite having a yield lower than Kenya’s.

“The fact that Kenya’ cloud cover and sun radiation are in favour of the country far much more than Germany, means Kenya can reap a lot more from solar,” said Roman Brinzanik of Kraftwerk Renewable Power Solutions.

The construction of the 310-megawatt Lake Turkana Wind Power project in Marsabit, which was supposed to start in 2011, has also suffered delays, attributed to financing constraints and delays in setting up a transmission line connecting it to the grid.

Developers of the wind farm, the largest in Africa, say generation of the first 90 megawatts would go live in September 2016.

President Uhuru Kenyatta in 2013 said the government would mobilise resources towards tapping power from a cheaper mix of sources like wind, geothermal, solar, natural gas and coal to halve power costs from a high of Sh18 per unit.

Kenya back then over relied on hydro-power, which is susceptible to weather changes, meaning the country’s dependence on expensive thermal plants was also high, especially during droughts, increasing the cost of power.

Watershed moment

But September last year marked a watershed moment for the country’s energy landscape as the share of geothermal power consumed by homes and businesses outpaced that of hydropower, ushering in a regime of lower costs.

Though hydropower is Kenya’s lowest energy source at S per unit, its dependence on rain patterns makes it unreliable, a situation that in the past exposed the country to high use of diesel-run generators whose electricity costs Sh19 per unit.

Geothermal electricity, which is reliable and renewable, is priced at about Sh7, according to Kenya Electricity Generating Company. The increased share of geothermal power, currently at 49 per cent of energy mix from 33 per cent July last year, has significantly eaten into the share of thermal electricity supplied to the grid, lowering bills.

Kenya’s installed steam power capacity stands at 579 megawatts, making it the eighth largest producer behind  Philippines, Indonesia, Mexico, Italy, New Zealand, Iceland and the US (3,389 megawatts) — the largest.

The cutback on thermal power has seen the fuel cost levy, linked to the amount of power from diesel generators and supplied to the grid, drop from Sh7.22 per unit in power bills in July last year to Sh2.51 this month, a 65 per cent drop.

The fall in the levy, which takes up the largest share of monthly variable costs, has helped cut bills by a third, a relief to consumers.

Power bills also come loaded with an inflation charge and forex adjustment levy tied to expenses incurred in foreign currency during electricity generation and distribution.

Thermal power is mainly generated by independent power producers (IPPs) that sell it to Kenya Power at higher prices, besides getting full reimbursement for costs incurred in fuelling their generators.

Most of the IPPs have a 25-year power purchase agreement to sell power. The IPPs are also paid a capacity charge — based on their generation capacity — whether they supply power to the grid or not.

The Energy Regulatory Commission this year suspended licensing of new diesel-fired plants with the change of focus to renewable energy. The diesel plants are, however, often on stand-by and are only switched on during peak hours or when power production from cheaper sources drops, acting as system stabilisers.

Power demand is at its highest between 6pm and 10pm when Kenyans return home from work and switch on house lighting, cooking appliances and

Due to higher costs, thermal electricity is only connected to the grid after that from cheaper power sources has already been dispatched to the grid.
SOURCE: BUSINESS DAILY