Kenyan Quest for Cheaper power may remain a dream due to stalled mega projects

Currently, peak demand is at about 1,859MW, mostly during the day, but this drops to about 1,000MW during the night. Kenya has been shifting to green energy, with the hope that reducing the use of expensive sources such as thermal plants will help reduce bills. One major green project is Lake Turkana Wind Power (LTWP), with an installed capacity of 310MW.

Kenya’s quest for cheaper power tariffs may remain a fanciful dream, sector players have said, pointing fingers at subdued demand due to delays by the State in implementing mega projects in the country. Sluggish take-off of key projects such as Konza City and Lamu Port-South Sudan-Ethiopia Transport (Lapsset) have left peak demand at below 1,860 megawatts, making consumers incur capacity charges and deemed generation energy benefit costs.

Kenya Power, has had to put a freeze on signing new power purchase agreements (PPAs) to shield consumers from higher costs for electricity bought from producers that may not be consumed. PPAs usually contain a “take or pay” clause meaning that the power producer is paid even if the electricity is not taken due to grid issues or low consumption. The subdued demand has forced Kenya Power to cut on its appetite for new PPAs, according to acting chief executive Jared Othieno.

“We had made forecasts with hope that demand will pick up so that by the time these units come in, new customers have also come in. Then they would be able to share these costs and invariably the cost of power spread among many people would become cheaper,” he said.