Ministry eyes cheaper electricity with phase out of thermal plants

Gradual weaning of thermal power from Kenya’s energy mix promises to provide cheaper energy for both domestic and industrial users.

This follows recommendations by a taskforce set up by the ministry of energy to delve into Kenya’s generation sources.

Energy Cabinet Secretary Charles Keter yesterday said the initiative will be implemented in phases as green energy takes a larger share of the country’s production mix.

The plan, which has been one of the ministry’s key levers to tame increasing cost of power is now set for implementation once the Cabinet ratifies the report handed to Mr Keter in Nairobi yesterday.

“We will first stop renewing expiring Power Purchase Agreements with the thermal power plants and then analyse the existing ones to weigh the expenses involved in sustaining them versus what it will take to terminate them and then act appropriately to scale them down as much as possible,”Mr Keter said.

Geothermal accounted for 44 per cent of the total energy purchased or 4,451GWh in the period to June 2017 while hydro provided 3,341GWh equivalent to 33 per cent according to Kenya Power.

Thermal power plants contribution to the total energy mix increased to 21 per cent up from 13 per cent in 2016.

The taskforce chaired by Strathmore University Deputy Vice Chancellor, Research and Innovation professor Izael Pereira, identifies three power plants to be first targeted in the scale down.

One is contract is expiring in a year while the other two will be terminated by a mutual agreement between the developer and Kenya Power according to the taskforce.

Professor Pereira said the criteria for eliminating thermal plants will depend on the cost of setting up the units as well as the remaining period for the active PPAs.

“The independent power producers have to recover their investment costs whether we take up their generated power or not. We also have the bit we have to pay when we use the power so how easy these two will be to deal with will determine which ones are to be terminated first.”

The scale down in diesel–run plants will offer a huge relief as fuel cost charge, which makes a significant component in electricity pricing will be largely reduced.

The cost increased by Sh434 million from Sh12 billion in 2016 to Sh22.1 billion due to increased usage of thermal sources during the year.

Kenya has been facing the dilemma of keeping the expensive thermal plants, which are vital in complementing peak demand for power as fuel cost continue to grow under a looming introduction of VAT on petroleum products.

The country has also connected more households to the main grid further piling pressure for more availability of stand by sources that are needed in case weather-dependent sources such as wind, solar and hydro are affected.