The cost of idle capacity is set to wipe out nearly all the gains made as cheaper energy sources come on to the national grid, the energy regulator has said, dashing hopes for lower rainy season power bills
Senior renewable energy officer at Energy and Petroleum Regulatory Authority (EPRA) Nixon Bukachi said the cost of power may not come down soon despite the high proportion of renewable energy sources.
“We have contracted power plants that we have to pay for and the question is whether we are utilising the energy they are generating. We have to try and grow our demand so as to enjoy benefits of cheaper generation,” said Mr Bukachi in Nairobi.
“If we have cheaper generations and utilise it as much as possible, we will have tariffs that will be reflective of this cheaper sources.”
The regulator’s position, backed by the Ministry of Energy, deals a blow to consumers who had hoped for immediate reduction in electricity bills as the country drops expensive sources of power in favour of cheaper ones such as wind and solar.
As at half year, about 44 per cent of the power sold by Kenya Power #ticker:KPLC came from geothermal sources while 39 percent was from hydro as wind contributed 15 percent, helping the State firm cut fuel costs by 44 percent to Sh6.88 billion. However, power bills remained static.
Speaking during an energy debate session, director of renewable energy at the Ministry of Energy Benson Mwakina said demand has not grown as anticipated, forcing the ministry to freeze signing of contracts with prospective wind and solar energy power producers.
“What is the use of us approving so many generation projects whose costs will be passed to the tariffs? We are protecting consumers,” said Mr Mwakina who is an engineer.
He explained that currently, the ministry has received applications able to generate over 4,000 MW, up from about 1,700 MW in 2017, showing increasing investor appetite.
Peak demand is at about 1,859MW, mostly during the day, but this drops to about 1,000MW during the night.
The Government had hoped that power consumption would grow at 7.2 per cent per year in five years to 2020, sending peak demand to hit 2,300MW but this has not happened.