All businesses and households seeking to generate over 500 kilowatts (kW) of electricity for private use will have to seek the nod from the energy regulator going forward.
This is contained in proposed changes to the law that could make it harder for consumers seeking to shift to own-source power generation.
The Statute Law (Miscellaneous Amendments) Bill, 2023 has proposed to amend the Energy Act of 2019 to introduce compulsory approval from the Energy and Petroleum Regulatory Authority (Epra) for the generation of 500kW of power.
Currently, only those seeking to generate more than 1 megawatt (MW) are required to get Epra’s approval.
“Delete the word “one” and substitute therefore the words “one half of a”,” reads the proposal to amend Section 117 of the Act.
According to Mr George Aluru, the chief executive of the Electricity Sector Association of Kenya (Esak), while the proposal will make it harder for applicants to get approval for half a megawatt, he opines that the law change will not have a major negative impact on the sector.
“Currently the process of getting approval from Epra to generate 1MW is smooth. Reducing the threshold means it will be a bit harder to get approval for generation of between 500kW and 1MW but I don’t see it having any major negative effect on acquiring approval,” said Mr Aluru.
This comes at a time when high electricity bills are forcing especially large power consumers such as manufacturers to switch to their own power generation from sources such as hydro, solar, wind, and biomass to save on production costs.
Epra, for instance, revealed that by August last year, it had licensed 106 captive power projects with a capacity of 260.22MW.
Captive power plants are generally used by power-intensive industries where continuity and quality of energy supply are crucial, such as aluminium smelters, steel plants, chemical plants, etc.
Further, 15 captive power applications totalling 197.5MW were also pending approval at the time.
The shift to own power generation by large power users is a worry to Kenya Power, which generates 70 per cent of its revenues from power sales to commercial users.
Some of the firms that are shifting to own power generation include Total Energies Kenya, Maisha Mabati Mills, Simba Cement, Unilever Tea Kenya, British American Tobacco, Africa Logistics Properties, Bidco, and Devyani Food Industries.
Many tea factories are also generating their own electricity especially, hydropower with some having inked power purchase agreements with Kenya Power which allows them to sell their excess electricity to the grid.
