Jitters as Kenya Power set to approve solar energy sales deals 

Kenya Power has been handed a sole mandate of determining who supplies excess solar energy to the national grid in proposed regulations that raise concerns about unfair competition and conflict of interest by the utility firm that is also eyeing business in the fast-rising segment.

The draft regulations published by the Energy and Regulatory Authority(Epra) are aimed at enabling homes and businesses that are using less than one megawatt (MW) but have no means to store the excess power they generate to sign 10-year contracts with Kenya Power and inject it into the national power grid.

 “The licensee (Kenya Power) shall examine all applications in Regulation 7 within sixty (60) days and on a non-discriminatory basis,” the Epra regulations partly said.

The draft regulations also give Kenya Power the mandate to set the prices that solar users will be injecting power to the grid, which could see the power firm offer low prices in a bid to prevent revenue loss.

The pricing and sales rights could give an undue advantage to Kenya Power which is set to join the solar business, hoping to stay relevant and protect its long-term revenues increasingly threatened by a fast uptake of home solar panels by its main customers.

The utility firm — zealous to cash in rather than lose out on the millions of solar kits being mounted on the roofs of homes and business premises around the country — plans to install panels in private houses and office blocks with the promise of cheap uninterrupted electricity.

In the arrangement, Kenya Power will scout for customers seeking to have solar panels installed on their rooftops and contract private firms to do the job under a design-build-finance and operate model. Kenya Power would then sell the generated power at a discounted rate to the owners of homes and office blocks hosting its solar plants.

Many industrialists and an increasing number of homes are switching to renewable electricity, especially solar in a bid to have a cheap and reliable supply amid the falling costs of installing solar plants.

The big shift to solar power by heavy consumers has pushed Kenya Power into a deeper dilemma in the wake of excess production of electricity. Kenya Power in November 2020 raised the alarm, saying some of its industrial customers — who account for about 54.8 percent of its sales revenues — are gradually shifting to own-generated solar power, dealing a further blow to its already dwindling finances.

Several companies, universities, and factories have turned to solar photovoltaic (PV) grid-tied systems to supply power for internal use to ensure reliable supply and reduced operational costs.

According to the proposed rules, solar power producers would sell excess out to the grid and also get supplies from the grid, especially at night when their output is low.

However, they will not be able to receive any monetary compensation from Kenya Power for the electricity that they export to the grid. This is because the self-generation plants are supposed to meet the consumers' own energy needs and should not be for commercial use.

If a solar user has sold more power to the grid than he has imported, the utility firm will offer him a credit of 50 percent for each unit he exported which will lower his power bill for the following month.

Epra has capped the total installed capacity of solar plants that can be injected into the grid in the country at 100MW in the first three-year phase of the net-metering programme. 

The move to cap the grid solar capacity from individuals and firms at 100MW aims to protect power producers and Kenya Power from revenue loss on high solar uptake.