KenGen power tariffs rise 23pc to record high on drought
The Kenya Electricity Generating Company (KenGen) head offices in Nairobi.
The average tariffs at, which KenGen sold electricity to Kenya Power rose by 23.5 per cent in the year to June 2023, the highest on record, hitting consumers with stiffer power bills.
Data from KenGen shows power producer sold electricity to the utility at an average weighted tariff of Sh4.83 per unit, a significant jump from an average tariff of Sh3.91 per unit in the previous year.
It is the highest average tariff cost charged by the Nairobi Securities Exchange-listed power generator.
KenGen supplied 8,027GWh of the electricity consumed nationally, translating to 60.4 per cent of the total wattage to the grid, while the rest was provided by independent power producers (IPPs).
The company currently has an installed capacity of 1,904MW, with geothermal forming more than half of the capacity (63.41 per cent) followed by hydro, which has 31.39 per cent, thermal at 4.48 per cent, and wind at 0.71 per cent.
Drought led to a 23.8 per cent reduction in hydropower generation, with the company’s sales from hydro dropping to 2,520GWh down from 3,336GWh last year.
KenGen was thus forced to step up production from geothermal, which pushed its geothermal sales up by 28 per cent to 5,089GWh up from 4,053GWh.
“The drought conditions equally impacted our hydropower generation which dropped by 23.8 per cent, but thanks to our diversified portfolio of generation assets, we stepped up geothermal power generation by 28 per cent thereby ensuring the sector continues to meet the national energy demand,” said KenGen.
Due to the higher tariffs, while the company’s power sales grew by just 1.3 per cent compared to 2022, revenue from the units sold hit a historic high of Sh38.78 billion, an increase of 25.2 per cent from the previous year.
“Increase is primarily attributable to the enhanced operational efficiency in our geothermal fleet and the additional installed capacity of Olkaria 1 Unit 6 geothermal power plant that was commissioned in July 2022,” said the company.
Hydro is the cheapest source of electricity to the grid, with a previous report from the Energy and Petroleum Regulatory Authority (Epra) showing hydro costs an average of Sh3.2 per unit.
A report tabled in Parliament in July this year shows that in contrast, a unit of geothermal power averages Sh8 compared to Sh27.90 for electricity from thermal plants.
Meanwhile, a unit of power from wind sources goes for Sh10.9 on average while that from solar averages Sh15.73.
The cost of electricity has been a major headache for consumers for years, which was worsened by Epra’s tariffs review in April, which increased prices by as much as 63 per cent.
A unit of power for a domestic ordinary customer is selling at Sh28 this month compared to Sh25 in November last year underlining an increase of 12 per cent, according to data from Kenya Power.
The biting drought had an effect not only on local hydropower generation but also across the region, with Ethiopia cutting supply of cheaper hydropower to Kenya by half owing to low dam water levels.
