Kenya Power has lost up to 10.8 percent of customers after firms dumped the national grid and started own power generation.
Data from the Energy and Petroleum Regulatory Authority (Epra) released last week shows that captive generation, which refers to own-use power production, increased to 402.3 megawatts (MW) during the 12-month period to June 2023 as more commercial and industrial consumers launched their plants.
The disclosure signals more financial trouble for Kenya Power, which issued a profit warning in May before declaring a Sh3.2 billion loss for the year ended June.
According to Epra, solar photovoltaic generation was the most preferred mode of captive generation accounting for 38.5 percent of the total installed captive capacity, trailed by bioenergy (biomass, bagasse and biogas) and waste heat recovery generation that represented 26.3 percent and 20.7 percent respectively.
Others were hydro, thermal and geothermal which accounted for 8.2 percent, 5.3 percent and 0.9 percent respectively.
“Captive generation increased to 402.3MW on the backdrop of growing interest in own use generation by commercial and industrial consumers. This accounts for 10.83 percent of total installed capacity,” said Epra in the report.
“The 55 MW Devki Steel Mills waste heat recovery plant in Kwale County is the largest captive generation plant.”
Other notable institutions that have set up own generation plants include agricultural firm Sasini and Strathmore University.
The overall installed capacity in the country is 3,713.4MW with interconnected capacity accounting for slightly under 90 percent at 3,311.1MW, a 7.5 percent rise from the 3,036.1MW recorded as at the close of the previous year.
“This is attributed to the commissioning of the 35MW Sossian Geothermal power plant in Menengai, the 40MW Alten Solar Photovoltaic plant in Kesses and the importation of 200MW from Ethiopia via the Kenya-Ethiopia High Voltage Direct Current (HVDC) transmission line,” said Epra in the report.
The regulator said that the Lake Turkana Wind Power (LTWP) plant remained the largest single power plant in the country at 310MW, while the 225MW Gitaru and the 220MW Olkaria 1AU plants are the largest hydro and geothermal plants respectively.
“Garissa Solar Plant is the largest solar power plant in the country at 50MW,” it said.
According to the report, a total of 280,624 new customers were connected to the grid during the year under review, translating to a two percent increase in connections from 8.9 million as of June 2022 to 9.2 million as at close of June this year.
Experts who spoke to the Business Daily said the shift to own power generation could be pegged on a number of factors, key among them the aggressive global push for sustainable energy use in the wake of climate hazard mitigation efforts.
“Initially, the main reason for the shift by firms from Kenya Power was cost and reliability as organisations sought to improve voltages and reduce blackouts. Without giving specific figures, I can guarantee that the companies generating their own power operate a business model that is below Kenya Power rates and that way they are able to cut on cost,” said the Electricity Sector Association of Kenya (ESAK) chairman George Aluru.
“However, with the climate discussions taking centre stage in many modern-day corporate engagements, most firms, especially multinationals, are increasingly withdrawing from consumption on the main grid as they succumb to pressure from their international partners.”
Head of the Electricity and Renewable Energy Directorate at Epra Joseph Oketch anchors the trend in increased financing from global climate champions as well as reduced pricing on renewable energy components.
“Companies are always seeking to cut down on their production costs. The climate debate has seen prices of renewable energy components reduce drastically in global markets which has in turn opened up an opportunity for industries to explore cheaper options,” noted Mr Oketch.
“This, coupled with intensified financing support from climate champions, has greatly simplified the process of setting up private power production plants.”
On reliability, customers have been grappling with undependable supply from Kenya Power, with blackouts averaging 8.4 hours in a month as of June this year, underscoring the impact of the fickle grid.
“On average, customers lacked power for 8.37 hours per month. This index was highest in November 2022 (10.63hrs) and March 2023 (12.75) due to system disturbances that resulted in national blackouts,” said Epra.
On Sunday last week, Kenya Power plunged the country into its third nationwide blackout in five months, with officials blaming ageing transmission lines that expose businesses and households to financial losses.
A recent Business Daily analysis showed that if power interruption hits the entire country and paralyses all manufacturing activities and no factory uses alternative sources for the whole period, the sector bleeds approximately Sh119.4 million per hour.
