Kenya will allow private firms that enter the electricity distribution space to import power from neighbouring countries, intensifying competition that could push power producers to cut wholesale tariffs.
This is part of the proposed changes by the Energy and Petroleum Regulatory Authority (Epra) meant to open up the electricity distribution sector to other firms to consumers.
Widening options for the power distributors is likely to trigger increased competition on the wholesale tariffs, ultimately leading to price cuts for consumers.
High wholesale tariffs from producers have made it difficult for Kenya Power to reduce electricity bills for consumers. Currently, only Kenya Power is allowed to sign electricity import agreements with foreign producers, and has deals with Ethiopia Electric Power and the Uganda Electricity Transmission Company Limited.
Epra has in the draft Energy Electric Power Undertaking Licensing Regulations, 2024, proposed a license that will allow firms to import electricity for sale to consumers or those generating power locally to export to other countries.
“The Authority may, on receipt of an application, grant the applicant any of the following categories of licence: Electricity export/import licence, which shall entitle the holder to export or import electrical energy to or from another country,” the regulations read in part.
Allowing the firms to export power to neighbouring countries will offer them a wider market, forcing Kenya Power to offer more competitive rates to power producers.
But the firms must get regulatory approval for the consumer tariffs that they will charge, just like Kenya Power’s.
The license to import and also export electricity is one of the five licenses that the government is offering new entrants into the electricity generation and distribution space.
Others include licenses to build, operate and maintain electricity generation systems, approval to build, operate and maintain infrastructure for power transmission and a retail supply license to sell, bill and collect revenue. Other licenses will allow firms to build infrastructure to carry electricity generated from stations at high voltage to load centres, or connect with another transmission system including that of Kenya Power.
The draft regulations follow publishing of the Energy (Electricity Market, Bulk Supply and Open Access) Regulations, 2024 that seek to end the monopoly that Kenya Power has enjoyed for decades.
