Large power consumers are seeking to set up own power plants with a combined installed capacity of 457 megawatts (MW) for their use posing a revenue loss dilemma for utility firm, Kenya Power.
The latest data by the Energy and Petroleum Regulatory Authority (Epra) shows that some 106 heavy consuming companies have so far been licensed to generate a total of 260.22MW of electricity for self-use as part of a strategy to ensure stable and cheaper supply.
Further, there are pending approvals for permits by another 15 firms that are seeking to generate a combined 197.5MW of own-use power.
Should they get the nod, this will bring the total approved generation capacity by large power users to 457.72MW.
“As at August 31, 2022, there were 106 licensed captive power projects with a total installed capacity of 260.22MW. At the moment, 15 captive power applications with a total capacity of 197.5MW are at various stages of approval,” said Epra.
Epra last month raised the fuel levy on electricity by 46.6 percent, the highest level in over five years pushing up power costs by more than 15 percent adding extra burden on households, small businesses, and industrial power customers.
Large power consumers appear to have had enough of monumental power bills and are lining up in droves at the Epra offices for permits to divorce Kenya Power.
Among the latest is British American Tobacco (BAT), which is seeking to set up a solar plant that will generate up to 1,400 kilowatt-hours (kWh) in an hour to slash its energy costs.
BAT said it will apply to Epra for a license this week.
“This will be a self-consumption, captive solar installation with a total capacity of 1,400 kilowatt-peak hours (kWp). Issuance of a license by Epra to the applicant will not adversely affect any public or local authorities, companies, persons, or bodies of persons within the undertaking,” said BAT.
The tobacco processor is among companies that are eyeing to set up multi-billion-shilling power plants to reduce their energy costs at a time power prices are rising sharply.
The shift to own power generation by large consumers is a worry to Kenya Power, which generates 70 percent of its revenues from power sales to commercial users.
The firm’s revenues of Sh144.12 billion in the financial year to June 2021, just Sh43.21 billion (30 percent) was derived from domestic consumers.
But more worryingly for Kenya Power, the government is planning to split its power distribution monopoly, which will see it only distribute electricity to large commercial and industrial consumers.
In proposed reforms by the Ministry of Energy to boost efficiency and cut costs, the Rural Electrification and Renewable Energy Corporation (Rerec) will take over the role of distributing electricity to households. The move could see Kenya Power not only lose the revenue it derives from domestic consumers but also contend with constrained demand from industrial consumers who are now going their separate ways. Already, some large power users have shifted to solar to cut their energy bills and improve reliability of the power supply.
In December 2020, Total Energies Kenya announced it had installed some 3,390 solar panels at 107 petrol stations to power lights, pumps, fridges, air conditioning, and coffee machines, reducing its reliance on the national grid.
Other large power users who have installed solar farms include Bidco and Africa Logistics Properties (ALP).
Large power users such as cement manufacturers, steel firms, tea firms, and other manufacturers are not stopping at solar, and are looking at other sources of cheaper power including coal-fired power plants, waste-heat recovery plants, hydropower, and wind.
Maisha Mabati Mills recently announced plans to set up a 25-megawatt (MW) coal-fired power plant in Machakos to reduce its high energy costs.
The company said the power generated will be used for its own consumption at its factory in Lukenya.
Last month, National Cement, a Devki Group subsidiary, also announced plans to set up its own 10MW waste heat recovery power plant in Kilifi county to power its cement factory operations.
This was followed by another announcement by Cemtech Limited to set up a 9MW waste power plant to power its cement factory in Sebit, West Pokot.
The Competition Authority of Kenya (CAK) early this year gave Simba Cement Limited, a subsidiary of Devki Group, approval to acquire Cemtech.
Cemtech is subsidiary of India’s Sanghi Group, one of the world’s largest cement makers.
In January, Unilever Tea Kenya also announced plans to enhance its own power generation capacity to be used within its tea estates in Kericho and Bomet.
Many tea factories are currently producing 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.
This includes Imenti Tea Factory, Metumi Hydro Power plant owned by Kenya Tea Development Agency (KTDA) factories, and Gura Hydro Power plant also owned by the agency.
Centum Investment Company’s subsidiary, Two Rivers Power Company (TRPC) also last year took a Sh770 million loan from Pan-African solar financier GridX Duara Holdings to build a solar plant.
TRPC holds a generation and distribution license from Epra and operates a high-voltage line from Ruaraka to its power substation within the Two Rivers Development. The company currently produces 1.2MW of power from solar at the real estate development.
In September 2018, ALP installed a 506 kilowattpeak (kWp) hybrid solar PV, hoping to save Sh12 million per year.
In the same month, Icipe commissioned its $2.5 million (Sh302.7 million) two solar PV power plants located in Kasarani, Nairobi, and on the shores of Lake Victoria. The plants have a combined generating capacity of 1,156 kWp.
Moi International Airport in Mombasa is also set to install a 500 KW solar PV system. The ground-mounted solar system is expected to generate 820,000 kWh per year and offset 1,300 tonnes of carbon dioxide annually.
Nairobi’s Garden City Mall set up a $1.9 million (Sh230 million) solar carport to generate 1,256 megawatt-hours annually from the 3,300 solar panels installed on the topmost car park shade, projecting that this would help it cut power bills by about Sh31.6 million annually.
London Distillers Ltd also installed 1 MWp roof solar system in Athi River, helping it offset the need for grid energy and save at least Sh18.4 million annually over the system lifespan of 25 years.
Williamson Tea likewise cut the ribbon on a 1MW solar farm in Changoi, saying it would help reduce its energy bills by nearly one-third.
In December 2018, Kenyatta University switched on the first phase of a Sh1.7 billion solar plant that will see the institution generate its own electricity and offload excess power to the national grid. The 100 kilowatt (KW) solar plant, located on the main campus off Thika Road cost about Sh17 million. It was developed by France-based solar panels manufacturer Urbasolar.
In 2014, Strathmore University installed 600 KW rooftop PV solar plant, part of which is also being sold to the national grid. The university estimated the cash savings from the project at between Sh18 million and Sh24 million annually. BY DAILY NATION