Policy shift
Africa’s leading geothermal energy producer, KenGen is set to lose billions in revenue this year after Kenya Power’s decision to make the shift to renewable energy. The state electricity distributor has decided against renewing supply contracts for two of its diesel plants.
The affected plants are the Kipevu I 73.5MW diesel-powered plant and the Muhoroni 60MW gas turbine facility, whose contracts are to expire before the year ends. Similarly, Kenya Power saw its power purchase agreements with the privately-owned Iberafrica 52.5MW power plant and Tsavo Power 75 MW thermal power plant also come to an end.
The move will see KenGen take a major hit as it was earning million from the plants. For example, it sold 141 gigawatt-hours (GWh) of electricity to Kenya Power from the Kipevu I plant earning Sh2.49 billion in the financial year to June 2022 while also earning Sh2.02 billion from the sale of 40GWh from Muhoroni gas turbine facility in the same period.
As a result of the shift, KenGen is looking at gloom future whereby it will remain with only one thermal power plant, the Kipevu III power plant which has an installed capacity of 120MW.
According to Joseph Siror, Kenya Power Managing Director, during the Africa Energy Forum being held in Nairobi, the expiry of the contracts of the thermal plants will enable the utility to take up much more renewable energy.
According to President William Ruto, renewable energy in Kenya currently accounts for 73% of the installed power generation capacity.
“In terms of utilization, renewable energy accounts for 90 % of the power generation dispatch. We are on course towards achieving our target of 100 % clean energy by 2030. Additionally, we have set a national target to achieve 100% access to Clean Cooking by 2028,” Ruto said.
The withdrawal from thermal power plants comes at a time that Kenya is in a partnership with Ethiopia to supply it with cheaper hydropower.
In January, Kenya started importing 200MW from Ethiopia with it expected to increase to 400MW by 2025. The imports were crucial for the country to avoid power rationing at a time of severe drought. However, it had a ripple effect as it caused the thermal contribution to the energy mix to reduce.
“The recently commissioned imports from Ethiopia hydropower have reduced thermal contribution to the energy mix to below 10%,” said Siror.
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