Delay of dispatch unit dims hopes of cheap electricity
A Kenya Power technician at work: A dispatch system automatically picks the cheapest bands from power producers to keep costs low. PHOTO | FILE
What you need to know:
ERC said it put on hold a bid to have a national dispatch unit in place before the end of 2016 due to absence of a legal framework.
That means the partly private Kenya Power will continue to control how various sources of power procured are released to homes and industry for several weeks to come.
Kenya’s energy mix includes hydro power priced at Sh3 per kilowatt-hour (kWh), followed by geothermal at Sh7 per kWh per unit.
Consumers will have to wait longer for an independent unit that will release power to the national grid, maintaining a mode of operation that has been blamed for expensive electricity.
The Energy Regulatory Commission (ERC) said it put on hold a bid to have a national dispatch unit in place before the end of 2016 due to absence of a legal framework.
That means the partly private Kenya Power will continue to control how various sources of power procured are released to homes and industry for several weeks to come.
Kenya Power’s internal dispatch system has been on the spot for feeding expensive thermal power sources onto the national grid, ultimately leading to expensive power for homes and businesses.
“That proposal [to create an independent dispatch unit] was contingent on assent of the new Energy Bill, which is still pending,” ERC director-general Joe Ng’ang’a told the Business Daily on the phone.
Kenya’s energy mix includes hydro power priced at Sh3 per kilowatt-hour (kWh), followed by geothermal at Sh7 per kWh per unit. Strathmore University’s solar power is priced at Sh12 while thermal power is priced at Sh20 per kWh with emergency power costing nearly double the price of diesel-fired electricity.
A legal plan would have allowed the ERC to set up a national dispatch unit by end of last month to ensure that at any point in time, cheaper power gets to the consumer first, technically known as economic merit order dispatch.
The proposed dispatch system is expected to follow the ‘least cost order of merit’ by automatically picking the cheapest bands from each of the producers to keep power cost minimum.
That would imply that at night, weekend or during public holidays when power supply outstrips demand, only the cheaper sources like hydro and geothermal are released.
In August, the ERC accused Kenya Power of thwarting the government’s bid to cut power cost by increasing the intake of diesel-fired electricity to the national grid.
“Cheaper hydro-power generation has not been aggressively pursued despite fairly good water levels,” the ERC said in a letter seen by the Business Daily, adding that it would be watching the power distributor closely “to avoid defaulting on our commitment to keep power costs down.”
In mid this year, the national assembly passed the Energy Bill 2015 but President Uhuru Kenyatta later rejected it in November, citing a provision compelling Kenya Power to compensate consumers for losses resulting from unscheduled outages.
The Parliament’s Bills Tracker 2016 indicates the proposed law is before the Senate for consideration.
Once approved, a national dispatch centre will be set up within the Kenya Electricity Transmission Co Ltd (Ketraco). Ketraco had even floated a tender for a consultant to conduct feasibility study on the national load dispatch centre.
“An independent unit, one whose action cannot be influenced by interests of various suppliers will connect consumers with the most optimal and economical mix of energy,” Mr Ng’ang’a said in an earlier interview.
Countries such as India and Malaysia have recorded enormous gains of independent dispatch.
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