Electricity producers will be allowed to sell power directly to consumers in the first quarter of 2025, the Energy Ministry has revealed, ending a monopoly by the State-run Kenya Power.
Energy Cabinet Secretary Opiyo Wandayi said the Energy (Electricity Market, Bulk Supply and Open Access) Regulations 2024, whose draft was published in February for public scrutiny, are being fine-tuned before they are sent to the the Attorney-General for final review and gazettement.
The regulations, when enforced, will allow private firms to mobilise cash for power generation, transmission, and distribution of bulk electricity to private retailers who will ensure last-mile connectivity and billing.
“We are fast-tracking them to ensure we have open access to our transmission and distribution networks to deepen supply in our country and electricity power markets within the East Africa Power Pool (EAPP). Trading within the EAPP is expected to start in the first quarter of 2025,” Mr Wandayi said.
“Epra [Energy and Petroleum Regulatory Authority] has just submitted a revised copy and a transition plan to the power market in the country. The electricity market regulations will increase degrees of freedom to the supply of power to large consumers” the CS added.
The proposed regulations will open cross-border power trade among seven-nation East African community bloc, enabling economies with excess capacity to off-load it through the regional power market. Kenya currently taps excess hydroelectric power from Ethiopia and Uganda.
Once gazetted, private firms will generate, transmit, distribute, export, and import electricity, enabling them to supply in bulk to retailers who will connect and bill consumers.
This is expected to widen options for power distributors, likely creating competition on wholesale tariffs, whose ripple effect will be felt by consumers through lower bills.
The regulations have allowed electricity ‘wheeling’ which will open the window for large consumers such as manufacturers to buy power directly from generators using existing infrastructure built by State-owned firms such as Kenya Electricity Transmission Company (Ketraco) at a fee.
Under the Energy Act, “wheeling” means the transmission system, distribution system, and associated facilities of a transmission licensee or distribution licensee can be used by another person on agreed charges.
This means that Kenya Power will charge electricity generators for using its transmission line to directly sell electricity.
“The bulk regulations will open up wheeling revenue. This means that every large power consumer can buy outside the power purchase agreement and only pay Ketraco a wheeling tariff,” Ketraco managing director John Mativo said in an interview in June.
The proposed opening up of the energy market will also give publicly traded KenGen, 70 percent owned by the State, and other independent power producers the option of selling to distributors other than Kenya Power, including private off-takers.
The rules, however, bar private distributors from connecting power to consumers who have an existing contract with Kenya Power, the near-monopoly power supplier.
“A consumer shall choose his retail supplier provided that the said consumer shall not have two supply contracts for the same premises,” the original regulations in part.
Frequent outages amidst costly bills have prompted a number of companies and households to opt for alternative electricity sources, including solar, biomass, and captive power.
For example, Epra licensed firms to generate 168.74 megawatts of captive power plants — electricity produced from waste heat, which is a byproduct of machine operations— last year.
The regulations are set to be rolled out years after lawmakers passed the Energy Act 2019, opening the country’s distribution to competition.
“The electricity market regulations will increase degrees of freedom to the supply of power to large consumers,” Mr Wandayi said.
Ketraco owns about 4,660 kilometres of transmission lines across the country while Kenya Power has a total of 310,618 kilometres of both transmission and distribution lines.
