Kenya Power on the spot for ignoring cheaper electricity

Kenya Power #ticker:KPLC is on the spot for prioritising expensive thermal power over the cheaper options such as geothermal and hydro, effectively setting up consumers for higher electricity prices.

Data by the Energy and Petroleum Regulatory Authority (Epra) shows that the power distributor last month took the highest proportion of the expensive thermal power in more than a year while reserving the lowest slot for the cheaper geothermal power.

As a result, consumers paid a higher fuel cost charge — which is influenced by the share of electricity from diesel generators — of Sh2.6 per kilowatt hour (kWh), up from the Sh2.4 since May 2020.

Some insiders at the power utility attributed the record uptake of expensive thermal power partly to a reduced generation of geothermal power after two of the plants run by the KenGen were stopped for maintenance.

KenGen, however, said it compensated the lack of geothermal power with enhanced production of hydropower, which is even cheaper.

KenGen further pointed out that even the geothermal units it had supplied Kenya Power was not all taken up, raising questions about Kenya Power’s decision to give priority to the more expensive thermal in September.

“Although KenGen’s geothermal power output marginally dropped in September due to maintenance, this was compensated by increased dispatch from hydro. In total KenGen’s available geothermal capacity for the month was 499.7 MW, against 410.3 MW taken up by the off-taker. This means we had an additional 89.4 MW that was not taken up,” KenGen managing director Rebecca Miano told the Business Daily.

Kenya Power did not respond to Business Daily queries on what may have influenced its decision to take up more units of the more expensive thermal power yet its dispatch policy demands that it gives priority to cheaper energy sources.

The Energy Control Centre, which manages the uptake of energy from the various sources for distribution on the national grid, is manned by Kenya Power staff.

A Kenya Power engineer with knowledge of how the dispatch centre works said the load of thermal may only be increased in rare cases where there is need to “stabilise the system” due to hitches in the transmission of energy from other sources.

“I don’t know of any transmission constraints in the system of late so it will be interesting to know how this happened. We have heard of such complaints in the past where people feel some of the vendors of thermal energy are behind the push to increase uptake and make money but it has not been proven,” the expert said, requesting anonymity as he is not authorised to speak to the media.

Hydro is the cheapest energy source, retailing at an average of Sh3.23 per unit. Despite the dams being full after a long period of rainfall, the proportion of hydro dispatched into the grid has hardly changed beyond 36 percent since the year began.

The uptake of thermal, which the government has been striving to reduce due to its high retail rate of up to Sh32 per unit, has however increased steadily even as the country reported good rains. The uptake of thermal energy was recorded at a near double digit of 9.1 percent in September from a low of 4.2 percent five months earlier.

Supply of the Sh9 a unit geothermal power, which has remained steady at about 50 percent, dropped to 38 percent in September. This is despite the fact that 89.4 MW of geothermal power produced by KenGen went unused in September.

The steady climb in uptake of thermal power by Kenya Power in September has raised fears of steep rises in consumer prices in the wake of a possible upward revision of tariff that has been pending for close to one year now.

With the main hydropower dams full and the government investing heavily in cheaper power sources like geothermal, focus will not remain on Kenya Power and how it dispatches power to give consumers relief in the cost of electricity.

The government’s promise for cheaper electricity is heavily pegged on increased use of the renewable energy sources like geothermal, wind and solar, which cuts the costly thermal power and ultimately reduces the fuel cost adjustment levy in bills.