The growing shift to solar power systems by heavy-consuming industrialists seeking reliable and cheaper supply has rattled electricity distributor Kenya Power #ticker:KPLC amid thinning revenues.
The utility firm said some of its industrial customers — who account for about 54.8 percent of its sales revenues — are gradually shifting to own-generated solar power, dealing a further blow to its already dwindling finances.
“The company operated in a challenging environment over the financial year under review, where demand growth at 3.7 percent remained below the projected level of five percent. The dampened demand growth is further compounded with the increased threats of grid defection by the industrial category as decentralised renewable energy options are becoming more available and cheaper," Kenya Power revealed in its latest annual report.
The company got some Sh63 billion from the industrial customers who bought 4,462 Gigawatt hours in the year to June 2019, representing 45 per cent of its total revenue.
The big shift to solar power by heavy consumers has pushed Kenya Power into deeper dilemma in the wake of excess production of electricity.
Power generation crossed a record one billion kilowatt-hours in October — adding financial pressure on the distributor, which is already paying for huge volumes of idle electricity.
Power generators have raised production amid reduced consumption by homes and businesses in the wake of Covid-19.
Payments for idle electricity is a pass-on cost to consumers thanks to a take-or-pay clause contained in contracts signed between the government and power producers, compelling Kenya Power to buy the agreed amount of electricity regardless of need.
Kenya Power projects the latest growth in demand to remain at approximately 2.3 per cent in 2020, which is much lower compared to the historical 10-year average of 5.9 per cent.
Several companies, universities and factories have turned to solar photovoltaic (PV) grid-tied systems to supply power for internal use to ensure reliable supply and reduced operational costs.
Big power consumers such as Africa Logistics Properties (ALP), Mombasa International Airport, the International Centre of Insect Physiology and Ecology (Icipe) have recently commissioned solar power units on their properties.
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 (Sh273.5 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 (Sh207.8 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 cut 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 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 roof top 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.
Several others, including Kapa Oil Refineries, are lining up to join the solar bandwagon. Kapa Oil wants to install a 1.5 megawatts (MW) PV grid-tied system for internal use.
Official data released last year showed that some 2.3 million households also used solar for lighting, representing about 19.3 per cent of the total number of homes.
The 2019 census report put solar lighting uptake in homes at 19.3 per cent. Rural areas recorded above 29.9 per cent, higher than the rural national grid connections that stood at 26 per cent.