Households and businesses with solar power installations above 10 kilowatts (kW) have been locked out of a special scheme that allows consumers who generate their own power to supply electricity to the national grid in times of over-production and get compensated for energy dispatched.
Customers who have solar power systems on their roof and generate more electricity than the domestic uses during daylight hours can sell the surplus to the national grid. If the home is net-metered, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods when the home’s electricity use exceeds the system’s output.
In this arrangement, customers are only billed for their “net” energy use.
The final regulations published by the Energy and Petroleum Regulatory Authority (Epra) on net-metering said only households producing less than 10kW of solar power would be allowed to use the power exchange system, which is aimed at helping customers that produce their own renewable energy to reduce the initial high cost of purchasing many backup batteries.
“The installed capacity for domestic customers shall not exceed 4kW for single-phase supply and 10kW for three-phase supply,” according to the Energy Act (Net Metering) Regulations, 2024, which the Ministry of Energy gazetted last month. This is a new provision that has been introduced in the regulations and was not part of the draft regulations that were published two years ago.
Energy and Petroleum Regulatory Authority (Epra) Director-General Daniel Kiptoo said the cap was based on the findings of the Regulatory Impact Assessment (RIA) study.
"4kW is for single phase, while 10kW is for three phase. This is the typical demand of such customers, based on the RIA study findings," he told the Business Daily.
For industrial and commercial customers, they have been capped at 1 megawatt (MW). This 1MW cap was the threshold for both domestic and industrial customers in the draft regulations.
“The installed capacity for commercial and industrial customers shall be capped at the maximum load demand in kW achieved in the 12 months preceding the application for net metering,” add the regulations.
The net metering regulations were put on hold for years by the government amid fears that they would sound a death knell for Kenya Power by accelerating the shift to own-source power generation.
Insiders said the 10kW cap is one of the measures to limit Kenya Power's exposure to net metering.
The State has also ensured that the utility will not pay customers any money for the electricity that they supply to the grid.
Instead, they will be given credits for supplies made to the grid. However, these credits are priced at half the price that the utility sells. For instance, in a month during which Kenya Power sells a unit to customers at Sh32, net metering customers that supply to the grid will only be credited with Sh16 for each unit they supply the utility.
The customers will use their credits during months when they consume more electricity from Kenya Power than they supply to the grid. Unused credits, however, expire at the end of the utility's financial year, which closes every June 30.
To further limit the number of net metering beneficiaries, the government will only licence a total capacity of 100MW. This is only three percent of Kenya's total installed power capacity, which was estimated at 3,321MW last year. It is also less than a quarter of the country's total captive power capacity, which was a record 449.5MW in December 2023.
Kenya's solar installed capacity stood at 410.4MW in December 2023, according to Epra data.
Of this, 210.3MW is connected to the grid, while 196.2MW is captive capacity.
Under the net metering system, customers will feed back electricity to the grid using the existing Kenya Power lines that feed power to their homes or businesses.
This power transfer will be facilitated by a grid-tied inverter that communicates with the power grid to transfer excess energy generated by the home. Customers will pay for the interconnection costs.
The net-metering concept has become popular in many parts of the world because it allows utilities to better manage their peak electricity loads. By encouraging generation near the point of consumption, net metering also reduces the strain on distribution systems and prevents losses in long-distance electricity transmission and distribution.
