To make electricity more affordable to Kenyans and spur sustainable social and economic development, President William Ruto’s administration should speed up efforts to displace expensive and dirty thermal power from our electricity grid.
The government aims to transition power generation to 100 per cent clean and affordable sources by 2030.
This entails reducing our reliance on thermal power plants which run on imported and polluting heavy fuel oils (HFO), diesel, or kerosene.
Kenya is lauded globally for being a leader in clean electricity, generating per cent of power from geothermal, wind, and solar. However, electricity remains too costly for local businesses and homes.
This is partly due to the expensive thermal power that is still part of our electricity mix, pushing up the average electricity tariffs.
Independent power producers (IPPs) operate five main thermal power plants selling costly power to consumers via the electricity utility Kenya Power.
Their contracts lapse between 2030 and 2034. The state-owned Kenya Electricity Generating Company (KenGen) also runs thermal plants in parts of the country.
The share of thermal power dispatched to the grid has fallen to an average of less than 10 per cent in recent years as clean energy generation expanded.
Nonetheless, it still exerts a disproportionate impact on electricity prices.
These plants charge an average of Sh22.7 per unit of power, making them costlier than hydropower (Sh5.7) or geothermal and wind (Sh9.08).
A recent report by the Auditor General noted that some thermal IPPs charge as high as Sh195 per unit of power.
The largest cost item on consumer electricity bills — the fuel energy charge —covers the cost of imported fuels for thermal plants.
This means local electricity prices are vulnerable to global oil supply shocks and currency volatilities as is presently the case.
In addition, the thermal IPP plants operate on the “take or pay” model, entitling them to billions of shillings in fixed annual payments, even if their power is not needed on the grid.
These payments also exert considerable pressure on power tariffs.
Thermal plants are deployed during periods of peak electricity demand when other power sources are unavailable or unreliable.
They also stabilise the power grid in areas like Mombasa that are far from the country’s power generation centres.
Last year’s report by the Presidential Taskforce on the Review of Power Purchase Agreements proposed pathways to mitigate the negative impacts of thermal power on our electricity prices.
These included renegotiation or termination of contracts with thermal power plants owned by IPPs without violating contractual obligations.
In addition, the task force called for stronger oversight of fuel procurement by HFO thermal IPPs to minimize costs and tackle apparent irregularities that contribute to expensive electricity.
It also recommended studies to determine the viability of converting the plants to use Liquefied Natural Gas to secure up to 40 per cent operational cost reductions.
The Taskforce also questioned the modalities of dispatching power from different energy sources to the grid, saying expensive thermal power should be used as a last resort to limit consumer tariffs.
The full range of the task force proposals should be explored and implemented where feasible.
Experts note that reducing the country’s overreliance on costly thermal power calls for further expansion of clean and affordable electricity sources.
Geothermal energy is particularly promising as it’s less vulnerable to climatic and weather vagaries compared to other clean energy sources.
Kenya has an estimated potential of 10,000 megawatts (MW) of geothermal power against the current installed capacity of 828 MW.
Moreover, the strategic extension of the national grid would also render some thermal power plants redundant. For instance, building a new transmission line would allow the Muhoroni power plant to be retired and replaced with cheaper and cleaner electricity.
The plant is reportedly among the most expensive to operate, consuming 300,000 litres of fuel daily.
Earlier this month, the Energy Ministry’s Principal Secretary Alex Wachira told legislators vetting his appointment that once approved, he will retire costly thermal plants to reduce power costs.
This is welcome if implemented. Similar pledges by state officials in the past were not fulfilled.
Jamah is a sustainable development advocate based in Nairobi.
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