- For electricity usage isn’t steady across the day.
- We use a small burst of extra power when we wake up, and then our peak home use is early evening, as the lights come on.
- That daily cycle is a challenge for electricity generators everywhere because electricity cannot be readily stored.
This week saw the lid lifted on the newest penalty charges levelled by KenGen on Kenya Power for its late payments, in an extraordinary tale of no surprises. For Kenya Power is struggling, we learn, on having to pay for electricity it can’t sell.
Yet, wait a minute, aren’t we short of electricity, with a fifth of our population still unable to get any, and power cuts for the rest of us every time a frog sneezes?
Apparently not, for now Kenya Power can’t sell it all, thanks to a conundrum around a row of thermal energy plants with wonder contracts.
In fact, thermal energy is by far our most expensive energy, at four times the cost of hydropower and over twice the cost of geothermal and wind. It adds a nasty sting in our electricity bills too, with eternal rounds of fuel surcharges for the diesel to fuel the thermal plants.
So why do we keep on running it and buying it? Well, we have to, thanks to the contract signers of yester-year, and the way we all use electricity.
For electricity usage isn’t steady across the day. We use a small burst of extra power when we wake up, and then our peak home use is early evening, as the lights come on.
That daily cycle is a challenge for electricity generators everywhere because electricity cannot be readily stored. That means that if a steady amount is made all day and night we end up either short of electricity at peak times, or with too much off-peak.
The answer, generally, is to have some plants that only produce at peak hours. But most of our own electricity is now renewable and provides power steadily at virtually no extra cost — with nearly all the cost of geothermal power, for instance, created by the initial drilling and plant building. Either way, it’s not a ‘thing’ to turn a geothermal plant on and off twice a day: that power just keeps coming 24/7.
But thermal power, which needs diesel poured in, can easily come on just for a few hours.
In fact, hydropower can too, but while a lot of our power comes from hydro, that can be diminished sharply by drought, meaning we also need power back-up for our more waterless years.
Thus, we have these thermal plants that come on for just a few hours and can give us a lot of extra capacity when water is short. All well and good — a solid and risk-proofed power mix.
Except for the power contracts these thermals were born with, which require that they are paid as if they are producing electricity all the time, whether they are, or not.
And, for real, this is where our no surprises are. No-one conceiving that contract or signing it thought we were going to move into a future without peak and off-peak electricity consumption. True, they could not have foreseen the pace and scale of Kenya’s moves away from thermal power, faster than nearly every other country in the world.
But to build a contract that pays whether you produce or not?
In fact, these contracts came about because power generation requires big upfront investments, so investors want to be sure of their returns. Don’t we all? Yet thermal power plants are the cheapest to build: their costs are much more loaded to the fuel used. And how many other business investments are premised on complete control of the market for decades ahead?
Thus, in all, our ‘negotiators’ overpaid with those contract deals, there was poor lawyering, an absence of ‘wiggle-room’ in a changing world, and too much power exercised by investors versus government in protecting Kenya and Kenyan consumers as they gave investors a place on our national grid.
Yet surely our most brilliant minds could do better than having Kenyans sit paying for those limitations for another decade ahead. Kenya Power has been increasing electricity exports to Uganda and, in a more limited way, to Tanzania, which helps. In whatever way we now redeploy this spare capacity, we need to find a better answer than paying year after year for the nothing parts.