As renewable energy solutions such as rooftop solar panels and small-scale biomass technologies become more popular, new net-metering regulations are reshaping how these investments pay off.
The Energy (Net-Metering) Regulations, 2024, which came into effect on 18 June 2024, mark a significant shift towards promoting the use of renewable energy across the national grid.
The concept of net-metering allows consumers of electricity who are connected to the main power grid to generate their own electricity and supply any excess to the grid. Their grid supply then earns them credits, offsetting their expenses from the power distributor or retailer.
Kenya’s national licensed power distributor and retailer is Kenya Power and Lighting Company which is currently the main off-taker for all grid connected generators.
The new regulations breathe life into Section 162 of the Energy Act, 2019, which provides that a consumer who owns an electric power generator of a capacity not exceeding 1MW may be allowed to supply power to the national grid by entering a net-metering system agreement.
The regulations lay emphasis on renewable energy technologies, to foster a cleaner and more sustainable energy landscape.
At the heart of the new regulations is the opportunity for consumers to integrate renewable energy systems into the national grid.
For domestic consumers, the capacity limits are set at 4 kW for single-phase and 10 kW for three-phase systems, while commercial and industrial users can install systems up to 1 MW.
The country’s aggregate generation capacity from these net-metering systems has, however, been capped at 100 MW in the initial five years after the commencement of the regulations.
The net metering systems must be installed, interconnected, maintained, and operated in accordance with the Kenya Electricity Distribution Grid Code, the Standards Act, Cap 496 of the Laws of Kenya and other guidelines issued by the Energy and Petroleum Regulatory Authority (Epra).
The positive impact of these regulations cannot be overstated. By allowing individuals and businesses to generate their own power and offset their electricity costs, the regulations offer a pathway to reduced energy bills, enhanced energy security, and a reduced carbon footprint.
The incentives for using renewable energy sources support national goals for reducing greenhouse gas emissions and combating climate change.
However, the regulations also come some challenges. For households with substantial energy needs or those making significant investments in renewable energy, the 4 kW and 10 kW limits may be inadequate.
Similarly, commercial entities with larger energy demands might find the 1 MW cap limiting, which could impact the financial returns on their renewable energy investments.
The application process itself is another area where challenges may arise. Consumers must enter into agreements valid for five years with the relevant power distributor or retailer.
Installations exceeding 10 kW require a feasibility study conducted by a certified engineer.
The regulations also mandate that systems must be set up by authorised professionals and adhere to specific technical standards, including the use of smart meters capable of bi-directional energy measurement.
While these standards are necessary to ensure safety and efficiency, they increase upfront costs, can be complex and time-consuming and necessitate careful coordination with electricity service providers, which can be logistically challenging.
The financial aspect also introduces its own set of limitations. Consumers will only be credited for the energy they supply at a rate equivalent to 50% of the units supplied, and any unused credits are forfeited at the end of the year.
This capped credit valuation may not fully capture the value of the energy supplied, but it nonetheless provides a structured financial incentive for renewable energy production.
The regulations also require ongoing compliance with record-keeping, annual reporting, and dispute resolution processes.
In conclusion, the Energy (Net-Metering) Regulations, 2024, represent a significant advancement towards a greener energy future.
While there are challenges associated with capacity limits, application processes, and financial considerations, the regulations offer valuable opportunities for cost savings, energy independence, and environmental benefits.
Embracing these regulations could lead to a more sustainable and resilient energy system, benefiting both consumers and the broader community.
The writer is the senior manager, Legal Business Solutions, PwC Kenya
