A prosumer is a mixture of a producer and a consumer. The Energy Act 2019 provides for small producers of renewable energy for their own use to sell their surplus to the national grid, which makes them prosumers.
They only pay for the ‘net’ electricity they use from the grid through a mechanism known as Net Metering. Draft regulations for Net Metering were released for public comment by the Energy and Petroleum Regulatory Authority (Epra) in June 2022.
It is encouraging to see that the regulations are informed by a study undertaken by JKUAT, which includes an analysis of the Net Metering regime in States such as Malaysia, Tanzania, Ghana and California.
It is a no-brainer that heavy consumers of electricity will contemplate generating their own power from renewable sources such as solar to lower their energy costs and their carbon footprint. The use of renewable energy technologies carries the risk of intermittent power and power back-ups in the form of fuel-fed generators or battery solutions are often too expensive. For this reason, prosumers remain connected to the national grid and can take advantage of Net Metering to cut their power bills and avoid wasting surplus energy.
It is imperative for prosumers to understand what the regulations portend for them. Firstly, the regulations outline the qualification criteria for prosumers. For example, the prosumers must have a production capacity of no more than 1MW.
Some dissenters objected that this capacity threshold is too low which appears to be supported by the JKUAT study which anticipates that 17 percent of local prosumers will eventually exceed the 1MW limit. That said, the 1MW limit has been adopted in States such as Tanzania and California and the Stellenbosch municipality in Cape Town.
Another criterion for prosumers in the regulations is that they must have been producing power for at least 12 months before they can benefit from a Net Metering arrangement. This appears to be a cautionary measure aimed at ensuring that the prosumers have a track record and meaningful data on their power generation for own use before they are permitted to sell their surplus to the utility.
Turning to the all-important point of compensation, the regulations propose a credit system under which the prosumer is entitled to credits for the surplus power exported to the national grid.
Curiously, every two units of power exported to the grid by a prosumer shall offset only 1 unit of power consumed from the grid. Kenya Power deserves to be compensated for the infrastructure and resources that it uses to dispatch the prosumer’s power to other consumers and for absorbing the financial risk that the other consumers will pay their electricity bills.
However, pricing the unit of electricity that is sold to Kenya Power at a mere 50 percent of the price charged by Kenya Power when on-selling that unit to someone else may face resistance as it appears to be motivated by the need to improve the utility’s profitability.
The issuance of the draft regulations is an important step towards realising the objective of successful Net Metering in Kenya and potential prosumers should grab this opportunity to provide their considered feedback to Epra.
The writer is a Director in the Projects, Energy & Restructuring Practice at DLA Piper Africa, IKM Advocates.