Strathmore University is in talks with Kenya Power #ticker:KPLC expected to unlock earnings from its grid-connected solar system, which has been injecting 0.25 megawatts to the national circuit since June 2014, but has not earned a cent due to regulatory hitches.
The university in October 2015 signed a power purchase agreement with Kenya Power to begin injecting power into the national grid at a tariff of ¢12 (Sh12) per kilowatt hour, but payments could not be processed because the school did not have an electricity generating licence.
The Energy Regulatory Commission last week issued Strathmore with the permit, the university said on Thursday. Projected annual revenue from the solar power deal is estimated at Sh4 million per year.
“We got the licence last week, so now we’re negotiating again. We hope to finalise in two to three months and begin earning revenue,” said Izael Pereira Da Silva, deputy vice chancellor in charge of research and innovation.
“My prayer is that it will be backdated to signing of PPA,” Prof Da Silva told Business Daily. The project was initially calculated to have a payback period of 5.5 years, but the delay in generating income from the power sale may delay this.
Occupying six buildings at the Madaraka main campus, the Strathmore energy project consists of 2,400 solar panels generating a total of 0.6MW.
Strathmore internally consumes 0.35MW to run the university, resulting in monthly cost savings of about $160,000 previously paid as electricity bills, Prof Da Silva said.
The solar project was funded by a $1.3 million (Sh130 million) concessional loan from the French development financier AFD - disbursed through Co-operative Bank #ticker:COOP – at a rate of 4.1 per cent per annum whose tenor is 10 years.