Cheap geothermal electricity fails to cut monthly power bills

Electricity consumers will continue to bear a heavy cost burden despite the recent increase in geothermal power output, an industry report says, citing increased uptake of expensive thermal and emergency power in the national grid.

The report by the industry regulator — the Energy Regulatory Commission (ERC) — says delays in setting up high-voltage lines and substations to evacuate cheaper hydro- and geothermal power has forced Kenya Power to continue using expensive thermal power to service customers in certain parts of the country, leaving consumers with a high cost burden.

READ: Kenya geothermal capacity growth fourth largest in the world

The ERC said part of the steam power generated at Olkaria was lying idle because there are no transmission lines to western Kenya and Coast regions that experience constant system disturbances and supply fluctuation.

Middle-income households consuming 200 kilowatt-hours are currently paying Sh3,398 or Sh16.99 per kWh, up from Sh2,783 or Sh13.97 a unit in April 2014 — an increase that is mainly attributed to the rise in fuel cost in the bills due to heavy uptake of thermal power.

Kenya Power’s uptake of independent power producer Aggreko’s expensive temporary power nearly doubled in March while diesel-fired electricity rose by a fifth on the national grid despite the stability of steam power, and heavy rains in the third month of the year.

READ: ERC pushes removal of costly Aggreko power from national grid to June

ALSO READ: KenGen bags Sh889m in ten-year Aggreko power deal

Kenyan households and industrial users consumed 5.79 million kWh of emergency power in March from 3.17 million units in February, an increase of 83 per cent.

Electricity from heavy fuel oil generators increased by a fifth to 112.23 million kWh in March, whereas geothermal power declined for the third month in a row to 383.11 million units.

Emergency power is priced as high as ¢50 per unit, diesel-fired electricity costs ¢20 per kWh while hydropower, though susceptible to weather changes, is the cheapest at ¢3 per kWh.

Geothermal power is currently priced at ¢7 per kWh, Biojoule’s biogas (¢10 per unit), and Strathmore University’s solar power (¢12 per unit).

The ERC has pointed an accusing finger at Kenya Electricity Transmission Company (Ketraco) for delays in putting up the high-voltage lines, resulting in an imbalance on the grid arising from failure to fully exploit geothermal’s potential.

“We are having infrastructure constraints and as a result we can’t fully pick up geothermal. Ketraco is very central to this,” said ERC director general-general Joe Ng’ang’a.

“We want these projects completed so we can properly utilise cheaper power.”

Transmission lines delay

Ketraco’s incessant delays in constructing transmission lines have frustrated President Uhuru Kenyatta’s plan to halve the cost of electricity to Sh10 (¢10.45) per kWh from the current average of Sh21.60 (¢21.60) per unit for households.

The State-funded agency was set up in December 2008 to build and maintain high-voltage electricity transmission lines that feed into Kenya Power’s distribution and retail lines.

The 300km Olkaria-Lessos-Kisumu line meant to evacuate power from Olkaria to western Kenya has suffered multiple delays blamed on land acquisition challenges that have forced Ketraco to set December 2017 as the completion date for the project.

Work on the project began in January 2012 with December 2015 as the completion date but tenders were only awarded in March last year.

Ketraco managing director Fernandes Barasa attributed the delays to inadequate allocation of way-leaves.

The Sh8.5 billion double circuit line and associated substations are being developed by Indian firm Kalpataru Power Transmission Co., Kinden Corp of Japan, and three Chinese firms, NARI Group, Sieyuan Electric, and China Construction Civil Engineering Ltd.

KenGen already missed the March deadline to relocate a 30-megawatt gas turbine to Muhoroni meant to replace Aggreko’s temporary power plant.

The construction of the 482-Km Mombasa-Nairobi line is also behind schedule after running into strong headwinds related to land acquisition in Kajiado.

It has now emerged that the August 2016 deadline is unlikely to be met partly because Ketraco is currently locked in a protracted legal battle with 561 Kajiado landowners who have refused to give up their land for the transmission line.

Works on the Sh14 billion power line linking Nairobi with Mombasa began in August 2011 and was expected to be completed in three years.

Mr Barasa reckons that the project, with 6.71 per cent of works pending, stalled after Kajiado residents demanded more compensation for their land than was budgeted for.

Mumbai-based Kalpataru, which is also constructing a section of the Olkaria-Kisumu line, is the project’s main contractor, with German firm Siemens as the developer of the high-voltage substations.

Ketraco says once the line is complete, it will “improve the power system stability, reliability and reduce technical losses as well as play a major role in regional power trade”.

The ill-fated Suswa-Isinya line is also running behind schedule, rocked by protracted land disputes as local landowners dig in for fat paycheques.

It is part of the Nairobi metropolitan ring meant to help transfer steam power to the capital and for onward transmission to Tanzania through Arusha.

Ketraco broke ground for the project in 2012 with August 2016 as the completion date for the 100km line. But with only 65 per cent of works complete to date, it is likely that the line will delay.

The 430km Loiyangalani-Suswa line, meant to carry electricity from the 300-megawatt Lake Turkana Wind Power Project, is also facing delays blamed on the land headache.

With a target completion date of October 2016, the Sh16.7 billion power line is less than half complete.
The transmission line runs from South Horr, Baragoi, Malaral, Rumuruti, Nyahururu, Gilgil and Narok main road and connects to a mega substation at Suswa to connect to the national grid.

Ketraco has also blamed the Treasury for failure to allocate enough resources for the capital-intensive works such as transmission lines, high-voltage substations and land acquisition for way-leaves.

Yesterday, the agency announced it had commissioned the Sh1.8 billion (€15.8 million) Suswa substation on Sunday, and is banking on it to “significantly reduce blackouts in Nairobi region” by bringing in steam power from Olkaria.

At an average of ¢21.6 per kWh, Kenya’s electricity is one of the priciest in the world, compared to Ethiopia’s ¢4.7 per kWh, according to World Bank data.

A third of Kenya’s total grid connections or 1.2 million customers are in the lifeline bracket and consume less than 50 units of electricity per month at a cost of Sh10.76 per kWh.