Energy Cabinet Secretary Charles Keter told the Senate that three thermal power plants with combined capacity of 190 megawatts are not needed after Kenya increased its share of cheap wind power.
But taxpayers should raise Sh9 billion to pay off the owners to disconnect the plants from the national grid or allow them to run down their contracts set to expire within five years.
Iberafrica Power Plant's 56MW contract is set to end in October next year, Tsavo Power’s (74MW) will end in September 2021, while Kipevu Diesel’s (60MW) contract runs up to July 2023.
The 310MW Turkana Wind Farm, which was switched on in October, is now injecting up to 240MW into the grid.
“Total cost of terminating the three thermal stations is Sh9 billion. Power system and energy balance analysis results demonstrated that technically they can safely be decommissioned without negative impacts to the quality and security of supply of electricity,” said Mr Keter.
Kenya runs 23 diesel power plants that account for 25 per cent or 700MW of the total installed capacity of 2,800MW.
The use of thermal power has been blamed for Kenya’s expensive electricity relative to countries like Egypt.
Solar and wind power cost about Sh8 per kilowatt hour while thermal goes for above Sh20.
The fuel cost charge on power bills, which is linked to the amount of thermal power in the grid, has remained unchanged at Sh2.50 per kWh since August despite the injection of the cheaper wind electricity.
Consumers expected lower electricity charges with supply of wind power from Lake Turkana.
A task force set up to review independent power producers and power purchase agreements (PPAs) noted that ending the contracts would help bring down electricity tariffs.
Most of the PPAs are foreign-funded and their tariffs are denominated in the dollar, pushing up the cost of electricity.
Mr Keter said that if the Sh9bn is not immediately available, it is advisable to retire the power plants in the medium term.
Switching off thermal plants is part of the government’s gradual phase out plan of expensive diesel power generators as it moves to provide cheaper and cleaner energy.