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Economy

Turkana Wind plant saves power users Sh8bn fuel charges

Rizwan Fazal
Lake Turkana Wind Power director Rizwan Fazal. PHOTO | SALATON NJAU 

The injection of Lake Turkana Wind Power’s energy into the national grid has saved electricity consumers Sh8.5 billion fuel cost charges in ten months, the project developer has said.

At a media briefing Thursday, Lake Turkana Wind Power (LTWP) executive director Rizwan Fazal said additional cheaper electricity from the wind farm helped to significantly reduce Kenya’s reliance on diesel-powered generators during the biting drought from late last year through to April this year.

President Uhuru Kenyatta is Friday expected to officially commission the wind power plant in Marsabit County and the high-voltage line connecting it to the national grid, just two months shy of one year since they were switched on.

Fuel levy

“So far (from October 2018), we have saved the country about Sh8.5 billion in additional fuel cost. So what would have been the actual fuel cost if Lake Turkana wind was not there? That question has to be answered in October because that’s when we started producing extra power at a lower tariff,” Mr Fazal said.

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Fuel levy — which is influenced by the share of electricity from diesel generators — is a major driver of power bills as it is loaded onto customers’ electricity bills in addition to 16 percent valued added tax (VAT), forex levy and inflation charge.

Wind accounted for 781.14 million units or 13.75 percent of 5.68 billion units of electricity generated between October 2018 and March 2019, latest data by the Kenya National Bureau of Statistics shows, a steep rise from 32.92 million units, or 0.63 percent of capacity a year earlier. Thermal power generation has in that period dropped 54.51 percent to 570.55 million units.

The wind farm, which has a maximum capacity of 310.25 megawatts, was connected to the grid on September 24 last year after a 15-month delay.

This was after construction of the 438 kilometre, 400 kilovolts transmission line from the plant site in Marsabit to Suswa sub-station faced a series of setbacks, including securing financing for the project and land compensation.

The construction finally kicked off in November 2015, but the project’s main contractor, Spain’s Grupo Isolux Corsan, went under due to financial difficulties forcing Kenya to turn to a Chinese contractor, Power China Guizhou Engineering, to finish the job in August 2018.

Different sources

Taxpayers incurred a total of Sh43.84 billion to connect the wind power from Loyangalani to Suswa sub-station in Narok, the country’s main interchange for power coming from different sources.

This comprised Sh28 billion in project costs and Sh15.84 billion in cumulative penalties for the 15-month delay in evacuating power to the national grid, fines which will be cleared in installments until 2024.

"In future, we will be engaging the communities first before we begin the project to avoid such delays," said Fernandes Barasa, the chief executive of Kenya Electricity Transmission Company (Ketraco). He said compensation to some 2,600 land owners along the expansive route had cost Sh3 billion.

LTWP, which is on average operating at 63-64 percent of its maximum 310.25 megawatts capacity, has a 20-year Power Purchase Agreement (PPA) with Kenya Power effective 2017 at a cost of $8.5 cents (Sh8.66) per unit.

The cost will, however, be halved after purchases by Kenya Power cross 1.68 billion units (measured in kilowatt-hours) mark under the deal, a threshold Mr Fazal projected will be hit at the end of October.

"What it means is there will be more power available at a lower tariff to KPLC. So instead of power bills going up from November as they have traditionally due to drought, they could stay the same," he said.

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