Daily Nation ­ Tuesday
Date: 28.02.2017
Page 41,42
Article size: 609 cm2
ColumnCM: 135.33
AVE: 292319.99
Fears of costly
excess supply hit
power projects
CONTINUED FROM PAGE 41
period, which is double that of the consult­
consumer bills. Several mega power projects
have been cancelled or shelved amid fears they
would leave Kenya with excess power, a situ­
ation that could see consumers pay billions
of shillings for electricity not used.
Energy experts reckon that the officials bit
more than the economy could chew when
they unveiled an ambitious plan to construct
new power plants based on an 'exaggerated'
demand growth.
Kenya had hoped to slash electricity costs
by increasing supply from cheaper energy
sources such as geothermal, wind, coal and
natural gas power plant ­ which was dropped
last year on lack of adequate demand.
"Of course they knew their estimations
were highly exaggerated when they drafted
the least cost power development plan
(LCPDP) in 2011," said Mr David Mwangi, an
energy consultant.
He said economic activity, especially in the
manufacturing sector, has been slow over the
six­year period. This has failed to fire up de­
mand for power while the option of exports to
neighbouring economies has been impeded
by the lack of or existence of low­capacity
Such growth would require the country to
have a total power capacity of 6,495 mega­
watts or nearly three times more than the cur­
rent capacity, leaving a reserve margin of 36
per cent to serve as contingency energy.
The ministry expects geothermal power to
grow threefold to 1,728 megawatts in the next
three years, hydropower (1,039 megawatts),
wind (735 megawatts) and 969 megawatts
from diesel generators. Imports, largely hy­
dropower from Ethiopia, would comprise
1,000 megawatts while coal will take up 620
megawatts according to the plan.
The cheaper power sources will serve as
base load to meet the country's minimum de­
mand at any given time, pushing out expen­
sive thermal sources in the reserve margin.
Any economy is required to have surplus
power capacity up to a given level, beyond
which it translates to higher power bills as
consumers are often charged for idle power
plants.
The reserve energy capacity serves to plug
supply shortfalls whenever several plants are
taken off the national grid during mainte­
transmission lines.
nance or unforeseen breakdowns.
It is perhaps for this reason that the Energy
ministry recently commissioned a study by a
German consultancy Lahmeyer International
to assess the economy's power needs in com­
ing years.
The government's power demand growth
projection has sparked a fierce debate on
where this huge demand will come from in
the three years to 2020.
The consultant, which audited manufactur­
ers and other large power users, submitted
the report last October to serve as the power
sector roadmap.
The study casts the spotlight on just how
far­off­the mark the government was when it
came up with the economy's growth projec­
tions for electricity demand.
The consultant reckons that Kenya's maxi­
mum power demand will grow 72 per cent to
2,259 megawatts by 2020 from the current
1,620 megawatts, when projects such as the
standard gauge railway start operating fully.
Government estimates, on the other hand,
indicate that the peak demand will jump
threefold to 4,755 megawatts in the three­year
ant.
Lack substance
To put it into context, Kenya has only man­
aged to consume a maximum of 1,620 mega­
watts at any given time .
The narrative that the economy will now
transform rapidly to demand three times
more power in the next three years is seen to
lack substance.
"It does not take much effort to notice the
gap between what is on paper and the eco­
nomic reality," Hindpal Jabbal, a former chair­
man of the Energy Regulatory Commission
(ERC) said, citing sluggish pace of activity.
Kenya's manufacturing scene, the biggest
user of electricity, has recently experienced
mixed fortunes with some firms, like tyre
maker Sameer, battery maker Eveready and
Cadbury, exiting factory operations.
On the flipside, French multinational
Peugeot and German Volkswagen have since
opened assembly plants in Kenya, raising
electricity demand.
Kenya's manufacturing sector has stagnated
at an average of 10 per cent over the past 10
years, despite government's efforts to revamp
it like reducing power costs.
Several factories that shut operations had
cited high cost of doing business.
Demand from domestic consumers is still
low despite connections to power having
grown fivefold in the past seven years to 5.8
million customers currently.
Electricity retailer Kenya Power has also
more recently been keen on expanding street
lighting programme across the country.
Energy Principal Secretary Joseph Njoroge
says that investors in Kenya are enjoying the
lowest power costs in East Africa.
The ministry records indicate that the av­
erage tariff for industrialists is SI114.22 (13.8
US cents) per kilowatt hour (kWh), having
dropped from Shi8.8o per unit in 2014.
"At 13.8 US cents per kWh, Kenya's indus­
trial end user tariff is lower compared to other
countries in the region more so Rwanda (15.5
US<t/kWh), Tanzania d7.6US<t/kWh), Uganda
(20.7 US(|VkWh), Nigeria (15.6 US(f/kWh) and
Ghana (15.5 US(t/kWh)," said Mr Njoroge.
"It is, however, higher than that of Egypt
(3.8US<t/kWh), Zambia (6.0 USdVkWh), Ethi­
opia (6.7 US<t/kWh) and South Africa (8.47
US<f/kWh)," he added.
In 2013, the Jubilee Government announced
an ambitious plan to produce additional 5,000
megawatts of electricity in a period of 40
months ending this year.
This saw economists warn that the econ­
omy would end up with a more­than required
surplus and saddle consumers with a Sh6i bil­
lion idle capacity charges burden every year.
They reckoned that Kenya lacks the capacity
to absorb such massive amounts of electricity
given the sluggish rate of economic growth,
delays in rolling out Vision 2030 projects and
a poorly performing manufacturing sector.
"The power plants will remain totally redun­
dant for several years, attracting almost $600
million (Sh6i billion) per annum in idle capac­
ity charges," Mr Jabbal said in a 2014 report
titled Review of Kenya's Power Sector (1998­
2013) and Its Future (2013­2023).
Energy ministry officials last year seemed
to heed to this advice and dropped plans to
construct a 700­megawatt (MW) natural gas
power plant near Mombasa to avoid excess
supply.
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