Captive power generation surge as more firms shift
Major firms in Kenya are increasingly adopting captive solar power solutions as they transition towards sustainable energy practices making move a new normal.
Captive power generation offers organizations the ability to produce their own electricity on-site, particularly beneficial for power-intensive industries such as aluminium smelters and chemical plants that require a reliable energy supply.
The emerging trend is fuelled by a combination of factors including cost efficiency, energy independence, environmental stewardship, and supportive government policies, says a new report.
According to the latest bi-annual energy and petroleum statistics report for the financial year 2023/24 by the Energy and Petroleum Regulatory Authority (EPRA), a significant surge in captive power capacity in Kenya with over 400MW already installed. This represents a notable shift towards renewable energy sources across industries.
EPRA Director General Daniel Kiptoo said the growing popularity of captive power generation among commercial and industrial users, which now accounts for 12.18 per cent of the country’s total installed capacit.
“Captive power generation continued to gain popularity among commercial and industrial consumers, with additions in captive solar PV generation reaching an installed capacity of 196.2 MW. This pushed the captive capacity to 449.5 MW, constituting 12.18 per cent of the country’s total installed capacity,” Kiptoo said.
Combined capacity
During the review period, EPRA approved 11 captive power projects led by seven different entities, with a combined capacity of 6.502 MW.
An example of captive power generation in Kenya, the Coastal Bottlers in Mombasa, Kenya are now using solar energy to power their PET production line.
Companies like Ecoligo Limited and Equator Energy Kenya Limited are also spearheading multiple solar PV projects in various locations including industrial sites and tea estates.
One of the key attractions of captive solar power is its cost-effectiveness. The cost of a 250-kW solar captive project ranges between US$0.10 – 0.14/kWh, significantly lower than the rates charged by commercial grid power, which can exceed $0.25/kWh.
Furthermore, captive solar power provides businesses with energy independence, reducing their reliance on the grid and shielding them from energy price fluctuations. This is particularly crucial given recent instances of sharp increases in electricity prices experienced by consumers in Kenya.
For example, in September 2021, Kenyans experienced the highest power cost in five years at Sh26.57 per unit, and in March 2023, electricity prices surged by up to 63 per cent.
In addition, many businesses are turning to renewable energy sources like solar power to reduce their carbon footprint and achieve their sustainability goals. The Kenyan government has been supportive of these initiatives, creating a conducive environment for businesses to adopt solar energy including tax reliefs, feed-in tariffs, and competitive power rates.
According to the Kenya Renewable Energy Association (KREA), off-grid solar power is growing to be greater than the total grid peak demand, as captive power, electric mobility, solar water pumping and refrigeration increase exponentially.
According to him, off grid total installed load is estimated at 400-500 MW and this will get to over 3,000 MW by 2028.
