State to shun IPPs in new power plan
The Energy ministry will turn to buy cheaper power from Kenya Electricity Generating Company (KenGen) and Ethiopia Electric Power (EEP) after only three Independent Power Producers (IPPs) accepted tariff reduction in the intense negotiation that has now lasted for months.
The two State-owned power producers offer relatively cheaper power compared to costly thermal electricity sold to Kenya Power by the IPPs. EPP is expected to cost between Sh6 and Sh7 a kilowatt hour which is way lower than Sh195 per KW/hr rate supplied by some of the IPPs.
Kenya Power buys the bulk of its power, more than 70 per cent, from KenGen at a rate of Sh5.4 per Kilowatt-hours. The edging out of the IPPs will enable the State utility to cut electricity tariffs without being exposed to financial crunches.
“I am pleased to report that we are also in discussions with Kengen…..Kengen have stepped up to the challenge of seeing whether they can bring even more efficiency into their operations, with resultant consumer tariff reductions,” Energy Cabinet Secretary Monica Juma (pictured) said during a media briefing.
Kenya-Ethiopia 27-year Power Purchase Agreement (PPA) is expected to commence in November with the first phase injecting 200 MW capacity out of the cumulative 600 MW the government intends to import.
“KPLC and EEP counterparts inked a most significant PPAs deal – the provision of 200MW of renewable energy to our grid, at a very competitive rate, commencing in November of 2022,” she added.
However, Juma there is still of other IPPs comming on board, saying that negotiations are ongoing on power cost reduction pressures. She said three of the IPPs have signed up to lower tariffs while four have agreed to reduce power prices ahead of negotiations.
“Three IPPS operating the variable renewable energy realm have signed up to lower tariffs as we had expected, four of these larger IPPS that operate across various technologies have already proposed short and medium term tariff reduction plans,” said Juma.