The government will not renew licences of Independent Power Producers (IPPs) but instead invest more in renewable energy, Energy CS Charles Keter said on Wednesday.
He said the government is keen on locking out expensive thermal power generators to bring down the cost of power.
First to go will be Iberafrica Power Plant whose 56MW contract expires next month, with about 27 IPPs to follow in the long-run.
Others facing a shut down in the near future are Tsavo Power’s (74MW) whose licence expires in September 2021 and 60MW-Kipevu Diesel whose contract ends in July 2023.
However, some IPPs with contracts of up to 20 years could continue running until 2032, unless the government decides to pay them off.
“We know when these deals were made, I think there are some that will run to their period of 25 years but three IPPs one ending this year, another next year, these will not be renewed,” Keter said in Nairobi,during the re-branding of the Energy and Petroleum Regulatory Authority(EPRA).
According to Keter, the first to be decommissioned will be replaced by the 165MW Olkaria V geothermal project set to be commissioned as early as next month.
The 100MW Kipeto wind project is also expected to inject additional power.
“The one that is going is about 50MW, we are putting in 165MW, three times that, which is going to compensate. Next year we are having another 83MW of geothermal coming in ,we also have Kipeto, solar plants and others,” Keter said.
He said as the government brings in cheaper power plants and inject more renewable energy into the national grid, it will decommission the expensive ones.
The proportion of electricity from renewable sources stood at 86 per cent compared to 75.5 per cent in 2017, the Economic Survey 2019 shows.
This was on account of a significant growth (43.6 per cent) in hydroelectricity generation that was supported by heavy rains experienced in 2018.
“The substantial growth in hydro, wind and solar energy led to a considerable decline in generation from thermal sources (39.0 per cent) and electricity imports (43.3 per cent) during the review period,” the survey notes.
Kenya Power sources part of its electricity from IPP'S that mainly rely on diesel powered thermal turbines. Last year, Kenya Power spent Sh14.8 billion on only six IPPs.
Some of the biggest independent beneficiaries include Tsavo Power, Iberafrica Power, Gulf Power,Thika Power, Triumph, Rabai Power and Aggreko, all which will be phased out.
EPRA director general Pavel Oimeke said the regulator is committed to providing Kenyans a pool of energy sources to choose from.
“We want to promote the freedom of choice for energy consumers as well as innovations that will unleash our energy abundance,” Oimeke said.
Thermal is most expensive at upwards of Sh20 per kilowatt hour compared to solar which is at a low of Sh3 per unit. Geothermal has a wholesale price of Sh8 per Kwh.
Despite the growth in production of cheaper power, including the 310 MW Lake Turkana Wind Power farm commissioned in June, consumers continue to pay higher bills as Kenya Power chock under restrictive power purchase agreements with the IPPS.
