High power bills reduce Kenya’s competitiveness in trade

Kenya Power is facing challenges brought about by a combination of heavy storms, illegal connections a spate of vandalism and slow pace of investment by the Government in renewable energy sources.

While the first is an act of nature the second and third are recurring nightmares calling for   longer-term solutions, including but not limited to stiffer penalties for thieves, more cooperation from the public and adopting new technology transformers.

Increased outages

Daily outages have increased lately with some areas suffering more than others. Also hit hard are manufacturers who either have to run on expensive power generators for most of the day or stay idle every time the electricity goes on the blink.

But it is the increase in the cost of power that is worrying. As a listed company, no doubt Kenya Power has a duty to ensure the costs of its operations do not eat up its revenues and to report a healthy profit at the end of every financial year.

However, it is also important that power supply is not just reliable, but also maintained at a cost that does not inhibit Kenya’s business growth.  The latter is particularly important as it has a direct impact  on Kenya’s ranking as an attractive hub for investors and the overall cost of goods and services.

Because power produced by burning diesel still accounts for a significant percentage of the electricity supplied by Kenya Power, the instability of international oil prices has had a negative effect on the cost of electricity supplied to consumers.

Hydropower sources are not reliable due to changes in dam water levels brought about by weather, hence the need to retain the overly expensive independent power producers.

Meanwhile non-fuel and non-hydropower sources aren’t coming on stream fast enough to take up the slack.

New energy sources

So Kenya Power is forced to rely on electricity secured through expensive power purchase agreements made between KenGen and third parties to meet the shortfall in the national grid.

The new Government must therefore find a way to reduce the current share of hydropower and thermal electricity against renewable energy from the current 57 per cent to at least 50.

This would have an immediate impact on the economy. While the initial cost of investment in renewable energy can be high, it can be recouped rapidly over a period, and the benefits would be seen in cheaper electricity and a drop in the total cost of goods and services.

There has been much talk in the recent past about a possible investment in nuclear energy, but this is more of a wish list than a reality as it carries with it serious risks not just limited to the danger of leakages.

So far solar, wind biomass and geothermal power are the best bets but have not received the kind of attention they deserve maybe because their potential to be rich sources of kickbacks to corrupt Government officials are not as high.

The wind project near Lake Turkana is a good start and is projected to add 300MW to the national grid when complete.