Cost of power to come down as generation from hydro surges

KenGen Board Chairman Julius Migos Ogamba with MD and CEO Peter Njenga and Energy PS Alex Wachira during the firms’ financial performance for the year ended June 2023. [Wilberforce Okwiri, Standard]

The cost of electricity will come down this month following the intense rains that the country has experienced in recent weeks. The heavy rains have seen an increase in hydropower production and reduced reliance on costly thermal power producers.

Power prices have sustained an upward momentum since August last year when power sector agencies stopped cushioning consumers and passed on the higher costs associated with higher prices of fuel and the weak shilling. 

In April this year, electricity costs made yet another major leap following the implementation of the new tariff. The impact has been a jump of about 50 per cent in the power cost from Sh21.87 per unit in August last year to Sh33.10 in November this year for households consuming more than 100 units.

Kenya Electricity Generating Company (KenGen) yesterday said it had increased generation from hydropower plants that had in turn reduced the amount of thermal power being fed into the grid.

“We have had intense rains in the last two weeks. About a month ago, Masinga Dam was almost at the minimum level and in a few days, it actually went below the minimum level and we stopped generation at Masinga. As the rains intensified, the levels have risen significantly,” said KenGen Managing Director Peter Njenga. He was speaking after the firm’s annual general meeting (AGM) in Nairobi yesterday.

“What we have done is to manage the generation on the cascade, especially at Kiambere which is the last power plant on that cascade… we are generating at maximum levels. Because hydropower is cheaper, there will be an effect on power costs for the user. It means we are minimising generation from thermal power plants.” 

Electricity generated through KenGen’s hydro plants costs Sh2.89 per unit while power from thermal plants costs upwards of Sh20 per unit. It is significantly higher for some individual power plants.

The costs are before taxes and when pass-through costs are loaded onto it, it brings the per-unit costs to about Sh33 at the moment.

At the AGM, shareholders approved the board’s proposal to pay a dividend of 30 cents per share for the year to June 2023.

This will translate to a total payout of Sh2 billion, one of the highest the company has paid since the 2016 rights issue. 

The firm reported Sh5.2 billion in profits after tax during the year. KenGen said it plans to rehabilitate and upgrade some of its power plants, a move it said will increase its installed capacity by 154 megawatts (MW).

It currently has an installed power-generating capacity of 1,904MW.

“Looking ahead, our initiatives to increase generation capacity by more than 154MW, mostly drawn from pipeline projects in geothermal over the next two years reflect our dedication to meeting the ever-growing demand for clean energy in Kenya,” KenGen Chairman Julius Ogamba said yesterday.