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Firms struggle to comply with energy regulations

BUSINESS
By Macharia Kamau | June 4th 2021

A Kenya Power technician carries out maintenance on a power line in Nyeri town.  [Mose Sammy, Standard]

Local companies are struggling to implement measures to reduce their energy bills, with more than half failing to comply with energy management regulations.

A new report by the Energy and Petroleum Regulatory Authority (Epra) noted that embedding energy management within their structures as well as undertaking regular audits can save Kenyan firms an estimated Sh45 billion annually.

Partial compliance with the Energy Management Regulations, which stands at 43 per cent, however resulted in firms saving only Sh19 billion annually over the last nine years.

“Only 43 per cent of the total population of the designated facilities have conducted energy audits,” said Epra in a report that looks into compliance with the regulations enacted in 2012.

The industry regulator has recently published draft Energy Management Regulations, 2021 that are expected to align the earlier regulations with the Energy Act, 2019.

Epra said the challenges companies faced included scarce resources as well as capacity in implementing measures that could cut their power bills substantially.

“The challenges of low compliance, as cited in the study, included lack of funds to carry out the energy audits, competing budget interests with other activities of facilities and marginal understanding of energy management systems,” said Epra in the Regulatory Impact Statement.

“There is, therefore, need to come up with interventions to increase the number of facilities that meet 50 per cent or more of the projected savings.”  

Provisions

The assessment looked at the compliance levels to the 2012 regulations with expectations of informing the 2021 draft.

“The draft regulations have incorporated provisions that will help improve compliance levels, through access to financial and technological support from energy service companies (Escos),” Epra said.

The Escos, which will be privately-run entities, according to the proposed regulations, will design, finance, develop and manage energy conservation projects on behalf of industries, who will then pay based on the amount of energy saved.

“The Sh44.7 billion likely to be saved annually in the full compliance scenario will help ease the cost of production on the factories,” the report said.

With the saving, two positive effects will be expected; first being that the facilities will have more money to expand their production lines or output.

“(Another benefit) is that savings from energy efficiency will help reduce the price of goods and services,” said the report.

“Such a reduction will help Kenyans either consume more of the product or service, or divest their money to other sectors, thus improving the economy. Increased consumption leads to increased economic activity.”

The draft regulations, currently being taken through public participation, aim at encouraging industries to increase energy efficiency through measures such as installation of solar panels.

They require Epra to set power consumption benchmarks that companies have to adhere to depending on the sectors they operate in and their size.

The move could see manufacturers and other big power consumers forced to invest in more energy-efficient systems such as solar to cut the electricity consumed from the grid.

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