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Companies opt to reduce reliance on Kenya Power with own plants

BUSINESS
By Macharia Kamau | May 9th 2022 | 2 min read
By Macharia Kamau | May 9th 2022
BUSINESS
Wind power turbines in Ngong hills, Kajiado county. [Elvis Ogina, Standard]

The number of companies that have set up their own power plants as they seek to reduce electricity bills increased last year, which could mean more challenges for Kenya Power and electricity producers.

The Kenya Economic Survey 2022 reported a 61 per cent growth in the power production capacity by small plants set up by various companies for their own use.

The surge was due to plants by sugar millers that are using sugarcane waste to generate power. The privately-run plants had a combined capacity to produce 216 megawatts (MW) as at December 2021, up from 133.9MW in 2020.

“Total licensed captive power capacity rose by 61.2 per cent to 215.9MW in 2021. Out of the 215.9MW, 172.2MW were active while the rest were inactive in 2021,” said the Economic Survey published Thursday by Kenya National Bureau of Statistics.

The Energy and Petroleum Regulatory Authority (Epra) requires firms or individuals setting up plants with capacity of more than 1MW to be licensed as electricity producers.

While they may appear small in isolation – with many of them having capacity to produce just a few megawatts – at 216MW, the combined capacity is bigger than that of most commercially-run power plants.

The largest power plant operated by KenGen, which is the biggest power producer, has a capacity to produce 280MW and is made up of two units of 140MW each. The increasing number of plants run by companies – referred to as captive power plants – could be a concern for the country’s power sector as it could mean slowed growth in the consumption of grid electricity.

The captive plants are mostly set up by the big power consumers, who account for about half of Kenya Power’s revenues. Kenya Power has in the recent past been considering diversifying its revenue streams to include installing and operating captive solar power plants at clients’ premises.

The huge jump, the Economic Survey said, was largely on account of increased power production through bagasse, which is waste from sugarcane generated during sugar production process.

Sugar millers have increasingly been setting up own power plants that are fired by bagasse. There was also an increase in solar power capacity to 13.44MW in 2021 from 3.96MW in 2020, as well as that of thermal plants to 30.48MW from 18.50MW in 2020. “The captive power capacity from bagasse more than tripled from 15.7MW in 2020 to 60.2MW in 2021. Captive power capacity from geothermal, coal, co-generation and biomass remained unchanged during the same period,” said the survey.

Firms have been putting up plants partly in a bid to cut reliance on grid electricity as well as meet green goals through clean sources.

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