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It's Kenya Power’s loss as more firms opt for solar

FINANCIAL STANDARD
By Macharia Kamau | Mar 8th 2022 | 4 min read
By Macharia Kamau | March 8th 2022
FINANCIAL STANDARD

Of the dozens of solar power generation licences it has issued, only a handful of the plants directly supply to the grid. [Elvis Ogina, Standard]

Last week, two tea factories expressed interest in setting up solar power plants within their facilities in a race to reduce their power bills.

The firms, which have contracted RentCo to build and operate the ground-mounted solar photovoltaic plants, said in a public notice that the power generated would serve their factories and estates.

Keritor and Kipkebe tea factories in Nyamira County are the latest addition to a growing list of companies that have over recent years built power plants within their premises.

The companies have cited, among other reasons, the need to cut costs and meet internal green goals, for putting up the small scale plants that are powered mostly by renewable energy sources.

A report published February this year by the Energy and Petroleum Regulatory Authority (Epra) shows the extent to which companies are putting up power plants within their premises. The Epra report shows that while there are 90 power generating licences issued to different companies, only 40 are currently actively supplying the national electricity grid.

The balance includes a few Independent Power Producers (IPPs) whose plants are still in the development phase, but the majority of these licences are held by companies that have built small power plants that they use to complement power from the grid.

There are also licences held by companies, such as RentCo, which build and operate small plants at a client’s premises and the client pays for the power they consume. Many of these plants have a power production capacity of less than one megawatt. In many instances, the companies cannot exhaust the electricity that their plants generate, and many usually have provisions for selling to Kenya Power.

Epra noted that there is increased interest among investors to put up solar plants on a commercial scale for feeding the grid, as well as on a small scale for companies looking to cut power costs.

“Kenya’s geographical location astride the equator gives it a unique opportunity for a vibrant solar energy market. The country receives good solar insolation all year round with moderately high temperatures. The percentage of solar energy harnessed for commercial and domestic applications is insignificant relative to the potential,” said Epra in the report.

Of the dozens of solar power generation licences it has issued, only a handful of the plants directly supply to the grid.

At the moment, some of the few commercial-scale plants include the Garissa power plant (54.5MW) owned by the Rural Electrification and Renewable Energy Corporation (Rerec), Malindi, Selenkei and Cedate Solar plants with an installed capacity of 40 megawatts (MW) each.

Epra has recently gazetted new guidelines that it expects to help in increasing the use of renewable energy in the country.

The guidelines have set the benchmark tariffs that would guide energy auctions envisioned in the Renewable Energy Auctions Policy. Using auctions could play part in lowering costs as bidders would fight it out in an auction with the company offering power at the lowest tariff getting the job of building the power plants.

Epra says it has published new guidelines targeting expansion of access to clean energy, scaling of clean energy infrastructure and reduction of energy costs.

A lot of consumers are shifting to solar power. [File, Standard]

“Promoting the use of renewable energy will ensure products and services offered to Kenyans meet the approved standards. The regulations will improve the uptake of solar products and stem runaway energy costs,” says Director-General Daniel Kiptoo.

“We also understand the need to increase further and faster to bring about an energy transition that not only ensures energy access for all but also achieves our climate targets and improves energy security.”

Globally, the cost of renewable energy technologies has been declining over the years, leaving Kenya no choice but to reduce the cost of investment in these technologies. Kenya Power, the biggest loser of the growing shift to renewable energy, has in the recent past started looking at how to cash in on the growing popularity of solar power products.

The company last year started searching for a firm to partner with, whereby it hopes to convert its existing grid power users into new customers for the solar products, while its partner would design, finance, build and operate the solar plants at customers’ premises.

To tap into the growing demand for solar products, power producer KenGen is set to start producing solar panels.

KenGen, which has in the recent past started diversifying revenue streams to stop solely relying on power generation, plans to construct a solar power production plant at its Tana Power Station in Murang’a County.

Other than currently hosting a 20MW power plant, the Tana station also has a research and development centre.

The firm is also eyeing other solar-related projects and said it is in the process of developing solar power plants at its Seven Forks hydropower plants in Embu. The plants, with a capacity to generate 42.5MW, will be floating on the hydropower dams.

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