ERC to give small hydro power firms special tariff

By Fredrick Obura

The Energy Regulation Commission (ERC) is coming up with a tariff structure expected to guide the way hydro power projects intending to use existing Kenya Power lines to transfer excess power to other users will operate.

Technically referred to as power wheeling, which involves independent generators using existing power lines owned by Kenya Power, the system has not been operational due to lack of a tariff structure.

“There is no doubt that the idea will be adopted but of major concern is to come up with a system that will ensure the owner of the current infrastructure is compensated as measures are put in place to safeguard the stability of the existing grid,” ERC director of electricity Joe Ng’ang’a, said.

Power purchase agreement  

The Kenya Tea Development Agency, through its subsidiary KTDA Power Company is assisting factories in Nyeri County to build a 5MW capacity small hydro-electric power plant for use in four tea factories, with the surplus expected to be fed into the national grid.

The construction work for the $14.5 million (Sh1.2 billion) plant on Gura River is set to begin this month, the Project Manager Lucas Maina said.

“The project will generate five megawatts of electricity for supply to Gathuthi, Gitugi, Iria-ini and Chinga tea factories and we expect it to be complete in 2015,” he said, adding that the initiative is expected to reduce reliance on wood fuel thus contributing to climate change management.

“However, this amount of power is more than the factories can consumeand the excess will be sold to Kenya Power through its existing distribution lines. But this is still a challenge since the energy regulator has not yet set the tariff,” Mr Maina said, adding that KTDA had already negotiated a Power Purchase Agreement (PPA) with Kenya Power.

The KTDA initiated the building of small hydro power plants programme for the tea industry to cut the cost of energy and reduce environmental degradation by use of alternative power sources with funding from Greening the Tea Industry in East Africa, (GTIEA) a project sponsored by United Nations Development Programme (UNEP).

Power wheeling

Mr Maina said initially they had plans to build their own transmission lines between the four factories but a study carried out by a French firm Innovation Energie Development and sponsored by GTIEA, recommended that it was more cost effective to use existing lines. The study findings - which used Gura and Kipchoria (in Nandi hills) projects as case studies - noted that small hydro producers need not incur unnecessary costs building their own distribution lines which would also be unfriendly to the environment.

According to Mr Ng’ang’a, the delays in setting the tariff were caused by the ongoing review of relevant Acts of parliament to align them with the new constitution, but he noted that the final product would take care of the interests of all players.

“We have held consultations with all the stakeholders and there is good progress especially in regard to setting of the rates to be used in power wheeling,” he said, adding that some of the factors to be considered would be the voltage and the length of the line being used among others.

 

Glance

“The major concern is to come up with a system that will ensure the owner of the current infrastructure is compensated.”

Joe Ng’ang’a, ERC director of electricity