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State halts power generation deals, cites low demand

Zachary Ochuodho @zachuodho

The government has no plan to license new power producers until demand for the commodity increases.It said there would be no need to approve any more plants when the effect would reflect on tariffs while there is no demand.

The decision to put on hold new power generation proposals comes after it emerged that nearly 4,000 investors are preparing to sign deals with Energy and Petroleum Regulatory Authority to generate more power for the national transmission grid.

Grid connected

Kenya’s current effective installed (grid connected) electricity capacity is 2,651MW, with a peak demand standing at 1,802 MW, as at June 2018.

John Mutua, Deputy Director Regulatory Research and Policy Analysis at the energy agency, said the move is meant to cushion consumers from paying unnecessary bills for what is not utilised.

“Consumers pay for all the electricity generated, utilised or not, as long as the plant has been installed as part of the power purchase agreements with Kenya Power,” he said.

Mutua said what the government wants is to forestall a situation where supply is growing faster than demand for energy – making Kenyans to pay for electricity bills which are not used.

He said as long as the demand for “more power” by consumers was low, allowing more investors in the energy sector will only be burdensome and uneconomical to consumers.

Acting General Manager for Customer Service at Kenya Power, Rosemary Oduor said there is a need to go slow on some projects so that consumers are not made to pay for what they do not use.

“It’s good for the economy and both of us,” she said. Oduor at the same time said since it has not been raining in the highlands, hydroelectric power generating dams have not received enough water to enable the power distributor to reduce the cost of electricity.

Energy production

Benson Mwakina, Director for Renewable Energy, Ministry of Energy said following the Energy Act 2019, Kenya is preparing to start an energy production auction system for investors interested in investing in future power generation.

“We are in the final process of setting up the mechanisms for establishing an energy auction system that will allow potential investors to bid for the development of various power projects across,” he said.

The auction system will replace the current system where investors come up with the power project, signs a power purchase agreement with Kenya Power and then implement the project.

President Uhuru Kenyatta signed Energy Act 2019 containing the new provision in March. The law is expected to completely change the landscape of the country’s energy sector.


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