Fred Aminga @faminga
New power from solar and wind should inform the decommissioning of expensive thermal plants to bring down the cost of electricity, stakeholders say.
Increased consumption of these renewable energy sources, they say, should also work to the country’s advantage, easing the cost of electricity, which has been cited as a driver of the high cost of living.
However, it emerged that despite savings from cheaper renewable sources, the cost of energy will take much more time to dip significantly for the taxpayers to feel the impact.
Speaking during the launch of Africa’s largest wind farm in Loiyangalani, Marsabit county, Lake Turkana Wind Power (LTWP) project board Chairman Mugo Kibati said consumption must hit a certain threshold for better rates to apply.
Renewable energy
The wind power plant will add 310MW of cheaper renewable energy into the national grid. Besides the lower electricity tariffs currently at Sh8 per unit, it is estimated that the wind farm alone stands to save the country up to $150 million (Sh15 billion) per annum on fuel imports used to generate thermal electricity.
Taxpayers also stand to benefit with developers’ tax contribution estimated at Sh2.7 billion per year and Sh58.6 billion over the lifespan of the investment agreement.
After purchasing up to 1.68 billion units – measured in kilowatt-hours (KWh) of electricity – from LTWP, Kenya Power is expected to get a 50 per cent price discount on electricity bought from the firm for the remainder of the year.
“In any given year, once we have attained a certain amount of consumption (1,683Gwh), then for the rest of the year, we (LTWP) drop tariffs by 50 per cent,” he said. This means if Kenya Power does away with expensive alternatives and tap cheaper sources, savings made can be pushed to consumers.
This is supported by the fact that the Loiyangalani wind power plant has among the best global capacity factors for energy averaging 63 per cent compared to the world average of between 25 per cent and 33 per cent.
“Capacity factor is the average power generated, divided by the rated peak power and measures how often a power plant runs for a specific period of time. “We do more than double the world average,” said Kibati.
Kenya Power Acting Chief Executive Officer Jared Othieno said based on the wind power per month, in about three months, wind power could hit the target set to trigger a 50 per cent discount.
“This will then inform the energy mix and the regulator (Energy and Petroleum Regulatory Authority) will be able to decide on the new tariffs,” he said.
However, manufacturers say while the country has made a lot of investments in increasing installed energy capacity, the Purchase Power Agreements signed by the government are expensive. This means that consumers have to bear the high fixed costs paid to investors.
Kenya Association of Manufacturers Chief Executive Officer Phyllis Wakiaga said there are also many taxes and levies imposed on the electricity bills such as Rural Electrification, WARMA and EPRA levies, value-added tax and fuel cost adjustment which impact on the cost of electricity.
She said Kenyans are also experiencing depressed demand growth, despite the increased power generation in the country.
Wakiaga, however, said this can be reversed by increasing the competitiveness of local industries and encouraging the growth of SMEs to increase productivity and in turn, increase power demand.
In retrospect, Kenya Electricity Transmission Company Ltd (Ketraco) board said that the myriad challenges that faced the execution of the Sh28 billion project to evacuate wind power from Marsabit including re-tendering must be catalogued for future reference.
Speaking to People Daily in Loiyangalani, Ketraco Managing Director Fernandes Barasa said at some point, the 435km-Loiyangalani-Suswa transmission line linking LTWP to the national grid appeared unrealisable.
Project financier
He said despite having spent billions of taxpayers money, Spanish company Isolux Corsan whose government was project financier, ran into financial headwinds mid-way causing unprecedented panic.
While this led to taxpayers losing Sh5.7 billion in fines, an amount which would have increased had they not been re-tendered for the remaining stretch, Barasa said Ketraco managed to actualise the project.
Barasa said terminating Isolux’s contract meant foregoing Spanish government’s funding at a time LTWP was demanding hefty fines having completed construction ahead of Ketraco’s evacuation line.
Isolux moved to court – a case which they lost – as Ketraco hired Chinese firms - Power China Guizhou Engineering Company and Nari Group Corporation – and given eight months to finish the remainder of what had taken Isolux three years.
This was on account that they would pay the government a fine of Sh1.3 billion per month should they not finish the remaining part within eight months.
Isolux had erected 430 towers, out of the needed 991 towers, but the Chinese firms managed to build pylons and stringing of the 435km stretch in only four months.
“They even had to tag along drones and other state-of-the-art machinery and technique to make it happen,” said Barasa. They achieved all this despite facing trigger-happy pastoralists, vandals, floods, strong gales, and wayleave acquisition challenges.
Some people demanded inflated compensations only to line up new manyattas after being paid, forcing the government to resort to the use of the General Service Unit (GSU) at some points to enhance speed.
As the consortium completed the 400kV Loiyangalani-Suswa transmission line, two substations in Loiyangalani and Suswa were being completed by Siemens, in readiness for cleaning the energy and stepping it down for local consumption.
Barasa also says Ketraco strung fibre optic cables along the transmission line to take broadband to areas where the line traverses.
