Kenya Power Sector Report - Q2 2019

Kenya has a low carbon and diverse energy mix, with geothermal and hydro power the main sources of electricity supply. The biggest producer is the parastatal Kenya Electricity Generating Company, which accounts for about 74% of the energy consumed, with independent power producers largely contributing the remainder.
Peak demand in 2017/18 was 1,802MW, while installed capacity was 2,351MW.
Electricity consumption has been rising at a compound annual rate of 6.2% since 2012 as more and more households and businesses are connected to the grid. Under its vision for Kenya to become an industrialised and middle income country, the government is aiming for universal electricity access by 2022. Today, some 73% of households have access to electricity through grid and off-grid solutions, compared with just 29% five years ago.
A number of energy-intensive infrastructure projects are also in the pipeline, which is complicating electricity demand forecasting in Kenya due to uncertainty over their completion.
For generation planning purposes, a hybrid forecast of various growth scenarios is being used, under which peak load is expected to increase to 3,348 MW in 2022.
In December 2018, Kenya published a 100-page document entitled The Electricity Sector Investment Prospectus, which details $14.8bn of investment opportunities in the country’s power sector up to 2022. Some of the transmission projects in particular are urgently needed.
The investments opportunities include:
• $5.2bn in geothermal power generation;
• $2.9bn in non-geothermal power generation;
• $2.9bn in transmission projects;
• $2.9bn in distribution projects;
• $0.9bn in off-grid electrification projects.
Given past problems in securing public funds for projects, a variety of financial structures are being used, which provides considerable scope for private sector involvement in the Kenyan power sector.
The government has been amending some of the legislation concerning the power sector of late: a new Energy Act was ratified at the end of March, and a Renewable Energy Auctions policy has been proposed – but not yet approved – to complement the Feed-in-Tariff programme, which is now in limbo as a result.

Kenya has a liberalised power sector, with unbundled generation, private producers, cost reflective tariffs, a single buyer and a sector regulator.
The main players are:
• The Ministry of Energy, which sets energy policy.
• The Energy & Petroleum Regulatory Authority (EPRA) was established in March 2019 as the successor to the Energy Regulatory Commission (ERC). It is the sector regulator, with responsibility for setting tariffs and oversight. The Energy & Petroleum Tribunal arbitrate disputes in the sector.
• Kenya Electricity Generating Company (KenGen), the country’s largest generation company, with 68% of installed capacity. It is 70% owned by the government, with the remaining shares listed on the Nairobi Stock Exchange.
• Kenya Power & Lighting Company (KPLC or Kenya Power), the single off-taker, which buys power from all the generators under Power Purchase Agreements (PPAs). It is listed on the Nairobi Stock Exchange and 50.1% state owned. It also owns and operates most of the existing transmission and distribution system in Kenya.
• Kenya Electricity Transmission Company (KETRACO), the entity responsible for planning, building, owning and operating new high voltage electricity transmission assets. It is also responsible for facilitating regional interconnections and is 100% state owned.
• Geothermal Development Company (GDC), a 100% state owned special purpose vehicle focused on geothermal activities.
• Rural Electrification & Renewable Energy Corporation (REREC), this body was created by the Energy Act 2019 to replace the Rural Electrification Authority (REA). The REREC has an expanded mandate with responsibility for Kenya’s rural electrification projects and the renewable energy programme.
• The Nuclear Power & Energy Agency, formerly the Kenya Nuclear Electricity Board (KNEB), is developing a legal and regulatory framework for a nuclear energy programme.
Kenya also has 15 Independent Power Producers (IPPs), which combined account for 29.8% of installed capacity. The largest IPPs are Orpower 4 and Iberafrica Power. There are also a number of private mini-grid developers, such as Powerhive, Powergen, and RVE-Sol, which generate and distribute power in off-grid areas. A growing number of Solar Home Systems companies including M-KOPA, Mobisol, BBOXX and Azuri are also operating in areas without grid access, rolling out Pay-As-You-Go services.

Source: Kenya Electricity Sector Investment Prospectus 2018 – 2022

Peak demand registered on Kenya’s national grid in the financial year 2017/18 was 1,802MW, an increase of 8.8% from the 1,656MW peak recorded in 2016/17.
Total installed generation capacity as of June 2018 was 2,351MW.
The total energy purchased in 2017/18 was 10,702 GWh, up 4.9% on the previous year.
Geothermal sources contributed 47% of the electricity produced, followed by hydro power (30.1%) and thermal plants (20.6%).
Between 2012 and 2018, peak usage grew at a compound annual rate of 6.2%. The increase in demand is largely the result of new customers being connected to the grid as part of the ongoing drive to ensure universal access to electricity by 2022.
As of June 2018, KPLC had 6.8 million customers. Its customer base grew 9.4% during the 2017/18 financial year. Some 73% of households have access to grid or off-grid electricity, compared with 29% five years ago.

Table 1: Regional Maximum Demand (MW)

Table 2: Number of Customer by Region

Table 3: KPLC Sales by Customer Category in GWh