The Kenyan Ministry of Energy has removed a block on new power purchase agreements (PPAs) discussions and clarified the procedures and approval systems already in place. Geothermal energy investments are anticipated to increase as a result of this latest development, The Kenya Times reported.
The Ministry has previously prohibited PPA discussions to stop rising power prices brought on by independent power companies’ charging for unused capacity (IPPs). As a result, on the advice of a task force on power sector reforms, President Uhuru Kenyatta halted all PPA talks under Kenya Power.
The Least Cost Power Development Plan will be used as the basis for future PPA discussions (LCPD). This approach is made to make the most of the nation’s renewable energy resources, increasing the incentive for investment in the renewable energy industry. Accordingly, the Ministry of Energy has provided the LCPD with guiding principles for the incorporation of innovative technologies and renewable energy sources.
The Olkaria I Unit 6 geothermal power plant was successfully commissioned by KenGen at the beginning of this year, bringing Kenya’s implemented geothermal power capacity to 944 MW.
The share of clean energy in the national grid is now 54.3 percent, with wind and solar energy accounting for 16 and 1%, respectively.
Some 30% of the energy comes from hydro sources, while 10% comes from thermal plants using diesel fuel.
In addition to Lake Turkana Wind and the US-based geothermal company OrPower 4 Inc., Kenya Power also purchased 46%, or Sh41.1 billion, of its electricity from state-controlled KenGen.
A kWh of geothermal energy costs, on average, Sh6.7 whereas a kWh of thermal energy costs, on average, Sh30.8. This contrast illustrates the predicted effects of the rising percentage of geothermal electricity on the national grid.
The government is attempting to achieve a 15% decrease in electricity rates after a comparable drop was gazetted in January while the plant is being put into operation.
The first reduction in power rates was dependent on Kenya Power cutting system losses, but the second reduction is dependent on a review of the power purchase agreements between the utility and power producers like KenGen.