24 April 2019

Kenya: Universal Access to Power Dream Achievable

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The government has progressively developed attractive policy frameworks that present high returns to investors as well as give value for money to the end users.

This was the case in the energy sector, as recently the President signed the famous Energy Bill 2017 into law, which ushered a new landscape in the electricity ecosystem.

The new Energy Act introduces a net metering component, which is an integration of small renewable energy elements like households and individual companies to the national power grid.

In simple terms, small-scale renewable energy sources are permissible to supply into the grid the excess power generated and since such households also receive grid electricity, their monthly bill becomes the difference between what they get from the grid and what they supplied.

In essence, there is going to be a significant reduction in their electricity bill, or at times none at all, when their supply exceeds consumption.

TARIFFS

Kenyans over time have grappled with high electricity tariffs, but this new legal regime gives the public a chance to contribute to green, clean energy like solar, which according to the Solar & Wind Energy Resource Assessment (Swera) 2018 publication, is available in sufficient quantities in Kenya.

Secondly, large entities such as leisure and hospitality outlets can now engage in small-scale energy retail markets.

For a long time, there has been manifest monopoly by the utility firm Kenya Power.

However, with new players in the retail market, these establishments will now be able to sell power to communities around them previously not connected to the grid.

Kenya registers a 73.4 per cent national electricity access rate, the highest in East Africa. However, the challenge still remains as these figures are on average, which means connectivity and access to electricity in rural areas is still very low.

COMPETITION

There is, therefore, need for the entrepreneurial class, particularly those in the energy sector, to leverage on the available legal regime to improve on their revenue.

The implementation of net-metering scheme will simplify energy exchange transaction and facilitate the opening of the renewable energy sector to small and medium-sized entrepreneurs, who have the ability to reach a large share of the country's population, and thereby expand the solar rooftop market size.

Unlike in cases of large Independent Power Producers, who generate and supply 10 to 50MW and over 100MW of power to the grid connector, under the net metering system, small-scale investors have the ability to contribute below 1MW.

The number of homes powered by 1MW of rooftop solar energy on average is around 164 homes.

NEW MARKET

Finally, the new law ensures stable power supply by creating a redundancy given the extra source. This means that households can have power supply on an eventuality where there is downtime or blackouts.

Other countries with experience in net metering include USA, Denmark, Mexico, Brazil and Morocco.

As Kenya navigates towards universal access to electricity by 2022, the new edict will be an important tool to attaining this endeavour as well as giving rise to a new crop of energy prosumers.

Thuo Njoroge Daniel is an energy economist [email protected]

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