Kenya: AfDB urges Nairobi to sign new power plants

The African Development Bank (AfDB) supports Energy Cabinet Secretary Davis Chirchir’s appeal to Parliament to lift the moratorium preventing Kenya Power from entering into new agreements with power producers.

The AfDB emphasized the urgent need for Kenya Power to engage new independent power producers (IPPs) to address the gap resulting from declining hydro-power generation. This step is crucial to mitigating the impact of inconsistent production from wind and solar sources.

“There is an urgent need to bring online new plants to plug the decreasing reserve margins to address the drought-prone hydropower generation shortfalls while avoiding oversupply and mitigating the variable renewable energy solar and wind intermittences,” said AfDB in the report.

The AfDB’s advocacy is set against concerns that electricity generation in Kenya and neighboring countries is sufficient. The primary challenge lies in the aging transmission network, which has been held responsible for increasing unreliability, including the recent nationwide blackout due to overload.

Permitting Kenya Power to enter into new agreements with IPPs also exposes consumers to the potential of higher power bills in the form of capacity charges payments made to an IPP regardless of whether it generates electricity.

Recently, power purchase agreements between Kenya Power and IPPs have faced scrutiny due to the higher prices offered in comparison to those of KenGen.

Analysis indicates that KenGen provides the most cost-effective electricity to Kenya at Sh4.71 per kilowatt-hour, while IPPs have priced their power at over five times that of KenGen.

Kenya has sought electricity imports from Ethiopia to address the rising demand, mitigate the effects of declining hydro generation, and reduce dependence on environmentally unfriendly and costly thermal plants.