Poor power demand dims low bills hope
“We had made forecasts with hope that demand will pick up so that by the time these units come in, new customers have also come in. Then they would be able to share these costs and invariably the cost of power spread among many people would become cheaper,” he said.
Kenya has been shifting to green energy, with the hope that reducing the use of expensive sources such as thermal plants will help reduce bills. One major green project is Lake Turkana Wind Power (LTWP), with an installed capacity of 310MW.
During the day, the project contributes about 14 to 17 per cent of Kenya’s power demand and this shoots to about 32 per cent at night, according to LTWP executive director Rizwan Fazal.
“You will never bring down the cost of tariff only by bringing in LTWP. That’s just one of the solutions. Until you have enough demand in the system, cost will not come down that quickly,” said Mr Fazal.
“Some of the PPAs are capacity-based, so even if you don’t take their power, you pay for capacity. If you use it, that is when you pay for fuel cost.”
According to the 2015-2020 Development of Power Generation and Transmission Master Plan by Ministry of Energy, electricity consumption was forecast to grow at 7.2 per cent per year. Peak demand was forecast to hit 2,300MW by next year.
By next year, the plan had anticipated that the power demand from Lapsset projects, Konza and SEZs alone would be 684GWh (gigawatt hours) before rising to 2,471GWh by 2025 as other projects become a reality.
“That is why we are rationalising, because reality is that they (those projects) are not there. So we need to reconcile this so that we have new load coming only when there is new demand coming in too,” said Mr Othieno.
The manufacturing sector in Kenya has faced significant challenges in the last 15 years, with its contribution to GDP dropping significantly and giving rise to fears of a premature deindustrialisation phenomenon, according to last year’s report by Kenya Association of Manufacturers (KAM).
“It’s a fine mix between planning and policy — if there is much power, why are many streets still dark? If you consume power on street lighting, security can improve and companies can think of 24-hour businesses,” he said.