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State lobbies MPs to lift freeze on new power deals
Principal Secretary State Department for Energy Alex Wachira during the announcement of Kenya Power's financial results for the Financial Year 2023/2024 at Stanley Hotel, Nairobi on October 29, 2024.
The executive is lobbying Parliament to lift the freeze on new Power Purchase Agreements (PPAs), allowing Kenya Power to onboard new electricity plants and avert a looming crisis.
Energy Principal Secretary Alex Wachira on Wednesday said the ministry and the National Assembly committee of Energy have already agreed to lift the moratorium. The committee will next week table a report for adoption by MPs.
Mr Wachira had earlier said he expected Parliament to lift the freeze in June this year, with Kenyans keen to see if his latest promise on ending the ban on PPAs will come to pass.
Kenya Power has not signed any new PPAs since 2018 following a freeze meant to allow for a probe into existing deals where power producers are selling electricity at exorbitant prices, denying consumers cheap energy.
The freeze coupled with rising local consumption has significantly eaten into the reserve margins and pushed them to below four percent forcing Kenya Power to ration supply in some regions in a bid to ensure the grid remains stable during peak demand hours.
“We have been in conversations with the energy committee of Parliament and a report is ready. We are anticipating that next week when Parliament resumes, they shall lift the moratorium,” Mr Wachira said on Wednesday at the Sustainable Energy Conference in Olkaria, Naivasha.
The conference has drawn top State officials in the energy sector, their colleagues in the private segment and financiers as the country seeks to further exploit its vast potential in clean energy sources.
Shrinking reserve margin –extra generation capacity available above demand— comes at a time when peak demand for power has jumped by over 45MW since the start of this year.
Global industry standards recommend a range of 20-35 percent for reserve margins, with Kenya Power raising concerns of a generation crisis if the freeze on new PPAs is not lifted.
Kenya recorded seven new demand peaks in 2024 alone, pointing to the rapidly growing appetite for electricity by homes, industries, and businesses. Kenya has an installed capacity of 3,811.60Megawatts of electricity.
Besides rationing some regions in order to safeguard the grid from shocks during peak demand, Kenya Power is also in talks with the Ethiopia Electric Power (EEP) to get an additional 50-100mw.
The 50-100MW will be in addition to the up to 200MW that Kenya is currently buying from Ethiopia under a 27-year deal.
Kenya risks being plunged into an electricity crisis in case of major disruptions on the line evacuating electricity from Ethiopia, underlining the precarious state of overly relying on the Horn of Africa nation.
Parliament is in recess and will resume sittings next week, with lifting of the freeze on PPAs being a priority item in the order of business.
The Cabinet lifted the moratorium on new PPAs in February 2023 but MPs reinstated it, saying that they needed to first scrutinise existing deals between Kenya Power and power producers.
