Manufacturers push for power purchase agreement ban to avert power blackout

The Kenya Association of Manufacturers has warned of power rationing if no investment is made in power purchase agreements and new power stations are not constructed.

Chief Executive Officer, Tobias Alando, speaking during the launch of New Enhanced Flooded Battery (EFB) – Built for the Demands of Modern Mobility, said that currently, Kenya is using a lot of geothermal, which has reached the peak of 96 per cent.

The government in 2018 put a moratorium on the signing of new PPAs, at the time trying to tame high power costs.

Since then, Kenya’s electricity demand has been threatening to outstrip available power-generating capacity in what could see the country’s sole power distributor resort to rationing.

The growing demand is despite a near-empty pipeline of power-generating projects that are expected to come on board in the coming years and increase supply following the 2018 freeze in the signing of power purchase agreements between Kenya Power and Independent Power Producers.

In February this year, Kenya Power warned that if the government does not lift the moratorium on the signing of new PPAs, the country could in the coming years find itself having to ration electricity as available sources will not be able to meet demand.

“We will have pressure to deal with the challenges that may arise should we take too long [to lift the moratorium]. We should also bear in mind the time it takes from signing a PPA to developing a power plant,” said Kenya Power Chief Executive Joseph Siror when the firm released its half-year financial results in Nairobi.

READ: ="https://www.standardmedia.co.ke/business/article/2001511041/freeze-on-power-purchase-deals-sparks-fresh-fears-of-rationing" title="Freeze on power purchase deals sparks fresh fears of rationing" target="_blank" rel="noopener">Freeze on power purchase deals sparks fresh fears of rationing<

According to Siror, the impact would be felt if the if moratorium was not immediately lifted.

He said the electricity grid also needed an operating reserve that would allow existing power plants to undergo scheduled maintenance but also ensure continued supply in case of emergencies.

“The reality is that even with the power plants that are in place have to undergo maintenance, which means that for some period of time, you are not going to have power from the plant. That reserve margin is used to cater for times when there are major breakdowns or maintenance or any other eventually,” said Eng Siror, adding that the country also needs to consider that in times of prolonged dry spells, output from hydropower plants usually dips.

PPAs said to be skewed in favour of power producers and disadvantaged consumers have been blamed for high power costs.

The Cabinet in March 2023 lifted the moratorium but Parliament shortly after, in April 2023, imposed another ban that is still in place.

This has meant that nearly all power plants that had obtained PPAs with Kenya Power by 2018 have come on board, and the pipeline of planned power plants is now almost empty.

Alando said the Senate and the Parliament need to consider the ban that was imposed on building new substations and new power purchase agreements.

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“We are remaining with only 4 per cent of power from the geothermal sources. Hydro thermal sources depend on weather and if rains stop, we are likely to stare at a power blackout that is likely to hit the struggling manufacturing sector,” said Mr Alando.

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