Government opens up power sector to competition, reduces KPLC monopoly

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The government has officially gazetted new electricity market regulations that are set to overhaul how power is generated, traded and distributed in the country.

 According to Energy Cabinet Secretary Opiyo Wandayi, the reforms are designed to transition Kenya from a single-buyer electricity system to a more competitive market structure.

 “The Regulations establish a comprehensive framework for transitioning Kenya’s electricity sector from the current single-buyer model to a competitive, transparent, and efficient electricity market,” the ministry said.

 The new framework will introduce a system in which electricity generators, distributors, retailers, and eligible large consumers can participate in power trading through bilateral contracts, forward agreements, and spot market arrangements.

 “The primary objective of the Regulations is to establish a framework for a competitive electricity market while promoting efficient management and operation of the sector, enhancing reliability and security of electricity supply,” the statement added.

 A key feature of the reforms is the introduction of open access to the national transmission and distribution grid, allowing qualified users to wheel power across the system under regulated conditions.

 “In addition, the Regulations operationalise open access by providing clear procedures and conditions for access to transmission and distribution networks, allowing qualified consumers and generators to transact electricity directly across the grid,” the ministry stated.

 The government says the changes are also expected to strengthen bulk supply arrangements through structured licensing, tariff approvals, metering and settlement systems, aimed at improving transparency in wholesale electricity transactions.

 The System Operator will also take on an expanded role in coordinating dispatch, maintaining grid stability and managing ancillary services.

 “In support of efficient market functioning, the Regulations introduce provisions for energy accounting, imbalance management, settlement systems, and the collection and dissemination of market information,” the statement reads.

 The new system, however, Wandayi says, does not remove Kenya Power and Lighting Company (KPLC) but its role will evolve as the sector opens up to more players and competitive electricity trading.