The cost of energy is expected to fall as the government moves toward renewable sources of energy. Energy CS Charles Keter promised not to renew licenses for Independent Power Producers (IPPs), as the government plans to bring down the cost of power.
Recently, the Kenyan government has shown great support for renewable energy through investments by both state and private parties.
The government plans to replace several thermal power plants with renewable energy sources, a move driven by both cost and environmental concerns. According to Regulus, thermal energy costs more than twice the price tag of renewable energy. For instance, in August 2019, thermal power costs as much as KSh 23 per kilowatt-hour for domestic use. On the other hand, Geothermal power has a wholesale price of KSh 8 per kilowatt-hour. Moreover, thermal energy relies heavily on diesel for power generation. As a result, consumers often bear the brunt of fluctuating diesel prices.
No new IPPs for expiring thermal power licenses
The Cabinet Secretary for energy revealed that the government would not renew some soon to expire licenses. Iberafrica’s 56MW contract will expire next month, followed by Tsavo Power’s 74MW and Kipevu’s 60MW in 2021 and 2023 respectively. However, the government is undecided on what to do with longterm IPP contracts, caught between letting them do business and paying them off.
“We know when these deals were made, I think there are some that will run to their 25 years but three IPPs one ending this year, another next year, these will not be renewed,” Keter confirmed.
The government is setting up additional renewable energy power sources to cover the foregone capacity. First, Kenya will commission the 165MW Olkaria V geothermal plant next month to replace Ibeafrica’s lost capacity. Additionally, commissioning of the Lessos Kisumu high voltage power line will drive the phase-out of the 60MW Muhoroni power plant.
The CS confirmed that the government would set up Kipeto wind project which will generate 100 MW. The state will also add another plant producing 83 MW of geothermal power.