Kenya has postponed the introduction of
competitive bidding for investors seeking to establish renewable energy
plants, delaying cheaper electricity to homes and businesses.
Energy
PS Joseph Njoroge said the auction system would start once investors in
power plants awarded licences under the current regime have injected a
combined 1,342 megawatts or 56 per cent of Kenya’s power capacity into
the grid.
“We have to clear the projects in the
pipeline that had received licence under the current feed-in-tariff,” he
said. “We received a task force report on the auctions and based on the
findings, we think the first auction will be mid-next year.”
Experts
reckon that Kenya will take years to inject the 1,342 megawatts,
signalling that the auction system could take longer to implement.
The
auction system was to apply to solar power plants of below 40
megawatts, wind plants (below 50 megawatts) and geothermal power plants
of below 70 megawatts.
This system allowed the
government to pick power projects and award them to bidders who offer to
charge consumers the lowest tariffs.
Currently,
investors identify viable power projects and then acquire licences from
the Energy Regulatory Commission (ERC) to operate them at pre-determined
rates without any requirement for tendering. The competitive bidding
window was billed as a tool to slash electricity bills.
The feed-in-tariff for solar projects (between 10 and
40 megawatts) stands at Sh12.36 per unit ($0.12), and Sh11.33 per unit
($0.11) for wind projects of between 10 and 50 megawatts. The rate for
geothermal power plants (35–70 megawatts) is Sh9 per unit ($0.088).
Kenya
adopted the feed-in-tariff in 2008 as a policy instrument to attract
investors in the renewable energy space as an alternative to expensive
diesel-generated electricity.
Kenya Power
is obligated to buy electricity generated under feed-in-tariff — which covers smaller renewable power plants.
“This
will help us plan well and match demand with supply. We want to reduce
cases of having stranded power which forces consumers to pay for idle
plants through capacity charges,” the ERC said in reference to the
auction system.
If adopted, the power tendering system
will see Kenya join the more than 60 countries that have embraced the
auctions, including South Africa, Morocco, Brazil, Zambia and the United
Arab Emirates (UAE).
Under the auction system,
renewable energy developers will bid for contracts and those with the
lowest bids will win government support.
Kenya’s
renewable energy market has recently attracted dozens of local and
multinational investors, who are constructing solar farms, wind parks
and geothermal wells.
This is in response to the
government’s call for private investors to develop clean energy plants
as part of the country’s goal to add 5,000MW to the national grid by
2020.
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