Over the last decade, few locally situated power stations have been onboarded in Kenya. There have been multiple moratoria and investigations on power procurement.
Successive governments in both the Executive and Legislature have been on a wild goose chase for benefactors, ignoring the need to execute plans for new generation capacity.
As happened in the early 2000s, the chickens are back to roost. We are staring at undersupply, load shedding, and emergency power procurement at guaranteed higher costs related to the volatility in fuel prices, including LNG. This crisis is a result of sustained political meddling in planning and onboarding of new power plants.
There is a notion that the power business is lucrative and must be controlled by bedfellows, and that our bedfellows deserve it more than theirs.
Outside of this, no one moves; we would rather have a standoff and let demand race beyond supply. Manufacturing a crisis, again, fighting and trading salvos over who gets to own the stopgap measure. An approach bereft of strategic long-term thinking.
There are no magic bullets to lower the cost of power. Kenya must run competitive procurement processes open to all.
Identify these opportunities to auction through the least cost power development plan (LCPDP) that is not tampered with to suit personal interests. Lower costs will be achieved with time if we can prove to be honest and diligent stewards of investment opportunities.
Investors have been waiting for Kenya to show this trait. Funding is available. Any promises of imminence in the reduction of the cost of power are pure wishful thinking; we have to do the work, spend the time and show resolve.
That said, we are where we are, and I can smell the coffee. Demand is set to outstrip supply, especially during peak hours. We need to quickly onboard capacity at the lowest cost and with the least long-term commitment. In the meantime, we should license and source cheaper long-term alternatives in parallel. This is the lesson from the Westmont barge of the early 2000s.
Our options are to expand imports from Uganda and Ethiopia, open to more captive supply, shift demand or engage another hydrocarbon barge. The first three in unison can also be thought of as an option.
In my view, expanding imports from Ethiopia and Uganda offers the best short-term approach. Kenya should strategically push for the operationalisation of the EAPP day-ahead market.
This will allow the country to procure additional short-term capacity (two to four years) from hydropower in Ethiopia, Uganda and Tanzania.
It will not require protracted PPA negotiations with neighbouring countries, as is the case with current bilateral agreements. Commitment should be on a short-term basis to better utilise cheaper installed capacity in the region and allow Kenya time to build new local generation.
The second option is to encourage an increase in captive supply.
This will occur anyway if the utility is unable to supply but can also be a strategic move to counter undersupply and provide consumers with control over their supply.
The removal of restrictions on captive supply has pulled South Africa out of load shedding in recent years. The quick resolution of all pending formalities to allow wheeling of power will further enable self-supply. This option has minimal direct costs for the government.
A third option is to incentivise the consumption of power away from peak hours. Lower prices can be offered to consumers to use power during periods of low utilisation, typically between 10pm and 6am.
Load shedding is prevalent during peak hours. We plan new generation based on the peak. Generation is underutilised outside peak hours. Shifting some demand away from the peak will reduce the pressure.
These three options together will solve our short-term supply challenges. We have better options than those available in the early 2000s. We simply require focused application.
An emergency hydrocarbon barge plant is the last option and should not be at the top of our priorities.
The irony is that we have recently decommissioned hydrocarbon plants that were fully paid for and could still run for 10 years, that we could have had for a peppercorn. However, a strategic longer-term LNG plant should be planned for grid stability.
George Aluru is the CEO, Electricity Sector Association of Kenya (ESAK)
