Captive systems are not necessarily bad for Kenya Power Company

The Kenyan electricity market has seen a rise in the uptake of captive power plants — consumers installing their own power generation facilities, mainly solar on their rooftops.

But there are also mini hydropower plants in tea farms, small geothermal plants in agro-processing facilities, biomass-based alternatives in industries with boilers and bagasse electricity in sugarmills.

These consumers normally already have a connection to the grid, via a Kenya Power (KPLC ) line. Large and medium-sized consumers like factories, lodges and shopping malls are choosing to go solar.

These installations were initially motivated by the enforcement of energy management rules by EPRA in the past 14 years.

Companies were required to undertake energy audits that then led to recommendations to instal some degree of solar to help them to manage loads such as lighting. This push for efficiency in energy use was the initial drive that opened the consumer’s eye to captive power plants.

The drive is not only energy efficiency but also energy security, improving power quality and responding to environmental targets.

Bleeding consumer finances

For a country where nearly all commercial buildings have a standby diesel generator, despite great improvement in the quality of supply from KPLC over the years, running the gadgets is bleeding consumer finances. 

Consumers are adding solar to reduce reliance on generators and guarantee supply, though not fully. Such installations have typically been covering up to 30 per cent of their supply needs as having a grid (read KPLC) connection is still viewed as important. 

Captive systems offer supply where the grid has not reached, allowing establishments to access electricity in an environmentally responsible manner.

This is especially the case for solar, low-carbon biomass, geothermal, mini hydro and wind power plants.

They support voltages at far ends of the grid, reducing the need for investment in infrastructure to support consumers in those areas.

When installed in telecommunications facilities, they allow for commerce and localised distribution to areas where grid extension would be an expensive option.

Renewable energy technologies

The freed-up capacity and funding can allow the utility to improve service delivery to other consumers.

The worry is the defection of the large consumers, who form the base of the revenue for the utility.

They, more than others, are working to manage their costs and having more options for supply is good for their financial well-being and the economy.

Such flexibility will enable retention of these investments and attract other similar investments, ultimately increasing overall demand.

The general reduction in the prices of renewable energy technologies and the regulatory trend towards a more open electricity market implies customer own production of electricity will continue.

Captive plants will get bigger as more sophisticated industries set up to take advantage of the vast renewable energy resources in Kenya.

Large-scale captive plants that do not rely on the grid for offtake will allow facilities to control their cost of electricity as an input to their production and remove supply and demand risk from the utility.

Customer experience

They would offer the utility an option for supply when needed and a ready demand when the intended consuming facility requires support.

The opening up of captive power plant market also allows for the absorption of foreign direct investment (FDI) and savings on public finance of electricity infrastructure, that will lead to better economic outcomes.

Jobs will be created, investment absorbed, efficiency improved and new service companies established to support these installations.

KPLC can embrace captive power players to grow the electricity market, improve own allocation of scarce funds and improve the customer experience.

As options for sale of power, through wheeling or regional trade, open, spare capacity will be an asset.

Consumers should be allowed all supply options at their disposal. Captive plants act to compliment the work done by the utility in customer service.

Mr Aluru is the CEO of Electricity Sector Association of Kenya (ESAK). [email protected]