Consumer pain as uptake of expensive thermal power hits 3-year high

Kenya’s production of expensive thermal electricity hit a three-year high in December, adding to the burden of costly electricity for consumers.

Kenya Power data shows the company bought 167.26 million kilowatt-hours (kWh) of thermal electricity in December, a significant jump from November and the highest uptake of the power source since April 2019 when it purchased 181.14 million units.

Kenyans pay Sh4.63 per unit of electricity to reimburse thermal power producers for the diesel used to generate power, setting it up as one of the single largest cost components of the power bill.

The fuel cost charge (FCC) component is adjusted monthly by the Energy and Petroleum Regulatory Authority (Epra) in line with adjustments in fuel prices.

It is especially costly to consumers as they must pay thermal power producers twice – first for diesel costs through the standalone FCC and also for the actual electricity consumption charge through the power purchase agreements (PPAs) the utility firm has with the producers.

This is happening as Kenya Power bought less of the much cheaper geothermal power, whose uptake reduced to 348.5 million kWh in December, down from 378.49 million units a month earlier.

It is the lowest uptake of geothermal power to the national grid since September 2016, when the company purchased 335.37 million units of electricity generated from the source.

The company also reduced the purchase of wind power, another cheaper electricity source, buying 131.45 million kWh in December, down from 195.68 million units in November. It is the lowest wind power uptake since May last year.

Thermal power is a stable energy source, its uptake dictated by numerous factors, including wind speeds that dictate availability of wind power, rains that influence water levels in hydropower dams, and the availability of geothermal steam.

However, Kenya Power has also repeatedly come under scrutiny for deliberately prioritising the purchase of expensive thermal power instead of cheaper sources in order to benefit a clique of private power producers.

A panel reviewing power purchase agreements “was informed that power dispatch is done by Kenya Power’s NCC (national control centre) through the merit order mechanism where (the) cheapest power is prioritised for dispatch”.

“This could however not be verified,” said the task force led by John Ngumi.

The utility firm was officially stripped of the mandate of controlling the power dispatch process last month, raising hopes for cheaper power through transparency in the dispatch merit order.

Epra last month gazetted the Kenya Electricity Transmission Company (Ketraco) as the new operator of the national grid but it has not fully taken over the operations from Kenya Power.

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