The Energy and Petroleum Regulatory Authority (EPRA) recently declared its intent to bolster regulations on private power generation in Kenya. Specifically, the Statute Law (Miscellaneous Amendments) Bill of 2023 introduces changes that will impact businesses and households planning to generate over 500 kilowatts (kW) of electricity for personal use. These amendments might necessitate applicants, instead of adhering to the current threshold of one megawatt (MW), to seek approval from EPRA; if accepted, this would become a mandatory requirement.

The proposed modification, a nuanced alteration to Section 117 of the Energy Act of 2019, recommends replacing the approval requirement for “one” megawatt generation with ‘one half of a’ megawatt. Despite appearing subtle, this adjustment heralds a significant change in the regulatory landscape, potentially affecting those seeking to generate between 500kW and 1MW.

George Aluru, CEO of the Electricity Sector Association of Kenya (Esak), asserts that securing a 1MW approval from EPRA currently follows a smooth process. He acknowledges, however, potential complexities may arise with proposed threshold reductions for those pursuing power generation approvals between 500kW and 1MW. Nevertheless, Aluru predicts no significant negative repercussions impacting the sector in any substantial way.

Large power consumers, such as manufacturers, are increasingly shifting towards private power generation; these regulatory adjustments align with this trend in timing. The surge in electricity bills prompts businesses to explore alternative sources – hydro, solar, wind, and biomass – aiming for cost reduction in production.

Against the backdrop of EPRA’s previous year activity, where it had already licensed 106 captive power projects by August with a combined capacity of 260.22MW, this recent move from them is significant: essential for industries such as aluminium smelters and steel plants, captive power plants guarantee a consistent high-quality energy supply, a crucial advantage in power-intensive operations.

EPRA further disclosed: at that point, fifteen captive power applications, totaling 197.5MW, were pending approval. This surge in private power generation applications marks a significant shift within the energy landscape; it prompts questions concerning future dynamics between consumers, regulators and indeed traditional power suppliers.

Undeniably, Kenya Power, an influential entity within the energy sector, grapples with daunting hurdles: an overwhelming 70 percent of its revenue hinges on commercial users’ power consumption. This predicament prompts a notable shift; major corporations such as Total Energies Kenya, Maisha Mabati Mills, and Simba Cement, not to mention Unilever Tea Kenya, are actively pursuing self-sufficiency in power generation. British American Tobacco also joins this determined cohort along with Africa Logistics Properties; Bidco company ltd.; and Devyani Food Industries, all poised for significant change towards sustainable energy solutions.

Moreover, numerous tea factories actively adopt self-generated electricity, specifically hydropower. A few even engage in power purchase agreements with Kenya Power: this arrangement empowers them to re-sell surplus electricity back to the grid.

Kenya, in the midst of a transformative phase regarding its energy landscape, proposes amendments to private power generation regulations. This initiative instigates an essential dialogue about consumer needs’ balance: sustainability and traditional power infrastructure. Undoubtedly, these proposed changes will shape Kenya’s future energy consumption, a significant influence on businesses and households alike.