Ruto lifts Uhuru’s ban on independent power producers (IPPs)
Ruto through a cabinet declaration lifts Uhuru's ban on the procurement of new independent power producers (IPPs)
Ruto through a cabinet declaration lifts Uhuru’s ban on the procurement of new independent power producers (IPPs).
In an effort to boost electricity production at a time when annual droughts are getting more severe and limiting hydropower generation, the Cabinet has relaxed the Uhuru-era ban on the acquisition of new independent power producers (IPPs).
The task force established by former president Uhuru Kenyatta in March 2021 to evaluate power purchase agreements (PPAs) and presented a report in September of that same year put a freeze on the selection of new IPPs.
Since then, Kenya Power has not signed any new PPA with any IPP in a period of just over a year in line with the task force’s report.
Ruto through a cabinet decision has, however, lifted the moratorium which now allows energy investors to come and sign contracts with the utility for the supply of electricity.
The Cabinet claims that the action was required by the severe drought, which has lowered the hydroelectric power output from the major dams and allowed additional IPPS to enter the country and establish themselves in order to protect the nation from power supply disruptions during upcoming droughts.
According to Kenya Power, the 200 megawatts (MW) of power imported from Ethiopia since January have made a substantial contribution to closing the gap left by the drought-related shortage in local hydropower generation.
“In addressing the challenges of realizing a sustainable energy mix occasioned by the prolonged drought, Cabinet approved the lifting of the moratorium on PPAs as a way of enhancing the nation’s energy security through opening up the energy sector for continued investments,” said Cabinet.
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Any new IPP that comes on board will join some 5 new power producers that have connected to the grid over the past five years which has increased the country’s generation capacity.
Kenya Power says Kenya’s reserve margin – the amount of unused available power generation capability – is at just 4 percent and therefore onboarding new power generators to the grid is necessary.
The Cabinet has also approved a framework for the engagement of these IPPs with energy auctions as opposed to the current feed-in tariffs regime.
In the new energy auction system however, the IPPs will be bidding for the supply of power to the grid where the lowest bidder will win the right to supply energy to the grid during that cycle.
“The new framework will enable the State to procure clean energy at prices that reflect those prevailing in the market, giving consumers the benefit of competition in pricing,” said the Cabinet.
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