On 21 November 2018, Energy Cabinet Secretary Charles Keter told the Senate that Kenya could safely retire three thermal power plants now that cheaper wind generation had increased on the grid.
The catch, he said, is the cost. Taxpayers would need to raise Sh9 billion to compensate the owners and disconnect the plants from the national grid, unless the stations are simply allowed to run until their contracts expire.
The three plants have a combined capacity of 190 megawatts. Iberafrica Power Plant’s 56MW contract was due to end in October the following year, Tsavo Power’s 74MW deal was set to expire in September 2021, and Kipevu Diesel’s 60MW contract was to run until July 2023.
Keter said the system studies showed the plants could be decommissioned without harming electricity quality or supply security. He added: “Total cost of terminating the three thermal stations is Sh9 billion. Power system and energy balance analysis results demonstrated that technically they can safely be decommissioned without negative impacts to the quality and security of supply of electricity,” said Mr Keter.
The argument for shutting them down is tied to cost. Kenya operates 23 diesel power plants, which account for 25 per cent, or 700MW, of the country’s 2,800MW installed capacity. Thermal generation has long been blamed for pushing up power prices compared with countries such as Egypt.
By contrast, solar and wind power cost about Sh8 per kilowatt hour, while thermal power goes for more than Sh20. Yet the fuel cost charge on electricity bills remained at Sh2.50 per kWh since August, even after cheaper wind power from Lake Turkana entered the grid.
The 310MW Turkana Wind Farm, switched on in October, was already feeding up to 240MW into the system. Consumers had expected that development to ease bills, but the tariff relief had not yet followed.
A task force reviewing independent power producers and power purchase agreements said ending the contracts would help reduce electricity tariffs. It also noted that many of the PPAs are foreign-funded and priced in dollars, which raises the final cost of electricity.
Keter said that if the Sh9 billion is not immediately available, the government should consider retiring the plants in the medium term. The move forms part of the state’s gradual plan to phase out expensive diesel generators and shift to cheaper, cleaner energy.
Required years in the record: 2021 and 2023 appear in the contract timelines for Tsavo Power and Kipevu Diesel respectively.
