Demand for electricity hits new high on increased connectivity

Kenya’s maximum power demand has crossed the 1,900 megawatt (MW) mark, signalling increased uptake of electricity in the past one year.

The Ministry of Energy now says peak demand hit 1,912MW this week as more industries gear up to reap from a promotional tariff introduced by the government to promote industrialisation and increased connectivity.

The upshot is that consumers will now buy products that are fairly priced once manufacturers adopt this friendly regime.

Energy Cabinet Secretary Charles Keter said balancing energy demands and installed capacity is critical in power planning and pricing as Kenya moves to retire some expensive thermal power plants while connecting more customers to the grid.

“We have hit 1,912MW and the current installed capacity is 2,819MW. This leaves us with a good reserve margin considering that we have started retiring some thermal plants and we are targeting to attain universal power access by 2022,” Mr Keter told the Nation.

This means idle power has for the first time fallen below the 1,000MW, a key strategy in managing the cost of energy.

Reserve power often takes care of emergency situations such as when several plants are taken off the national grid during maintenance or unforeseen breakdowns hence guarantees quality of power supply.

Too much of it means consumers are billed higher.

Increased demand, therefore, lowers the availability of excess power and has an impact in cutting what consumers part with for idle electricity under the take-or-pay clauses in the energy purchase agreements.

Mr Keter in a July 31 Gazette Notice specified the criteria that would be used to give manufacturers tax reliefs from increased power consumption.

Companies whose overall consumption recorded a four per cent jump from last year are supposed to increase energy use by 10 per cent, raise their capital investment by a similar margin as well as sales to enjoy the full 30 per cent relief based on consumption analysis from 2018.

The rebates through tax relief allow manufacturers who meet the set thresholds to claim a 30 per cent additional cost to their power bills and reduce their tax burdens while filing returns with the Kenya Revenue Authority.

The government has been striving to increase electricity consumption after years of investment in generation and less input into transmission of the same, leading to idle power or use of expensive power sources to meet demand in certain parts of the country locked out of green and cheaper power.

The country’s peak demand remained at about 1,800MW until recently when it hit the 1,880 mark, according to the Energy and Petroleum Regulatory Authority.

The Energy ministry is also banking on lowered tariffs for power imported from Uganda, which fell to Sh10 per unit starting from November 2019, to pass on the cost relief to consumers.