Huge power transmission gulf that keeps your bills sky-high

Millions of electricity consumers continue to bear the burden of expensive and low-quality power supply following years of thin investment in transmission infrastructure even as the country sinks billions of shillings into power generation.

The yawning transmission gap has created a paradox of power deficiency in abundant generation, forcing Kenya to continue relying on expensive sources to meet demand in certain parts of the country locked out of green and cheaper alternatives.

Poor distribution also means a few consumers are left to shoulder the burden of paying independent power producers whose power-purchase agreements with the government prescribe a take-or-pay arrangement, meaning a few are paying for idle power not being transmitted.

By July 2019, the Ministry of Energy expects the country’s installed capacity to hit about 2,900MW when the 168MW Olkaria geothermal power goes live. The country’s peak demand as of this month remained at 1,882MW, according to the Energy and Petroleum Regulatory Authority.

The difference means at least 1,000MW of power hang on without people to consume it even as producers get paid under the take-or-pay power purchase agreements that compel producers to be paid for electricity whether consumed or not.

With dwindling off-peak consumption (which dropped 28 per cent in 2018), it means consumers are left to share the heavy electricity burden coupled with use of expensive power sources such as diesel-powered generators in some regions that have no transmission to benefit from the cheaper power idling at the source.

Kenya Power acting Managing Director Jared Othieno said the utility firm feels the pinch of the transmission gulf through poor quality of power supply to its customers, who complain about unreliability, with a strain on its ability to earn revenues it needs to deepen distribution.

“We are the customer-facing company, so apart from the cost implication on having idle power, we have a missed opportunity could there have been proper evacuation from the generation sources. We have been assured by Ketraco that this is being addressed and given timelines which we are looking forward to,” Mr Othieno said.

Kenya is ranked among the world’s top producers of geothermal electricity, with about 700MW capacity, but the lack of transmission continues to derail the dream of cheaper power even as billions are still being invested in drilling geothermal wells.

In fact, even the capital city is yet to feel the full impact of cheaper geothermal power as a State agency struggles to complete Nairobi ring substations, which involve the 400kV Suswa-Isinya line and four 220/66kV substations in Isinya, Kimuka (Ngong), Athi River and Malaa. The Suswa-Isinya line will link the Olkaria geothermal generation to the national grid.

Since power tariffs on the national grid are harmonised regardless of location and energy source, the more thermal electricity households and businesses in Western Kenya consume as the transmission line is delayed, the higher the power tariffs everyone has to deal with due to the higher fuel surcharge levy — which is influenced by the share of electricity from diesel generators. The levy rose to Sh3.75 per kilowatt hour (kWh), up from Sh2.75 last month, the highest margin jump in the past five years.

Energy Principal Secretary Joseph Njoroge agrees that a transmission gulf has a contribution to high power bills but also says it will take a radical shift in consumption trends to cover up for the idle power at night when demand falls by almost half, further creating idle power that we all pay for.

“It is true to some extent because transmission will improve our system stability, but remember our consumers still demand the highest power between 6.30pm and 11pm, meaning after midnight the demand is very low and that is why we want to push for the Time Of Use Tariff to spur more consumption,” Mr Njoroge said.

Also factored in everyone’s bills are electricity losses that occur when lower-voltage lines are used in high transmission. The losses add to poor power quality, which may risk home appliances and increase the cost of distribution.

The system losses (difference between the units of electricity that retailer Kenya Power buys from producers and the actual units sold to homes and businesses) are also borne by consumers. Kenya Electricity Transmission Company estimates that the completion of the Sh18.2 billion Olkaria-Lessos-Kisumu line alone will save up to Sh2 billion worth of power technically lost when the current 132kV lines are overstretched to serve Western Kenya.

“It’s important to note that each new project we bring online seeks to expand transmission capacity thereby lowering technical losses and evacuating generation resources from where they have been planted to load centres. The company is also constructing transmission lines to areas that were being served by thermal energy like Lamu and Garissa,” said Ketraco Managing Director Fernandes Barasa.

On its website, Ketraco says it has completed 29 high-voltage projects totalling 2,364 kilometres since its inception slightly more than a decade ago. The firm has lined up some 17 as ongoing projects on its website spanning 2,359 kilometres. Compared to the 56 planned projects covering 5,856 kilometres, whose timelines are not specified, the journey is far from complete and it will take more investment to achieve.

Apart from the Olkaria-Lessos-Kisumu line, the 220kV Garsen-Bura-Hola-Garissa project is expected to take power to irrigation plants in Bura and Hola, making a key connection when it is completed in December 2020. Another key project that has been lagging behind is the 220kV Nairobi ring substations project with a transfer capacity of 800MW, which is expected to boost reliability and allow for the greater Nairobi Metropolitan area to be supplied with power from different substations.

Kenya’s increasing installed capacity will also need interregional lines like the 400kV double-circuit transmission line from the existing Lessos substation in Kenya to the Kenya-Uganda boarder near the Tororo substation in Uganda. The 132km line is expected to facilitate power interchange between the two countries, with Kenya earning from exports of power.

This too has stalled and, like similar cases before, is bound to cost more, according to Mr Barasa.

“The initial contract for the project was terminated at 55 per cent of works done and the company is in arbitration to settle the dispute before hiring a new contractor,” Mr Barasa said.

Other critical infrastructure like the Sh2.9 billion Mariakani substation under construction in Kilifi will also help boost supply of stable geothermal and hydropower energy to the coast region and cut reliance on expensive diesel-generated electricity in the region that has an overall impact on consumers’ power bills collectively.

Even as Kenya prides itself on having a greener generation mix — currently 87 per cent renewable energy and projected to hit 90 per cent by 2025 — the low-level investment in transmission will mean the investments in going green will only turn out to be a burden for households to carry as power producers pocket more money from unused power.

Taxpayers are also forced to bear the burden of delayed power evacuations in compensation schemes like the Sh5.7 billion the Treasury paid for the deemed energy the Lake Turkana Wind Power project could have channelled to the grid as the building of the Loyangalani-Suswa line lagged behind schedule. This effectively turned an otherwise potential gain from cheaper wind power to a multibillion-shilling burden instead.

We worry about the delays, says Ketraco

The Kenya Electricity Transmission Company, the state agency tasked with evacuating power from the sources, admits the existence of a transmission gulf that has translated to poor-quality and expensive power for households but says its efforts are thwarted by wayleave and vandalism challenges.

Ketraco Managing Director Fernandes Barasa told Smart Company that the agency is fighting against the odds created by lack of investment in transmission over the years in what may mean a longer wait for consumers keen to benefit from the country’s increasing investment in green and cheaper power.

“We are concerned that some projects are not completed on time due the reasons we have enumerated, the biggest being wayleave acquisition challenges. Whereas huge strides were made in generation and distribution in the 40 years before Ketraco’s establishment, not enough investments were made in transmission and hence we are playing catch-up,” Mr Barasa said.

Lower-voltage lines

Among projects that have been playing catch-up way behind schedule is the 300-kilometre line from Olkaria, where cheaper geothermal power, sits to the Lessos-Kisumu line.

Prolonged land acquisition hurdles, contractual inefficiencies and thin budgetary allocations have thrown the multibillion-shilling project over two years behind schedule.

The line, which comprises a 400kV, 220kV and 132kV network, is the missing link between the entire Western region and the idle power at Olkaria.

Ketraco records show the line has had various completion timelines, including December 2018, February 2019 and now December 2019.

Lower-voltage lines

By the end of last year, the project had only consumed Sh2.05 billion in its building, with Sh957 million spent on wayleave acquisition, indicating the possibility of a longer wait for the line expected to relieve the region from erratic power supply and reliance on the expensive kerosene-driven generator in Muhoroni.

The long wait has already forced a plan to add an additional 65MW gas turbine in the same location even as demand continues to grow in the region.

For every unit produced in the gas turbine, consumers are forced to pay Sh32, more than four times the price of a unit of wind power from Loyangalani as well as the Sh8 per unit charged on a unit of geothermal power.