Why electricity in Kenya is costly.
The Government of Kenya set its “Vision 2030,” program to transform Kenya into a newly industrialized country.
However, Kenya has 2,150 MW of generation capacity to serve its population of over 43 million, which constrains economic growth. Although there has been some modest reduction on electricity costs, Kenyans should be enjoying far cheaper rates than what they are paying now. Kenya is believed to possess over 7,000 MW of undeveloped geothermal energy resources in the Rift Valley. Wind and biomass energy are also significant potential sources for power generation.
The medium speed diesel plant, incorporated for peak load operates longer than 30% of the time instead of the normal 14% on average price of Kshs 20/Kwh. Geothermal energy is stored in the earth. It is generated from radioactive decay and continual heat loss from the earth, and is cost-effective and environmentally friendly. Thermal energy will help Kenya address its high cost of electricity.
Manufacturers blame the electricity price for the high cost of production in Kenya and high inflation at household level. Kenyan manufacturers say they have lost out to South Africa and Egyptian companies because of the high cost and unreliability of electricity.
Kenya has an installed capacity of 2.XX GW. About 57% is hydro power, 32% thermal and the rest comprises geothermal and emergency thermal power. Solar Power and Wind power contribute only 1%. However, hydropower has ranged from 38-76% of the generation mix due to poor rainfall. Thermal energy sources have been used to make up for these shortfalls, varying between 16-33% of the mix.
The electricity demand is higher than the supply, forcing deployment of emergent power which is four times more expensive than the average power price. Current demand is 1,191 MW and is projected to grow to about 2,500 MW by 2015 and 15,000 MW by 2030. To meet this demand, Kenya’s installed capacity should increase gradually to 19,200 MW by 2030.
It costs approximately Kshs 35,000 (EUR 318.18) to connect to the national grid and about 0.1145 EUR equivalent per kWh of electricity service. These are relatively high costs that pose a major obstacle to the expansion of electricity connections to low-income households and small businesses, which can therefore benefit from decentralized alternative sources of energy, such as solar.
The distribution and transmission is also a major problem, with aged systems that lead to break downs and heavy losses.
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