Lifting of PPAs freeze a shot in the arm for Kenya’s energy ambitions
Tuesday March 07 2023
Former President Uhuru Kenyatta in March 2021 appointed the John Ngumi-led Taskforce for the Review of the Power Purchase Agreements (the PPA Taskforce) with the mandate for the review and analysis of power purchase agreements entered into by Kenya Power and review of the sustainability and viability of independent power projects (IPPs) and the energy sector in Kenya.
The task force identified the skewed PPAs with the IPPs as the major cause of the runaway and unsustainable electricity costs.
This informed the Uhuru government’s decision to temporarily place a moratorium on the procurement of new PPAs by Kenya Power. This has seen a more than one-year hiatus on the signing of the PPAs.
But current President William Ruto’s Cabinet in February approved the lifting of the moratorium on PPAs. Approval was also granted for the implementation of the 40 MW Olkaria 1 Additional Units 4 and 5 and Olkaria IV Units 1 and 2 uprating power project.
In mainstreaming the Renewable Energy Auction Policy, the Cabinet further approved a framework for the transparent engagement of independent power producers.
As Kenya grapples through the energy trilemma (energy security, sustainability and affordability) the lifting of the moratorium on the signing of PPAs and with a particular focus on renewable energy sources through energy auctions comes as the much-needed shot in the arm for the realisation of various constitutional and legislative imperatives, energy transition and the Least Cost Power Development Plan (LCPDP).
The Renewable Energy Auction Policy framework brings along the much-sought benefits of competition, transparency and value for money in power procurement.
In many emerging markets, Kenya included, there is a significant gap between the demand for and supply of electricity.
The country should now focus on aligning both the energy supply and demand aspects and mainstreaming renewable sources of energy and competitive, sustainable procurement of the same towards a viable and investment-attractive energy sector for the county’s economic and social growth.
It’s only through this approach that the constitutional and statutory imperatives can be realised.