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AfrElec POLICY AfrElec

Private generators challenge

KenGen’s dominance

KENYA A new report from the Kenyan Energy and share of power generation still remains hugely
Petroleum Regulatory Authority (EPRA) has in favour of KenGen, which continues to make
welcomed the rise of new private generating huge investments.
companies in a market still dominated by state- KenGen plans to more than double its elec-
owned KenGen. tricity generating capacity to 4,270MW by 2025.
The report said that the new generators, It had a 76% market share in 2018, while inde-
which mainly concentrate on renewables such pendent power producers (IPPs) accounted for
as wind, solar and geothermal, are likely to win 24%.
more market share in future, fuelled by multi-bil- KenGen mainly generates hydro and geo-
lion shilling investments. thermal power, while independent producers
The new entrants have also benefited from are mainly working in the thermal, wind and
the recent unbundling and liberalisation of the solar space.
generating sector. Lake Turkana Wind Power, a 310MW instal-
KenGen currently has 1,796.4MW of gen- lation that was officially commissioned in July
erating capacity and supplies three quarters of last year, is the biggest private power producer.
Kenya’s electricity. However, it is slowly losing The Rural Electrification and Renewable
market share to the new private challenger firms. Energy Corporation opened a 54.6MW solar
“This dominance is mainly attributed to the power plant in Garissa in 2029. The plant is the
previous power structure that was vertically inte- largest solar power installation in East and Cen-
grated but with increased unbundling and open tral Africa.
access coupled with increased private sector par- Previously, IPPs were mainly to be found in
ticipation, it is unlikely that this will remain the thermal or diesel production, but the country
case in the near future,” said EPRA in its inaugu- has been looking to cut back on this source due
ral annual report for 2019 that captures trends in to its high cost, which has led to Kenya’s electric-
the Kenyan energy sector. ity process being uncompetitive from an indus-
Even so, EPRA noted that the structure and trial production point of view.™

GAS-FIRED GENERATION

Ghana’s Cenpower signs gas

supply deal with government

GHANA GHANA National Petroleum Corp. (GNPC) has In its statement, the company noted that
agreed to supply natural gas to Cenpower Gener- Accra has been importing fuel for KIPP under
ation Co. Ltd (CGC), the operator of the Kpone agreements with foreign suppliers. These
Independent Power Plant (KIPP) near Accra. arrangements have been detrimental to the
Cenpower confirmed the deal in a statement country’s capital accounts and have also caused
last week, saying that it had arranged to buy the the government to rack up penalties in line
gas during negotiations with the Ghanaian gov- with take-or-pay clauses, it said. Now, though,
ernment. The company explained that this gas state-owned GNPC will be able to use gas from
supply agreement (GSA) provided for KIPP, domestic fields to cover most of KIPP’s needs for
which is capable of using multiple types of fuel, fuel.
to switch light crude oil for gas as its main feed- This could save the government up to $3bn
stock. It also stated that gas deliveries were set to over the remaining portion of its 20-year power
begin within just a few days. purchase agreement (PPA) with Cenpower.
The company did not reveal the financial In turn, these savings will put Accra in a better
terms of the GSA or say how much gas GNPC position to pay down the additional debts it has
would deliver to its plant, which has a generating accumulated under the take-or-pay clauses of its
capacity of 340MW. It did say, though, that the PPAs with KIPP and other independent power
deal would result in substantial savings for the producers (IPPs).
government. Meanwhile, the deal will also help Ghana

Week 41 15•October•2020 www. NEWSBASE .com P7