The energy regulator is planning to set up a fund to cushion operators of mini-grids from high costs as part of regulations to encourage investors generate, transmit and sell electricity in remote areas at affordable retail prices.
A proposed law seeks to open up the national grid transmission and distribution network to multiple players, challenging Kenya Power’s stranglehold on supply of electricity.
The Energy Bill, which underwent first reading in November 2017, proposes licensing of rival electricity distributors and retailers in a bid to open up the market and end State-controlled Kenya Power’s near-monopoly status.
The Energy Regulatory Commission (ERC) says it is planning ahead in order to have regulations within a year after the proposed energy law is passed.
ERC director general Pavel Oimeke said the setting up of a fund will ensure uniform electricity tariffs for mini-grids across the country based on fair return on investment, with varying additional costs due to factors such as location being shouldered by the proposed fund.
The cost of a tariff for a mini-grid is quite high because you are doing generation, distribution and billing, Mr Oimeke said last week.
Right now, the government is funding transmission lines through Ketraco and we have Kenya Power and REA (Rural Electrification Authority) doing distribution. So the cost that people are paying (for electricity) now is not the true cost.
He said the regulator will be seeking concurrence within the government, including ministries of Energy and the Treasury, first on the size and source of funds before developing a framework for implementation.
