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Plan to end Kenya Power's monopoly gains momentum

Key industry players, including the Kenya Association of Manufacturers (KAM) have supported the move.

A Kenya Power worker on site

Independent power producers (IPPs) in Kenya are pushing for a proposal to sell electricity directly to consumers, potentially breaking Kenya Power's long-held monopoly.

This move aims to bypass Kenya Power's distribution network and establish a direct connection with customers, offering competitive pricing and expanding market share.

The Energy and Petroleum Regulatory Authority (EPRA) is currently developing regulations to facilitate direct power sales, including a licensing and tariff-setting framework specifically for IPPs.

During a session with the Senate Committee on Energy, George Aluru, Chairman of the Electricity Sector Association of Kenya, proposed opening the Kenya Power market to competition from local independent power producers, citing the Energy Act, 2019, which supports competition.

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These proposed changes are expected to introduce increased competition in the electricity market, bringing benefits to consumers, including improved service quality, lower prices, and a wider selection of energy options.

IPPs argue that the existing system, where they sell power to Kenya Power at wholesale prices and subsequently repurchase it at retail prices, leads to inefficiencies and restricts their ability to innovate and offer better deals directly to end consumers.

To demonstrate the viability and advantages of direct sales, some IPPs have already initiated pilot projects targeting large industrial and commercial customers.

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However, implementing direct power sales may face challenges, including regulatory hurdles, resistance from Kenya Power, and the need for significant investments in infrastructure and customer acquisition.

IPPs have also faced increased scrutiny over contracts with Kenya Power, which have resulted in significant revenue for the power generators.

Critics of the proposed changes express concerns about potential disruptions in the electricity sector and the financial sustainability of IPPs' business models.

Key industry players, including the Kenya Association of Manufacturers (KAM), support the shift towards direct power sales.

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