Through its Vision 2030, the Kenyan government is planning to increase generation capacity to 23,000 MW by 2030 to meet the growing electricity demand and assuage constraints in economic growth. The need to diversify its generation mix has led the government to focus on the development of its wind and geothermal generation capacity. Kenya is believed to have renewable energy potential to include 7,000MW of geothermal and other renewables such as wind, biomass and solar.
The Energy Regulatory Commission (ERC) was established in 2007 to oversee the country’s energy sector and is tasked, amongst other areas, to regulate the electrical, petroleum and related products, renewable energy and other forms of energy generation while protecting the interests of the consumer, investor and other sector stakeholders.
Through the assistance of the United States Agency for International Development and Power Africa, NARUC worked to strengthen the ERC’s technical capabilities to regulate electricity, thereby encouraging private investment in the power sector. The partnership supported the wider efforts by the Government of Kenya and Power Africa to increase Kenya’s generation capacity and add new connections through improved regulatory frameworks and practices.
The partnership focused on strengthening the regulatory framework and building capacity to ensure that Power Purchase Agreements (PPAs) signed by the utility were balanced and financially sound. The partnership also supported ERC’s capacity building in reviewing and approving wheeling agreements within the country and across its borders to support the expansion of the transmission connections.
Power Purchase Agreements
Through engagement with NARUC experts in 2016, ERC staff identified approaches for streamlining and enhancing the PPA review and approval process to ensure timely commissioning of new generation projects. With 4,246 MW of new generation in PPA negotiations at the time, the ERC played a vital role in ensuring a smooth growth in renewable generation capacity.
Transmission Wheeling and Open Access
The ERC, KPLC and KenGen collaborated with NARUC expert volunteers from the US and ECOWAS Regional Electricity Regulatory Authority (ERERA) to develop a draft checklist to begin to institutionalize the key elements of reviewing wheeling agreements in Kenya in 2016. The draft checklist provided the ERC with a starting point to evaluate wheeling agreements more systematically to ensure fair compensation for the provision of wheeling services, adequate risk allocation, and clear responsibilities for the technical and economic dispatch of power.
Project Dates: 2016-Present
Kenya Energy Regulatory Commission
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