Minigrid license project to support investments in the sector

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The Energy and Petroleum Regulatory Authority (EPRA) is considering a proposal that could allow private companies to buy electricity from Kenya Power and sell it on. If approved, the proposals are expected to strengthen the minigrid sector.

The new rules aim to attract investors to the off-grid electricity sub-sector.

The proposals contained in the draft Energy Regulation (minigrid) 2021, if approved, should stimulate investors in the sector, as the structure allows them to continue their activities even when the national grid reaches their area.

The remote location of most minigrids means that the costs of transporting the fuel that powers them are high, ensuring that most of them operate at a loss, making less income from the sale of electricity than their costs. totals.

But new technologies have made investments in renewables like solar and wind less expensive, which has spurred investors who are put off by the high operational costs of running minigrids.

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Minigrid license

“A minigrid operator operating under a minigrid license who has built a distribution system … can apply to the Authority to amend its license to operate as an electricity distributor who purchases electricity in bulk from the distribution concessionaire and resells this electricity to consumers under an Energy Supply Agreement, ”the regulation reads.

“A mini-grid operator can, in the event of a main grid entering the mini-grid area… ask the Authority to modify its license to operate as an electricity producer selling to the distribution concessionaire” , indicate the regulations.

In the new proposals, EPRA will also allow requests from companies to charge more for electricity than what grid customers pay, allowing investors to make a profit.

“The Authority will review the request and if the proposed retail tariff is higher than the approved tariff of the distribution concessionaire, the applicant will be required to submit the proposed margin that would be added to the wholesale supply tariff in order to ensure distribution operations effective. Say the regulations.

The new regulations aim to streamline the operation of mini-grids of capacities up to 1 megawatts (MW) that the government is betting on to add 34,700 new homes to electricity as it rushes to achieve universal electrical connection of ‘here next year.

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The new rules will harmonize the requirements for the approval of the construction of new mini-grids, the authorization procedure and interconnection to the main grid, and the processes for setting and approving tariffs.

The sector is currently regulated by the Energy (Electricity Licensing) Regulations 2012, which are not strong enough to cope with growing interest from the sector. There are currently 106 minigrids in Kenya, 14 of which are privately owned and operated, while the Rural Electrification and Renewable Energy Corporation (REREC) owns 46, Kenya Power (28) and communities (18).

Meanwhile, 180 new minigrids are being developed by private companies and are currently in various stages of development, while the government is also planning 158 minigrids under the Kenya Off-Grid Solar Access Project (KOSAP) will be built and operated by REREC. or Kenya Power.

The new mini-grids developed by the REREC are built using funds generated by the rural electrification tax, which represents around 5% of the total electricity load.

Kenya Power in February, issued a call for tenders to upgrade its 21 diesel minigrids in northern and northeastern Kenya to hybrid solar and wind technologies to reduce operating costs.

The company bought 60 gigawatt hours of electricity from off-grid power plants last year, a marginal increase from the 50 GWh it bought in 2019.

Reported by Brian Ambani in Nation.

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Lois Mendez

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