How KPLC, KenGen and Epra try to limit the largest solar market in East Africa

Harald Schützeichel

It is well known that the state-owned KPLC (Kenya Power and Lighting Company) is not able to offer its customers a reliable power supply. The resulting economic damage to Kenya is immense. For a long time, households and companies have been using diesel generators as a back-up. Recently, they are increasingly turning to solar energy because they recognize that solar energy provides reliable and affordable electricity.

However, every self-generated kilowatt hour is a thorn in the eye of the monopolist. And the monopolist now reacted in the same way as monopolists do: One suffers an unbelievable loss above all because the customers increasingly generated the electricity themselves, they said. KPLC blames the customers for the consequences of their own failures.

It is not the customers who are to blame for KPLC’s financial difficulties, but rather the company’s own management mistakes, such as inadequate quality standards or inflexible contracts with electricity producers. Ultimately, customers don’t care where the electricity in their own power sockets comes from. The main thing is that it is available reliably and at an affordable price. If KPLC were to provide this, customers would not be forced to look for other solutions in their distress.

KPLC knows, of course, that blaming the customers is not really convincing and is therefore looking for support. This was soon found at another state-owned company: KenGen.

KenGen assists

Also the Kenya Electricity Generating Company Ltd. (KenGen) has no interest in customers producing their own electricity on a large scale. Therefore Frank Ochieng, Chief Communications Officer of KenGen, grasps the word: In an article for Business Daily he explains with partly quite bizarre arguments why a solar system is not economically profitable, technically problematic and definitely unsuitable for a reliable power supply.

Strange only that KenGen has been investing in the solar power business itself for a long time and is even planning to build a solar module factory. Just recently, it was even announced that in the future, it will sell electricity directly to consumers, thus ending KPLC’s monopoly.

The real message of KenGen is clear: a solar system only makes economic sense if it is built by KenGen. This is an all too transparent strategy, which is why KenGen is only partially suitable for supporting KPLC. It is therefore time for the appearance of the third player: Epra.

Epra completes

It’s no coincidence that Epra, the Energy and Petroleum Regulatory Authority (Epra), has just now announced a set of strict rules designed to limit the increasing migration of KPLC customers to affordable and reliable solar power. NATION newspaper comments: “The Draft Energy (Solar Photovoltaic Systems) Regulations, 2020 seek to make it a harder and more expensive to manufacture, import, install or maintain solar components and systems and make consumers stick to the expensive and unreliable national power grid.”

Of course it is important to raise the quality standards for energy production and distribution, including those of KPLC and KenGen. But the regulations for the solar industry now presented by Epra make one suspicious, because the speed, extent and objectives of the restrictions suggest that there are other motives than just concern about the quality of solar installations.

But what Epra is successfully doing is turning its gaze away from KPLC and toward the local solar industry. KPLC has thus achieved its goal: A scapegoat has been found for the public and at KPLC, Epra will be gratefully applauded for its good timing.

KPLC as symptom

Not only KPLC is at a crossroads today, but Kenya’s economy as a whole: does the country really want to leave power supply to a state monopolist that has proven its inability to provide a reliable supply of electricity to Kenya’s economy in the long term – or is there an interest in strengthening Kenya’s economy and promoting the country’s economic growth with a reliable and affordable energy supply?

THE STANDARD comments very clearly on the situation: “In many ways, Kenya Power is emblematic of the many things wrong with the Kenyan economy. We are an economy in transition, but which still has vestiges of an era of monopolies, government meddling, and captive customers to shoddy public services. Yet if we are going to keep growing, we must cut loose the inefficiencies of the past. … A public utility that was meant to seed a power generation and distribution market found itself captured by short-sighted elites. In the rush to make a quick shilling, they forgot to tend to the goose that lays the golden eggs. The quality of management at the firm suffered. Maintenance of transmission lines and transformers suffered. And customers found themselves paying more for less.”

It’s time for KPLC to accept reality

Those who do not deliver what the customer needs will have to live with the fact that the customer is looking for other ways. The restrictions initiated by Epra will perhaps hinder the solar industry for a short time, but certainly not stop it permanently. And they will also only delay the necessary fundamental discussion about the work of KPLC and KenGen.

It is overdue that KPLC improves its own quality standards (perhaps with the support of Epra) and develops the necessary entrepreneurial creativity to respond to market and technology changes. This is certainly not too much to ask of a Kenyan utility in the 21st century.

Kenya’s government will have to acknowledge that a monopolist like KPLC is a brake on the country’s economic development. Economic growth today is more likely to be found in the fast-growing solar industry, which is creating jobs, attracting foreign investors – and providing more and more Kenyan households and companies with exactly what KPLC has failed to deliver for decades: a reliable and affordable power supply.

 


 

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