KenGen is seeking a PPP with external investors as it ventures more into green energy projects.The successful firm will enter into a joint venture (JV) with KenGen.
KenGen, which has a 1,796 MW or thereabouts annual capacity and supplies approximately 75 percent of the Kenya’s electricity said that it will cede 75 percent of the stake to the winning firm. This means that KenGen will be a 25 percent shareholder in the project.
The SPV will be responsible for the development, design, financing, construction, operation and maintenance of the project whereas KenGen will be responsible for the operation, maintenance, and management of steam supply to the project.“KenGen has drilled and tested all production wells required for the project,” read a statement from KenGen.
“KenGen will enter into a long-term steam supply agreement with the SPV through which the project will purchase steam from KenGen,” it said.
The plans come at a time where mega electricity generation projects valued at billions of shillings have stalled after the distributor -Kenya Power- indefinitely froze the signing of new power purchase agreements (PPAs), citing financial constraints and excess capacity.
Earlier this year, Kenya Power chairman Mahboub Maalim opined that the company would not sign new PPAs pending a sector review intended to establish the country’s additional demand for energy.
Mr Mohamed said electricity generation has overshot Kenya Power absorption capacity, hence the need for a moratorium on any new projects.
“There’s an excess capacity of power generation right now in Kenya,” said Mr Mohamed in an interview.
Pursuant to the Least Cost Power Development Plan, the government in 2013 set an ambitious plan to install an additional 5,000MW to the national grid by 2017. This power is expected to be generated from renewable energy sources such as geothermal, solar and wind farms with a target to connect all homes to power by 2020.
Currently, Kenya Power has 23 PPA applications under consideration with capacity of generating an additional 2,240.5 MW or thereabouts.
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