Kenya plans to scrap the current feed-in-tariff system and replace it with an energy auction tariff that will see the government award energy contracts to companies’ offering the lowest electricity tariffs.
Director of Renewable Energy at the Ministry of Energy Isaac Kiva says the auction model will replace the current feed-in-tariff system where investors identify potentially viable power projects and then acquire licenses to operate them at pre-determined rates.
For the last ten years, Kenya has been using the feed-in-tariff model where investors interested in investing in wind power, geothermal, solar, hydropower and biomass energy sources are offered a power purchase agreement to construct the power plant and sell the electricity to Kenya power.
However, the model has been criticized as being responsible for making power tariffs expensive.
The government now plans to scrap this with an auction system where tenders are given for the company offering the lowest rates.
The Ministry of Energy has drafted a bill which will offer more incentives to renewable energy investors.
Director of Renewable Energy at the Ministry of Energy Isaac Kiva says more than 800 companies have benefited from the time of use tariff plan introduced last December offering large power consumers a 50 per cent discount on power used between 10pm and 6am.
More than 3,000 large companies are yet to enjoy the time of use tariffs since they do not operate at night.
Kenya plans to use low power tariffs to lure more investors into the country to drive the big four agenda on manufacturing.