Kenya's Power Purchase Agreement Freeze: A Threat to Economic Growth

President William Ruto has warned lawmakers of overstepping their mandate by sustaining a freeze on new power purchase agreements (PPAs), which has constrained the expansion of the grid amid growing demand. The moratorium on new PPAs has lasted over two years, sparking concerns about the country's ability to attract big-ticket multinational manufacturers and create millions of decent jobs for the growing, skilled unemployed youth population.

Key Takeaways:

• The freeze on new power purchase agreements (PPAs) has lasted over two years, constraining the expansion of the grid amid growing demand.
• Kenya's installed capacity was estimated at 3,199.9MW in June 2024, a capacity Dr Ruto has pledged to more than double by 2030.
• The executive arm of the government has been pushing lawmakers to lift the moratorium because dwindling spinning reserve on the grid could prompt power rationing if not urgently addressed.
• Kenya Power has warned that thinning extra capacity at a time when growing demand for power is not being matched by local generation could result in sustained rationing.
• Lawmakers have for years been pushing for a review of the existing PPAs, which Kenya Power signed in the past with Independent Power Producers (IPPs), and has in the past recommended the formation of an independent office to procure new IPPs under fresh terms.
• The President has directed the Ministry of Energy to open up new space for power purchase agreements, and the government is already negotiating with players in the section.
• Kenya Power has in the past warned that thinning extra capacity at a time when growing demand for power is not being matched by local generation could result in sustained rationing.
• Dr Ruto has pledged to more than double Kenya's installed capacity by 2030, with a focus on renewable energy.

Statistics:

• Kenya's installed capacity was estimated at 3,199.9MW in June 2024.
• The president has pledged to more than double Kenya's installed capacity by 2030.
• Kenya Power sold electricity for an average of Sh11.87 per kilowatt-hour (kWh or unit) to IPPs in 2023, more than double the State-run Kenya Electricity Generating Company's (KenGen's) Sh3.93 per unit.
• Kenya Power seeks to tap between 50 and 100MW more from Ethiopia to help avert power rationing when demand peaks.

Sources:

• "President William Ruto has accused lawmakers of 'overstepping' their mandate by sustaining a freeze on new power purchase agreements (PPAs)," by various media sources.
• "Kenya's installed capacity was estimated at 3,199.9MW in June 2024," by Ministry of Energy.
• "Kenya Power has in the past warned that thinning extra capacity at a time when growing demand for power is not being matched by local generation could result in sustained rationing," by Kenya Power.
• "Dr Ruto has pledged to more than double Kenya's installed capacity by 2030, with a focus on renewable energy," by President William Ruto.