Kenya Power Faces Potential Competition as Energy Regulator Plans Direct Power Sales

Kenya Power, the private shareholding and state-owned electricity distributor, may soon face competition from independent power producers as the Energy and Petroleum Regulatory Authority (EPRA) works on introducing regulations to enable them to sell power directly to consumers. The move comes as part of the implementation of the Energy Act, 2019, which aims to open up the electricity distribution market in the country.

Under the proposed regulations, major consumers like factories would have the option to purchase electricity directly from producers such as KenGen, which currently supplies about 60 percent of Kenya Power’s annual electricity. The decision to allow direct sales is driven by the increasing number of large consumers seeking alternative power sources due to concerns over cost and the reliability of the national grid.

EPRA director-general Daniel Kiptoo announced that the wheeling regulations, which will formalize the process, will be released for public participation within the next three months. However, Kiptoo emphasized the importance of striking a balance to ensure that the government and Kenya Power are not adversely affected by the reforms.

KenGen had previously expressed its intention to engage in direct sales once the Energy Act was enacted. The state-owned power producer’s initial targets would be the large customers that contribute to over half of Kenya Power’s electricity sales revenue.

If the wheeling regulations are approved, both KenGen and independent power producers will need to obtain a distribution license from EPRA. While the move is expected to impact Kenya Power’s revenue, its primary objective is to enhance the reliability of electricity supply in the country.

The potential introduction of competition in the electricity distribution sector could bring about significant changes in the Kenyan energy landscape. After MPs approval, regulatory framework will be finalized and both Kenya Power and Lightening Company (PLC) and independent power producers will adapt to the evolving market dynamics.