KENYA Law and Practice Contributed by: Mary Waithiegeni Chege, Mary Anne Wachira and Joy Odhiambo, EMSI & Associates
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry The power industry in Kenya is fully unbundled, both vertically and horizontally, and consists of generation, transmission, distribution and retail segments. It includes participants from both the public and private sectors. The principal law governing the ownership and structure of the power industry in Kenya is the Energy Act, 2019, which was enacted to align the energy sector with the Energy Policy, 2018 and the devolved functions of the national and county governments in accordance with the Constitution of Kenya 2010. The generation of electricity in Kenya is dominat- ed by the majority state-owned Kenya Electric- ity Generating Company PLC (KenGen), which produces approximately 54% of the power gen- erated in Kenya. Other players in this segment include independent power producers (IPPs), the Rural Electrification and Renewable Energy Corporation (REREC), several off-grid generation licensees and, more recently, privately owned power utility companies. The transmission of electricity is undertaken by the Kenya Electricity Transmission Company Limited (KETRACO), which is mandated to oper- ate high-voltage transmission lines of 132kV and above. The distribution and supply segment is domi- nated by Kenya Power & Lighting PLC (Kenya Power), which is responsible for the procure- ment of power, including from projects under the Feed-in Tariff Policy, and for the negotia- tion of power purchase agreements (PPAs) with
IPPs and neighbouring states. It also historically served as a retailer and system operator, in addi- tion to owning and operating part of the trans- mission infrastructure and the entire distribution network in the country. Over the last few years, the distribution segment has seen the introduc- tion of privately owned distribution and electric- ity retail players. Battery Energy Storage Systems (BESS) are still in the early stages of development. KenGen has conducted prefeasibility studies on the instal- lation of utility scale BESS, and the Ministry of Energy & Petroleum (MoEP) has also under- taken a technical analysis on BESS. Following these studies, MoEP has designated KenGen to implement a 200 MWh BESS pilot project to build capacity in the energy sector, and it is anticipated that this mandate will continue to be vested in KenGen. 1.2 Principal State-Owned or Investor- Owned Entities The principal state-owned players in the gen- eration, transmission and distribution segments include the following. • KenGen is 70% owned by the government of Kenya and is listed on the Nairobi Securities Exchange. It accounts for slightly over 54% of electricity generated. • The Geothermal Development Company (GDC) is wholly owned by the government and was established to carry out geothermal exploration, production drilling and manage- ment of steam fields. • The Nuclear Power and Energy Agency (NuPEA) is wholly owned by the government and is responsible for overseeing research and development of nuclear electricity gen- eration in Kenya.
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