Kenya Power Lighting Company PLC (Kenya Power) recently submitted an application for a tariff review to Kenya’s energy regulator EPRA. One thing that stood out in Kenya Power’s initial application for me was a proposed special tariff for electric mobility.
As a key stakeholder in the e-mobility ecosystem, Kenya Power has been very active in promoting e-mobility. Kenya Power has also identified e-mobility as one of the key areas that will help sustain profitability and grow shareholders value. Kenya Power is looking to leverage on new business frontiers as part of its five-year Strategic Plan for the period 2023-2028. Some of the key pillars of this new growth plan include this strong focus on electric mobility, getting more Kenyans to shift to electric cooking, energy storage, and electrification of several other sectors to support decarbonization. Kenya Power has also announced plans to transition its own fleet to electric.
Yesterday, the energy regulator announced the tariffs it had approved which will be effective from the 1st of April, which is just a week away. As part of the approved tariffs, the e-mobility tariff has been included. Another important update was the expansion of the Time of Use (TOU) tariff to other sectors including this e-mobility area as well as the small commercial segment. The new e-mobility tariff has been set at 16 Kenya shillings for energy consumption up to 15,000kWh during peak periods and 8 Kenya shillings per kWh during off-peak periods also up to 15,000kWh. 16 Kenya shillings works out to 12 US cents/kWh at the current exchange rate. This is before taxes and other charges are added to the final cost the consumers will pay. This also means the tariff under the TOU program will be just 6 US cents/kWh. The 16 shillings is lower than the general domestic tariff which is 20.97 shillings per kWh for consumption above 100kWh and the small commercial tariff which has been set at 20.18 shillings/kWh for consumption above 100kWh. The e-mobility tariff is also fixed until 2025/2026.
Kenya has an installed electricity generation capacity of 3,321 MW. The peak demand is 2,132MW. It is the low overnight off-peak demand of 1,100MW that Kenya Power wants to exploit initially to power Kenya’s transition to electric mobility. Renewables make up most of the generation capacity in Kenya and provided 89% of Kenya’s electricity generation in 2021 thanks to contributions from geothermal, wind, hydro, and some utility-scale solar. Kenya is one of the major players in the geothermal space and is in the top 10 in the world when it comes to geothermal generation installed capacity. Electric vehicles in Kenya will be charged using some of this very clean electricity. As most of EV charging globally happens overnight, this low off-peak demand targeted for EV charging will help unlock efficiencies from available generation capacity such as Kenya’s geothermal plants as well as boosting Kenya Power’s revenues, whilst helping to reduce Kenya’s huge fossil fuel import bill.
Kenya has a high fossil fuel import bill that is now said to be about $500 million per month and is exacerbating Kenya’s trade deficit. This new e-mobility tariff as well as the new TOU program for the small commercial categories which has been set at 50% of the energy charge will help boost uptake of e-mobility.
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