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3/1/2012<br />
<strong>Kenya</strong> <strong>Power</strong>’s Experiences and<br />
Challenges as a single off-taker<br />
in the <strong>Power</strong> Sector<br />
Presentation to the <strong>UPDEA</strong><br />
Scientific Committee Meeting<br />
By<br />
Eng. Joseph K. Njoroge, MBS,<br />
Managing Director & CEO<br />
<strong>Kenya</strong> <strong>Power</strong> & Lighting Co. Ltd.<br />
OUTLINE<br />
<strong>Kenya</strong> <strong>Power</strong>’s Vision, Mission and Strategic<br />
Pillars<br />
Role of <strong>Kenya</strong> <strong>Power</strong> in the Economic Vision<br />
<strong>Power</strong> Sub-Sector Reforms<br />
Key Statistics<br />
Major Develop<strong>me</strong>nts in the <strong>Power</strong> Sub Sector<br />
Transforming Distribution Infrastructure and<br />
Custo<strong>me</strong>r Service Delivery<br />
Major Sub-Sector Challenges and Responses<br />
Future Outlook<br />
4 th July 2011<br />
1<br />
2<br />
<strong>Kenya</strong> <strong>Power</strong>’s Vision, Mission<br />
& Strategic Pillars<br />
People<br />
Diversification<br />
Robust Network<br />
Vision : to provide world<br />
class power that delights our<br />
custo<strong>me</strong>rs<br />
Financial<br />
Custo<strong>me</strong>r<br />
Service &<br />
Marketing<br />
Innovation<br />
Corporate Social<br />
Responsibility &<br />
Governance<br />
Sources of<br />
<strong>Power</strong><br />
Mission : <strong>Power</strong>ing people for better lives<br />
Core values: Custo<strong>me</strong>r First; One Team; Passion; Integrity,<br />
Excellence<br />
3<br />
Role of <strong>Kenya</strong> <strong>Power</strong> in the Economic Vision<br />
In the new constitution consu<strong>me</strong>rs have a right to goods & services<br />
provided by public and private entities<br />
Planning and develop<strong>me</strong>nt of electricity infrastructure will be executed<br />
in liaison with national and county govern<strong>me</strong>nts<br />
Vision 2030 envisages major infrastructural develop<strong>me</strong>nt to facilitate<br />
economic growth. <strong>Kenya</strong> <strong>Power</strong>’s contribution is:<br />
Increasing population access to electricity from the current 29% to 40% by<br />
2020<br />
Planning and imple<strong>me</strong>ntation of distribution reinforce<strong>me</strong>nt and upgrade<br />
projects<br />
Procure<strong>me</strong>nt of adequate power generation capacity from diverse sources;<br />
and maintaining a minimum reserve margin of 15% (and preferably 30%)<br />
Promotion of green energy invest<strong>me</strong>nts by undertaking the procure<strong>me</strong>nt<br />
process<br />
Improving power supply quality, reliability and custo<strong>me</strong>r service 4<br />
1
3/1/2012<br />
Refor<strong>me</strong>d Electricity Sub-sector Structure<br />
Refor<strong>me</strong>d Electricity Regulatory Environ<strong>me</strong>nt<br />
Companies Act (Cap 486)<br />
Nairobi Stock<br />
Exchange Listing<br />
Rules<br />
State Corporations Act<br />
KPLC<br />
The New<br />
Constitution of<br />
<strong>Kenya</strong><br />
ERC Regulations<br />
Cities<br />
& Counties<br />
Capital<br />
Markets<br />
Authority Act<br />
Public<br />
Procure<strong>me</strong>nt &<br />
Disposal Act<br />
Environ<strong>me</strong>nt Grid Code<br />
Manage<strong>me</strong>nt &<br />
Coordination Act<br />
Energy Act<br />
2006<br />
5<br />
6<br />
Key Statistics<br />
Installed capacity MW (May 2011) 1,599.9<br />
Available Generation Capacity MW (May2011) 1,359.2<br />
System Peak Demand MW to date* (10 th May 2011) 1,191.03<br />
Forecasted unconstrained demand MW 1,290<br />
Reserve Margin % (May 2011) * 5.1%<br />
Energy Purchased 2009/10 (GWh) 6,692<br />
Total Sales 2009/10 (GWh) 5,624<br />
Sales % of Energy Purchased 2009/10 84.0%<br />
Losses as % of Energy Purchased 2009/10 16.0%<br />
Transmission and Distribution Lines, Circuit Length in<br />
Kilo<strong>me</strong>ters (11kV to 220kV) 47,347<br />
Number of Custo<strong>me</strong>rs (May 2011) 1,720,868<br />
Population Electricity Access 29%<br />
Note: Reserve margin is thin at 5.1% as compared to the ideal of 15%. About<br />
112MW of demand is not being <strong>me</strong>t due to insufficient generation capacity,<br />
currently occasioned by poor hydrology 7<br />
Major Develop<strong>me</strong>nts Underway in the <strong>Power</strong><br />
Subsector<br />
Recent creation of REA, Ketraco and GDC<br />
New Energy Scale Up Program targeting 1million new households<br />
over 5 yrs at cost of KShs. 84 billion<br />
Planned East African Regional Interconnection projects e.g.<br />
Connection to Tanzania , Ethiopia and 2 nd Uganda line totaling 1,780<br />
kms at an estimated cost of US$ 876 million<br />
38 committed transmission projects totaling 3,697 kms and 2,421<br />
MVA of substation capacity being developed within the country<br />
between 2011 and 2015 at an estimated US$ 482 million,<br />
Public private partnership fra<strong>me</strong>work to facilitate procure<strong>me</strong>nt of<br />
new projects that aug<strong>me</strong>nt capacity e.g. geothermal, thermal, wind<br />
Green energy invest<strong>me</strong>nts through Feed-in-Tariff<br />
A total of 1,789.6MW of new generation capacity is being developed<br />
between 2011 and 2015 out of which 857MW will be green energy<br />
(hydro, geothermal and wind), 732MW of new thermal plant (MS<br />
Diesel and coal) and 200MW of imports.<br />
8<br />
2
3/1/2012<br />
20 000<br />
18 000<br />
16 000<br />
14 000<br />
12 000<br />
10 000<br />
8 000<br />
PROJECTED NATIONAL SUPPLY AND DEMAND<br />
– 2011 to 2030<br />
In 2020 <strong>Kenya</strong> must have at<br />
least 40% population access to<br />
electricity to reach the Vision<br />
2030 target<br />
Total Capacity (MW)<br />
Peak Demand (MW)<br />
8 226<br />
Vision 2030<br />
demand<br />
Forecast of 8-10 %<br />
17 764<br />
12 141<br />
10 097<br />
15 066<br />
Significant generation<br />
potential<br />
Geothermal(~ 7,000MW);<br />
Hydro (~1,500MW);<br />
Wind (~4,400 MW); and<br />
TRANSFORMING DISTRIBUTION<br />
INFRASTRUCTURE AND CUSTOMER SERVICE<br />
DELIVERY<br />
6 000<br />
4 000<br />
2 000<br />
0<br />
1,229<br />
1,107<br />
2010<br />
2011<br />
2012<br />
2009/10<br />
3 141<br />
2 038<br />
2014/15<br />
4 659<br />
3 474<br />
6 768<br />
2018/19 2023/24 2026/27 2029/30<br />
2013<br />
2014<br />
2015<br />
2016<br />
2017<br />
2018<br />
2019<br />
2020<br />
2021<br />
2022<br />
2023<br />
2024<br />
2025<br />
2026<br />
2027<br />
2028<br />
2029<br />
2030<br />
Potentially Coal and Gas.<br />
• 15% Reserve Margin<br />
Vision 2030 ~<br />
Projected Demand<br />
15,000MW<br />
Source: Update of <strong>Kenya</strong>’s Least Cost <strong>Power</strong> Develop<strong>me</strong>nt Plan 2010-2030 9<br />
10<br />
Distribution Expansion Plan Under<br />
Imple<strong>me</strong>ntation 2010/11 to 2014/15<br />
To connect over 1 million new custo<strong>me</strong>rs spread<br />
countrywide every 5 years.<br />
Construction of an additional approximately :<br />
16,000 kms of Medium Voltage distribution lines,<br />
1,000 MVA of distribution substations,<br />
50,000 kms of LV distribution lines,<br />
30,000 (3,000 MVA) of distribution transfor<strong>me</strong>rs and<br />
1 million service lines connections<br />
11<br />
Distribution Infrastructure Invest<strong>me</strong>nt Funding<br />
Since 2005 to date, a total of US$ 480 Million (Kshs 38.4 billion) has been mobilised to<br />
improve distribution infrastructure as follows:<br />
PROJECT FINANCIER AMOUNT PROJECT COMPONENTS OBJECTIVES<br />
Energy Sector Recovery Project<br />
(2005 to 2012)<br />
•IDA–US$111.5m<br />
•EIB–Euro51m<br />
•AFD–Euro25m<br />
•NDF–Euro10m<br />
•KPLC–US$34m<br />
<strong>Kenya</strong> Electricity Expansion<br />
Project (2010 to 2015) (IDA US<br />
$102.2 mill , KPLC US$ 29.8mill)<br />
Rights Issue Funding (2011 to<br />
2013) (KPLC)<br />
US$ 233<br />
million<br />
US$ 132<br />
million<br />
KShs. 9.2<br />
billion<br />
•Completed 25 substations,<br />
1,250 kms of fibre optic, 540<br />
kms of 66,33 & 11 kV<br />
distribution lines, procured<br />
406,000 static energy <strong>me</strong>ters,<br />
and installed Mt. <strong>Kenya</strong> Radio<br />
System.<br />
•Works ongoing at 26<br />
substations, 465 kms of lines<br />
and SCADA/EMS system.<br />
To date, US $ 102 million has<br />
been disbursed.<br />
Procuring 26 substations, 1400<br />
kms MV lines and prepaid<br />
<strong>me</strong>ters<br />
Procuring 17 Distribution<br />
substations, 4 transmission<br />
substations, 300,000 prepaid<br />
<strong>me</strong>ters<br />
•Enhanced access to<br />
electricity<br />
•Capacity<br />
enhance<strong>me</strong>nt<br />
•Supply reliability &<br />
power quality<br />
improve<strong>me</strong>nt<br />
•Revenue<br />
enhance<strong>me</strong>nt &<br />
protection<br />
•Enhanced custo<strong>me</strong>r<br />
satisfaction<br />
12<br />
3
3/1/2012<br />
3 500 000<br />
3 000 000<br />
2 500 000<br />
2 000 000<br />
1 500 000<br />
1 000 000<br />
500 000<br />
-<br />
Total Number of Custo<strong>me</strong>rs<br />
Projected<br />
2 000 000<br />
1 720 868<br />
3 000 000<br />
In order to address critical electricity supply quality service challenges facing the<br />
company the following new projects are being imple<strong>me</strong>nted in the period 2010/11 to<br />
2015/16:<br />
Project Objective Status<br />
1. Distribution Master Plan Plan for comprehensive improve<strong>me</strong>nt Tendered<br />
to the entire distribution network<br />
2. Under grounding of electricity To reduce electricity line break downs In progress<br />
lines<br />
in urban centres as well as to enhance<br />
public safety<br />
3. Automation Extension of new technologies such as Pilot projects in<br />
smart grid, so as to improve Nairobi and<br />
performance of the electricity network Mombasa in<br />
progress<br />
4. Auto changeovers Installation of more efficient load<br />
switching equip<strong>me</strong>nt<br />
In progress<br />
5. Dry Type Transfor<strong>me</strong>rs and<br />
Intruder Alarms<br />
6. Joint Venture Transfor<strong>me</strong>r<br />
Factory<br />
Distribution Strategic Initiatives<br />
Change from oil type to dry type<br />
transfor<strong>me</strong>rs that are less prone to<br />
vandalism<br />
Initiate manufacturing of transfor<strong>me</strong>rs<br />
locally in a joint venture arrange<strong>me</strong>nt.<br />
Alarms being<br />
installed<br />
Tendered<br />
13<br />
14<br />
Project Objective Status<br />
7. Reactive<br />
<strong>Power</strong><br />
Compensation<br />
8.Aerial Bundled<br />
Conductors<br />
To improve voltages and<br />
harmonics through installation of<br />
capacitors and other equip<strong>me</strong>nt.<br />
Use of Aerial Bundled Conductors<br />
in urban areas or where there is<br />
heavy vegetation, as they require<br />
much less maintenance work<br />
In progress<br />
Tendered and expected to cost<br />
about Shs 3 billion<br />
9. Concrete Poles Increased use of concrete poles in 26,300 concrete poles received<br />
power line construction leading to from the supplier to date out of<br />
fewer faults and less maintenance which 16,104 have been used<br />
10. Change to<br />
Smart Grid<br />
System<br />
Distribution Strategic Initiatives contd.<br />
To realize a grid which has<br />
communication linkages between<br />
custo<strong>me</strong>rs and system operators.<br />
To improve service delivery,<br />
efficiency and effectiveness in<br />
operations. Will facilitate<br />
leveraging of assets.<br />
Prepaid <strong>me</strong>tering being done with<br />
adaptable <strong>me</strong>ters, fibre optic<br />
installation being done in so<strong>me</strong><br />
parts of the system<br />
15<br />
Custo<strong>me</strong>r Service Strategic Initiatives<br />
Effectively collect revenue while providing efficient and high quality<br />
custo<strong>me</strong>r handling services. KPLC has developed a core competence of<br />
consistently achieving over 98% revenue collection as percent of billing<br />
Action<br />
Ti<strong>me</strong> Fra<strong>me</strong><br />
i. Automatic Meter Reading (AMR) project Pilot 2008/9<br />
Roll-out 2009/10 to<br />
2014/15<br />
ii. Prepaid Meters Pilot Rollout project to retrofit Pilot 2009/10<br />
250,000 per year small to <strong>me</strong>dium custo<strong>me</strong>rs.<br />
Install 200,000 <strong>me</strong>ters per year for new Roll-out 2010/11 to<br />
custo<strong>me</strong>rs<br />
2014/15<br />
iii. Smart <strong>me</strong>tering for 100,000 do<strong>me</strong>stic and Roll-out 2010/11 to<br />
small com<strong>me</strong>rcial custo<strong>me</strong>r<br />
2014/15<br />
iv. Use feeder <strong>me</strong>tering and transfor<strong>me</strong>r ring Roll-out 2009/10 to<br />
fencing to guide and monitor loss campaigns 2014/15<br />
v. Improve supply to people settle<strong>me</strong>nts Roll-out 2010/11 to<br />
2014/15<br />
16<br />
4
3/1/2012<br />
Threat<br />
1. Electricity theft & vandalism of<br />
infrastructure<br />
2. Sufficiency of Generation Capacity<br />
(delays due to protracted negotiations<br />
and lack of guarantees).<br />
3. Vagaries of weather including drought<br />
and floods.<br />
4. Affordability of power (new<br />
connections, tariffs, fuel costs)<br />
5. Right of Way for power infrastructure<br />
(levies, encroach<strong>me</strong>nt, etc.)<br />
MAJOR SUB-SECTORAL SECTORAL CHALLENGES<br />
Mitigation<br />
• Dry type transfor<strong>me</strong>rs, intruder alarms,<br />
relocation of transfor<strong>me</strong>rs, etc .<br />
• Community policing, public education<br />
• Lobbying for stiff penalties for infrastructure<br />
vandals<br />
• E<strong>me</strong>rgency generation<br />
• Raising reserve margin<br />
• Fast tracking so<strong>me</strong> projects<br />
• Projects under Feed In Tariffs policy<br />
• Diversify generation sources<br />
• Regional Interconnection<br />
• Least Cost Generation Planning<br />
• Promoting green energy sources<br />
• Credit facilities to custo<strong>me</strong>rs for connection<br />
costs<br />
• Public Education<br />
• Engaging local authorities<br />
6. Uncoordinated urban planning. • Engaging local authorities, Govern<strong>me</strong>nt urban<br />
17<br />
planners and other infrastructural developers<br />
FUTURE OUTLOOK<br />
Strategies for <strong>me</strong>eting demand going forward are in place.<br />
Support from develop<strong>me</strong>nt partners for network<br />
infrastructural invest<strong>me</strong>nt program in place – <strong>Kenya</strong> <strong>Power</strong>’s<br />
contribution also in place.<br />
Favorable operating environ<strong>me</strong>nt is expected from a vibrant<br />
economy.<br />
Accelerated economic activity is expected from large scale<br />
expansion of infrastructure.<br />
Revised legislation to imple<strong>me</strong>nt the new constitution will lead<br />
to :<br />
Better streamlining of stakeholder interests in power<br />
supply<br />
Clearer invest<strong>me</strong>nt boundaries for players in the electricity<br />
subsector<br />
18<br />
THANK YOU<br />
19<br />
5