Competitive auctions for renewables projects could replace feed-in-tariff system in Kenya
Kenya’s Energy Regulatory Commission (ERC) is drafting new regulation that would move away from a feed-in-tariff regime to a system based on competitive auction for renewable energy projects. This is aimed at reducing electricity costs for consumers.
Reported by several media outlets, Kenya’s Energy Regulatory Commission (ERC) seems to be working on drafts for new regulations on how renewable energy projects are being awarded in Kenya.
In an article this week, lawyers from Eversheds describe that the new regulations could be implemented as early as by the end of the first quarter of 2017.
The new regulation would introduce competitive auctions for awarding renewable energy projects in Kenya. This would be a shift from the current feed-in-tariff (FIT) regime in place under the Feed-in Tariff Policy 2012 (revised in December 2012). The current FIT system offers tariffs for small renewable projects up to 10 MW and for large renewable projects above 10 MW.
The FIT, as it is in place right now, allows the award of projects without a requirement for tendering, with a certain reliability, transparency and equality to develoeprs.
Focused on achieving lower prices, the Energy Regulatory Commission believes a change would help create competition among developers and investors to offer lower prices, which would translate to lower prices for consumers.
The new regulation is though believed to mostly favour the solar sector in Kenya and it is not clear how it would effect private geothermal energy development, and in particular projects in development today.