Kenya to subsidise cost geothermal power production by more than 40 percent

Uhuru Park, Nairobi/ Kenya (source: flickr/DEMOSH, creative commons)
Alexander Richter 25 Nov 2013

Ahead of the start of operation of the 140 MW Olkaria IV plant in Kenya, the Kenyan government plans to subsidise the cost of geothermal power production by more than 40 percent to decrease power prices to be paid by households and businesses.

Ahead of the commissioining of the 140 MW geothermal plant of Olkaria IV, Kenya’s Geothermal Development Company will only be allowed to charge $0.02 per kWh (Sh1.72), instead of the real cost of $0.035 per kWh (Sh3.01). This was announced by Principal Secretary in the Ministry of Energy and Petroleum, Joseph Njoroge.

This essentially means the government subsidises geothermal power production by more than 40 percent. This is planned to help cushion households and businesses from high power tariffs.

The Olkaria IV plant is expected to come online next month.

“Eng Njoroge accompanied by Cabinet Secretary Davis Chirchir told the parliamentary Public Investment Committee (PIC) last week that the Government plans to lower the cost of power to the consumers to as low as 7 US cents (Sh6.02) per kilowatt hour from a high of about 19 US cents (Sh16.34) per kilowatt hour.

If implemented, the proposal would be a major reprieve to Kenyans whose power bills have hit the roof with fears that the matter could get worse following Kenya Power’s application to the Energy Regulatory Commission (ERC) for a tariff review to shore up its wobbling cash flow position. The reduction in power prices is expected to lower the cost of doing business and make Kenya a competitive investment destination.”

Source: Standard  Digital