Power producer parastatal KenGen has floated a tender seeking consultants to help phase out its thermal plants into gas fired plants in a bid to lower electricity costs for homes and businesses.
“To reduce the cost of power supply in the country we plan to study the feasibility of converting the existing 720MW thermal power plants operating on HFO (heavy fuel oil) to operate on natural gas,” said KenGen in the tender notice.
KenGen has been working to replace thermal power with environmental friendly alternatives.
According to the Economic Survey Report (2020) by the Kenya National Bureau of Statistics (KNBS), thermal power generation registered a decline of 15.0 per cent to 1,313.3GWh in 2019. Geothermal energy production increased by 25 per cent to 828.4 MW in 2019. Looking at the company’s unaudited results for the half-year period ended December 31, 2019 and full year ended June 30, 2019, geothermal energy was KenGen’s top earner. The company, which has embarked on a geothermal energy-led strategy, is also exploring other avenues for achieving revenue growth through its business diversification strategy.
Thermal to Gas
KenGen relies largely on hydropower and geothermal and the conversion from thermal to gas will help lower the cost of power in the country by eliminating reliance on the costlier heavy fuel oil that KenGen has resorted to in the past during dry spells.
The government has been striving to reduce the uptake of thermal power due to its high retail rate of Sh18 per kilowatt-hour (kWh), compared to other sources like hydropower (Sh3.2), solar (Sh6.7), geothermal (Sh9.1) and wind (Sh11.2).
The cost of a unit of natural gas–fired power is much lower compared to thermal.
“To reduce the cost of power supply in the country we plan to study the feasibility of converting the existing 720MW thermal power plants operating on HFO (heavy fuel oil) to operate on natural gas,” said KenGen in the tender notice.
KenGen is also mulling developing a gas-fired power plant that would run on imported liquefied natural gas (LNG).
The power producer said the gas fired plant whose expected capacity it did not disclose would help meet growing demand for electricity and help the country diversify its energy sources as well as cut greenhouse gas emissions.
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To be based at the port city of Mombasa, the gas fired plant will be fuelled by LNG processed at a facility located nearby and would have an economic life of 20 years, the company said on Tuesday.
“The proposed natural gas infrastructure project would comprise of…development of a new natural gas fired generating plant if determined to be necessary by the study.”
Consequently, KenGen has invited bids for a feasibility study on the development of the natural gas fired plant and infrastructure.
“The objectives of the feasibility study is to establish the viability of conversion of existing thermal (HFO) power plants with a total installed capacity of 720MW to operate on natural gas and resulting implication on cost of electricity,” it said in the notice.
The government’s promise for cheaper electricity is heavily pegged on increased use of the renewable energy sources like geothermal, wind and solar, which cuts the costly thermal power and ultimately reduces the fuel cost adjustment levy in bills.
The country generates a total of 2,763 MW from a mix of thermal, renewable energy and existing hydropower dams. KenGen plans to more than double its electricity generating capacity to 4,270 MW by 2025.
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