Kenya is set to test the commercial viability of a planned liquefied natural gas (LNG) power plant as it steps up efforts to remove the expensive diesel-powered thermal plants for the national grid and offer consumers cheaper electricity.
The Public Private Partnership (PPP) Unit of the National Treasury is already recruiting an expert to, among other things, test the commercial viability of the planned 1,200 megawatt (MW) plant.
‘The feasibility study is intended to determine the commercial viability and PPP suitability of implementing the proposed project from a technical, economic, social, environmental and financial perspective,’ it said.
The planned LNG plant to be located in Dongo Kundu, Mombasa, is key to easing Kenya Power’s reliance on the expensive and dirty thermal power plants. It will be constructed via the PPP model.
Electricity from thermal plants is the most expensive of all sources to Kenya Power, with a kilowatt-hour (kWh) averaging Sh35.09, largely fuel cost charge, which is the single biggest component on consumer monthly power bills. Thermal power is 11 times costlier than locally-generated hydropower, which averages Sh3.27 a unit.
The LNG plant, to be built in phases, will lower the amount of thermal power that Kenya Power taps to stabilise power supply in the Coast region and countrywide when demand peaks in the evening.
Reduced use of thermal power is key to lowering electricity prices for consumers.
Kenya targets to have the first 300MW delivered this year, another 300MW in 2028, and 600 MW in 2032.
The project will be built via the Build-Own-Operate or Build-Own-Operate-Transfer model.
Thermal power supplied 706.9 gigawatt-hours (GWh) or 9.05 percent of the total output to the national grid in the six months to December last year, behind wind (12.98 percent), locally-generated hydro (22.36 percent), and geothermal power (40.06 percent).
Monthly electricity bills for consumers traditionally go up whenever fuel prices rise, and generation from the thermal power plants is high, underscoring the impact of FCC on bills.
Kenya does not have any confirmed reserves of LNG and is counting on Tanzania or other countries to get the commodity.
The country signed an agreement with Tanzania to build a pipeline to evacuate LNG from Mtwara in the southeastern part of Tanzania to the port of Mombasa. The two inked the deal in 2021.
The PPP unit says that an LPG plant will offer Kenya cheaper power compared to the thermal plants and also lower environmental pollution.
‘LNG Single Cycle Gas Turbines or Combined Cycle Gas Turbine (SCGT/CCGT) generation offers a lower-cost and more environmentally efficient alternative to existing diesel-based thermal generation,’ the PPP Unit said.
Kenya has for years been forced to lean on the expensive thermal power plants to shore up supply when demand spikes in the evening. The plants are also integral in stabilising the electricity supply in the Coastal region.
There are eight thermal plants currently supplying electricity to Kenya Power. Two are owned by Kenya Electricity Generating Company , while the rest are independent power producers.