Net-metering regulations in Kenya: What do you need to know?
The Kenya Energy Act, 2019, is coming alive. 2 weeks ago, the Energy and Petroleum Regulatory Authority, the Kenyan energy regulator, published the Energy (Net-metering) Regulations, 2022, that seek to implement net metering provisions in the Act, for public participation. Attached to the regulations is a regulatory impact assessment, as required by the Statutory Instruments Act.
Net-metering encapsulates one of the hallmark principles of the Energy Act, 2019- that those who supply energy deserve a fair return. Through net-metering, a consumer of electricity from the grid who installs a renewable energy system, like solar panels, for his or her own use will be compensated for any surplus that is fed back into the electricity grid.
The Energy Act, in Section 162, submits that any consumer who has an electric power generator capacity not exceeding 1 Megawatt is eligible to apply to enter into a net-metering system agreement with a distribution licensee or retailer, currently Kenya Power, for as long as that generator is within its area of supply. The Act goes a step further to provide that if one is eligible and applies for it, Kenya Power has no recourse but to make that service available to them.
The regulations are coming in at the right time in the country in light of the many households and industries that have installed solar photovoltaic panels estimated to generate a combined 100 MW, and who are currently forced to dump excess power, in the absence of storage systems for the same. Such consumers would thus be able to feed this power into the grid at the same rate as Kenya Power’s retail tariff or offset their consumption from the grid by a fraction of the energy banked, where generated power is inadequate.
Other key provisions of the regulations that potential consumers need to know include:
- Net-metering will be provided on a non-discriminatory and first come first served basis, subject to operational constraints. What this means is that operating limits will be installed in some areas in light of existing power flows to avoid overloading the lines and to maintain stability of the system. Thus while one may be eligible to be provided with a net metering service, limits may be reached in their area and in that respect be declined service.
- Phase 1 of the net-metering programme which will be for a period of 3 years upon the regulations coming into force, will only take in a capacity of net-metering systems that do not exceed 100 MW. Again, only a limited number of consumers will be absorbed in the short term, on a first come first served basis, though this may be reviewed later by the Cabinet Secretary.
- Net-metering systems will only be installed by approved personnel determined by Kenya Power for specific areas, in accordance with the Electric Power (Electrical Installation Works) Rules.
- Meters for net metering systems will be bi-directional meters that can measure both the energy imported and exported to the grid, and will further be type approved and duly calibrated by the Kenya Bureau of Standards.
- Application decisions for net-metering will be made within 60 days. As per the current format, applicants will bear all costs related to the meter and setting up the interconnection with Kenya Power.
- All net-metering consumers must seek Kenya Power’s approval before making any changes or replacements to the net-metering system or the connection point.
- Renewable energy credits created as a result of electricity supplied by net-metering will be owned by the consumer that generated the credit, unless revised by future law. This opens an attractive avenue for subsequent sale of carbon credits by consumers.
- To maintain transparency, the limits in a given area will be published at Kenya Power’s website. Further, a register of all net-metered consumers will also be maintained and published at their website.
- The application form and net-metering agreement formats are provided in the regulations. Agreements will only be for 10 years.
The net-metering regulations are welcome. Unlike other jurisdictions which seek to increase their renewables footprint, net-metering in Kenya is primarily meant to deal with the issue of storage. This is because Kenya generates more than three quarters of its power from renewables, with potential for more, and besides, generates excess energy.
Perhaps what may be disappointing for some is the fact that compensation will be in the form of credits, as opposed to monetary payments. Further, these credits cannot be carried over at the end of Kenya Power’s financial year. Lack of monetary compensation may discourage innovation, especially with regard to system design, capacity, and other benefits- the regulator may opt not to compensate generation but should consider compensating innovative enhancements that will improve their service, the system and future consumers.
Another weakness of the regulations is that approvals and net-metering agreements are specific to the applicant, and are not transferrable. This is disappointing for owners looking to off-load property as an existing net-metering system will be considered attractive by potential purchasers, and bump up the sale price. Having to forfeit such a system when moving out after paying application and installation fees will discourage owners from selling their properties, and stifle commerce. The regulator may look into providing approvals related to land parcels, and have agreements be assignable, of course with their consent, but with minimal if any fees.
If you wish to learn more about net-metering in Kenya, please reach out to me at firstname.lastname@example.org
Photo credit: GC Solar SA, 2022 https://www.pv-magazine.com/2022/02/07/net-metering-would-offer-a-solar-rooftop-alternative-to-uneconomic-kenyan-utilities/
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The Kenya Energy Act, 2019, is coming alive. 2 weeks ago, the Energy and Petroleum Regulatory Authority, the Kenyan energy regulator, published the Energy (Net-metering) Regulations, 2022, that seek to implement net metering provisions in the Act, for public participation. Attached to the regulations is a regulatory impact assessment, as required by the Statutory Instruments…