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A Game Changer for Renewable Energy in Kenya

2024-08-16

A Game Changer for Renewable Energy in Kenya

The Energy (Net-Metering) Regulations, 2024

In this era of high electricity bills, the Net- Metering Regulations could not have come at a better time. Net-metering is a mechanism that allows consumers to supply electricity to the national grid in times of over production and to make use of the credited energy during other times. This allows the consumer to offset the cost of the electricity they consume from the grid. The electricity produced may be from renewable energy sources such as solar photovoltaic (PV) panels, wind, hydraulic, biomass and other coefficient plants.

The Energy Act provides for a framework for electricity consumers who generate their own electricity for consumption to enter into net-metering arrangements with a holder of a distribution license or retailer (e.g. Kenya Power and Lighting Company (KPLC). The condition outlined under the Energy Act is that the consumer’s electric power generator does not exceed a capacity of 1 MW and the consumer’s generation facility is in the area of supply of the distribution licensee or retailer.

On 18thJune 2024, the Cabinet Secretary for Energy gazetted the Energy (Net-Metering) Regulations 2024 (the “Regulations”) providing for a detailed framework for net-metering in Kenya as envisioned in the Energy Act. The purpose of the Regulations is to promote the use of renewable energy technologies by providing consumers with energy storage on the national grid. In this article, we discuss key provisions of the Regulations.

Key Highlights of the Regulations

Eligibility

Domestic customers– Regulation 6 provides for the net-metering capacity units. The installed capacity for domestic customers should not exceed 4 kilowatts (kW) for single-phase supply and 10 kW for three-phase supply.

Commercial and industrial customers- The installed capacity for commercial and industrial customers should not exceed 1 Megawatt (MW) and is capped at the maximum load demand in kW achieved in the twelve months preceding the application for net-metering. The Regulations further provide that where a commercial or industrial customer has multiple meters for the same facility, the maximum demand will be the sum of all the values recorded by the meters, provided the total installed capacity does not exceed 1 MW.

This means that when a commercial or industrial customer applies for net-metering, the capacity of their generation system (like a solar power system) cannot be greater than the highest power demand they have experienced in the past year subject to a maximum capacity of 1MW. This is to ensure that the customer’s generation capacity is aligned with their actual usage, preventing them from installing more capacity than they need or can reasonably use.

Application for Net-Metering

Persons who wish to operate net-metering systems will be required to enter into net-metering agreements with a holder of an electricity distribution licence or a retail supply licence (“Licence Holders”) (e.g. KPLC). The License Holders are required to enter into net-metering agreements with consumers on a first come, first serve and non-discriminatory basis. This is because the Regulations set a maximum aggregate generation capacity of 100MW from all net-metering systems in the initial five years after the commencement of the Regulations. This maximum aggregate capacity is to be reviewed every five years by the Energy and Petroleum Regulatory Authority (EPRA).

The application to enter into the agreement should be accompanied by a feasibility study report where the proposed renewable energy system is more than 10kW. In determining the application, the License Holder considers the feasibility report submitted (where applicable) as well as the system power flow studies in the applicant’s area. Once the consumer enters into an agreement with the License Holder, they are expected to install and connect the meter within six (6) months from the date of the agreement. Such agreements are valid for a period of five (5) years.

Installation and grid interconnection.

The installation, interconnection, maintenance, and operation of net-metering systems should only be performed by authorised personnel.  The equipment and system configurations used should meet the requirements of the Kenya Electricity Distribution Grid Code, the relevant Kenya Standards and applicable statutory requirements and guidelines issued by EPRA.

The Regulations provide that the net-metering system should be capable of operating parallel

to the distribution network and safely deliver power at a single point of interconnection. The net-metering system should also be smart with the following minimum specifications:

  • Be bi-directional and capable of two-way communication to measure and register electricity flow in both directions at the same rate;
  • Measure and record peak supply in different periods; and
  • Provide for time-of-use metering;

Billing

Under the net-metering structure, a consumer will have two electricity meters installed: one measuring production and the other metre measuring consumption. The difference in the readings of both meters will enable the consumer to determine the surplus net amount of power.

Where the exported energy to the grid exceeds the imported energy, the net energy exported is shown as credited units of electricity which are carried forward to the next billing period. If the exported energy is less than the imported energy, the consumer shall pay the electricity distribution licence holder for the net energy.

Conclusion

Net-metering is part of Kenya’s energy policies that seeks to incentivize renewable energy in the country by providing producers with energy storage on the national grid. The regulations emphasize on Kenya’s National Energy Policy of energy efficiency and conservation as one of the key pillars of sustainable development in Kenya.

For tailored legal advice and support: Contact Esther Omulele at [email protected]  or Billy Otieno at [email protected] .

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Esther Omulele , Billy Otieno

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