Captive power plants, often known informally as commercial and industrial (C&I) power plants, are facilities located directly within a customer's property. These setups typically consist of solar panel installations on rooftops or small hydroelectric systems situated in tea plantations, particularly in Kenya.
This would similarly involve sugar processing firms setting up their own power generation using bagasse.
I'm certain many of us have witnessed industrial sites and shopping centers equipped with solar panels to generate power. This enables customers to manage their energy requirements through straightforward methods where they typically pay less than usual on their standard bills.
A developer or investor covers the expenses related to establishing the system and charges the customer a monthly fee similar to their usual payment to the utility company. This approach benefits most businesses by eliminating upfront costs while still allowing them to enjoy savings.
The The commercial and industrial (C&I) sector in Kenya keeps expanding, boasting over 600 MW of various technology installations by early 2025. In terms of solar power, private captive systems added more capacity compared to utility-scale projects connected to the national grid in the previous year. Today Captive solar is approaching 300 MW, whereas the solar power on the grid has stalled at 210 MW.
Captive plants are being more efficiently licensed and face fewer delays than those targeted at the grid. Investors, customers and developers alike are thus choosing to go behind the meter route.
Ultimately, this comparison should be irrelevant since the primary objective of providing electricity is to offer consumers the most cost-effective and high-quality power supply, irrespective of who the provider is.
The enactment of the net metering regulations and the continued development of the electricity markets, bulk supply and open access regulations open new frontiers for the electricity market. These will change how we look at electricity supply and benefit the entire market.
Through Facilities equipped with net metering and commercial & industrial projects will have the ability to store surplus electricity produced by their systems with the utility company and reclaim half of this stored energy for their own usage within one year.
Customers can more effectively harness the electricity-generating capability of their solar setups. Additionally, this enables the utility company to utilize up to half of the produced energy for resale to other customers. Such distributed generation serves as a crucial resource to aid those situated at the farthest points within the grid system.
Even More eagerly awaited by players in the captive power sector are the rules permitting wheeling. Access to transmission lines will allow consumers to obtain electricity from larger power plants that are situated beyond their own properties.
The capability to generate electricity in one place and pay a charge for its transport via the transmission and distribution network to the site of usage represents a significant shift. This charge is known as the wheeling fee or the expense associated with moving electric power from one point to another.
This setup implies that the transmission system operator will obtain an additional income stream; consumers can enter into contracts directly with power producers situated in areas rich with substantial renewable energy sources; and utilities won’t have to assume any direct risk in these transactions.
Companies from the private sector, one involved in electricity production and the other utilizing this power for productive purposes, will have the ability to engage in trading of electrical energy.
At present, C&I initiatives are constrained by the caliber of renewable resources available at the customer's location and the adequacy of space for developing these resources.
Transferring power capacity will allow customers to access the most efficient sources to maximize their own power generation as well as what they purchase from utilities. Additionally, this shift will significantly bring wind energy into the commercial and industrial sectors in Kenya.
These ideas could be considered as ambitious aspirations. However, recent developments in Kenya suggest otherwise. There is considerable focus on establishing large-scale data centers, expanding conventional steel production along with associated sectors, and developing new industries centered around e-fuels, electric mobility, and environmentally friendly manufacturing processes. This indicates significant progress beyond mere ambitions.
These kinds of customers require substantial amounts of electricity and are drawn to Kenya’s capability to provide renewable energy sources. Customers who benefit from appropriate regulations would be ready to assume the risks associated with larger-scale self-supply. The commercial and industrial sector holds great promise, offering numerous advantages for businesses within Kenya.
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