How East Africa can deal with excess supply of electricity

Urban growth will inevitably cause a corresponding demand for industrial production, residential amenities and mobility.

In its 2019 ‘Africa Energy Outlook’, the International Energy Agency projects that Africa’s urban population will increase by more than half a billion people by 2040.

 

Such drastic urban growth will inevitably cause a corresponding demand for industrial production, residential amenities and mobility. In anticipation of these growing needs, state-backed electricity distributors in East Africa have made multi-billion-dollar long-term investments into power generation projects over the past decade. However, 2020 has seen these distributors and electricity retailers forced to delicately manage ongoing and upcoming liabilities in the face of substantial economic uncertainty and unpredictable demand.

Data from Kenya's Energy and Petroleum Regulatory Authority shows that peak demand surpassed pre- covid-19 levels in October 2020 at 1,938 megawatts up from the 1,765 megawatts recorded at the onset of the pandemic. This followed months of suppressed demand that strained the off taker's cash flow and put to test its commitment to honouring it's obligations to power producers.