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Draft Energy Net Metering Regulations, 2022.

On 13th January 2023, the Energy and Petroleum Regulatory Authority (‘EPRA’) gazetted the Draft Energy (Net-Metering) Regulations (‘Draft Regulations’) for public comment. The main objective of the Draft Regulations is to provide a framework for prosumers to bank excess energy on the grid hence, promoting the uptake of renewable energy in Kenya through net metering. This is in line with section 162 of the Energy Act which enables consumers who own electric power generators of a capacity not exceeding one megawatt (1MW) to enter into a net metering arrangement with electricity distributors and/or retailers such as Kenya Power and Lighting Company Plc (‘KPLC’).

The Draft Regulations define “Net-metering” to mean a mechanism that allows electricity consumers who generate their own power to supply electricity to the grid in times of over-production and to be compensated for or make use of the credited energy during other times. The key provisions of the Draft Regulations are provided below:

Heading  Synopsis 
General Principles 
  • Licensees1 are required to offer net-metering arrangements to Prosumers on a non-discriminatory first come first serve basis subject to operational constraints
  • Prosumers are considered as Consumers and not as Code Participants under the Kenya Electricity Grid Code.
Eligible Technologies and Prosumers 
  • All Renewable Energy technologies are eligible for net-metering
  • All Prosumers supplied by a Licensee, are eligible to enter into a Net-metering Agreement
Generation Capacity Limits 
  • The onsite installed capacity of a Renewable Energy system, for a Prosumer entering into a Net-Metering Agreement must-

i.       not exceed 1,000 kW for all the consumer categories; and

ii.       be capped at the maximum load demand in kW of the 12 months preceding application for net metering for all consumers except domestic consumers; or

iii.       be capped at the maximum allowed load demand where the maximum demand is not recorded as part of the electricity bill. (This does not apply to domestic consumers); or

iv.       be capped at 10 kW for three phase domestic consumers; or

v.       be capped at 4 kW for single phase domestic consumers

§  The maximum aggregate generation capacity of Net metering Systems shall be 100 MW for the phase one of the Net-metering Programme (First 3 years of implementation of net-metering in Kenya)

Net metering agreement 
  • Mandatory requirement to enter into a Net-metering Agreement before operating a net-metering system.
  • An application to enter into a net-metering agreement shall be made to the licensee in the prescribed form set out in the Draft Regulations and the applicant must pay a non-refundable fee defined by EPRA.
  • An application must be accompanied by a feasibility study report where the proposed renewable energy system is more than 10kW
  • A Net-metering Agreement is valid for an initial period of 10 years. The term is renewable upon expiry with the mutual consent of the Prosumer and the Licensee.
Determination of Application 
  • The Licensee is required to examine all applications and give its decision within 60 days from the application date.
  • An appeal against the decision of a licensee on a net-metering system application may be made to EPRA.
  • Upon approval of an application the Prosumer and the Licensee will enter into a Net-metering System Agreement and the Prosumer must file a copy of the agreement with EPRA within 30 days.
  • Upon approval of an application, the Applicant must commence to install the Renewable Energy installation within three (3) months from the date of the notification, failing which, the application shall be deemed withdrawn and cancelled.
Net Meters 
  • The installation, interconnection and maintenance of Net-metering systems must be undertaken by competent personnel licensed by EPRA and using such prescribed equipment
  • The Draft Regulations outline the requirements of meters used for net-metering systems i.e., they should not be of a prepaid type
  • Electricity supplied from and to the net-metered installation shall be within the limits set in the Kenya Electricity Distribution Grid Code and any other guidelines issued by EPRA.
  • Prosumers are required to bear all costs related to the meter and setting up the interconnection with the Licensee’s network.
  • The Draft Regulations set out the instances where a Net-metering facility is required to have a visibly open, lockable, manual disconnect switch to prevent a prosumer from back-feeding a de-energized line.
  • A licensee may disconnect a Net-metering system that causes interference or unacceptable parameters upon notice to the prosumer except in case of an emergency.
  • A prosumer may assign a Net-metering Agreement to the new owner of premises where the Net-metering system is installed subject to prior written consent from the Licensee.
  • Costs, Tariffs and Billing 
  • Licensees are required to provide electricity services to prosumers at non-discriminatory rates that are identical to rates approved by EPRA for the applicable tariff control period.
  • Prosumers are obliged to pay the Licensee’s interconnection costs associated with their installation, which costs are to be gazetted by EPRA for each category tariff control period.
  • For each unit of electricity supplied to the licensee, the Prosumer is entitled to receive a net metering credit of 60% of the exported unit.
  • Billing and compensation procedures shall be done on a monthly basis.
  • In computing a prosumer’s monthly billing, the Licensee shall charge the Prosumer for the difference in total units supplied by the Licensee and the total units exported by the Prosumer at the discounted rate of 60%. (Energy units supplied by the Licensee – (60% * number of units exported by Prosumer).
  • If the Prosumer is a net exporter during a billing period (i.e., exported more units than what was supplied by the Licensee), the Prosumer shall not be billed for any energy supplied by the Licensee and shall carry forward any surplus credits to the next billing period. However, the Prosumer must pay the demand charge and other fixed charges when the net is zero of net export.
  • Unused credits shall be forfeited at the end of the Licensee’s financial year.
  • Units generated and consumed on-site shall not attract any compensation or charge.
  • Prosumers shall not be entitled to receive monetary compensation for any benefits their systems may provide.
  • Electricity generated and consumed by the Prosumer is not to be taken into account for billing purposes.
  • Prosumers shall grant the Licensee’s personnel access to their property for the purpose of maintaining and/or reading the meter.
  • A Prosumer who vacates the premises where the Net-Metering System is installed and terminates the Net-Metering System Agreement shall forfeit any remaining credits. However, credits may be transferred to new owner who is assigned the Net-metering Agreement.
Monitoring and Control  Licensees are mandated to:

i.  develop and maintain a register on their website of net-metered Consumers in their areas of supply;

ii.   continuously update the register;

iii.   submit to EPRA an updated register each quarter, by the 15th day of each fourth month; and

iv.   report annually to EPRA on the progress of implementation of Net-metering Systems in their areas of supply

Carbon Credits  Ownership of any Carbon Credits accruing to the Consumer is to remain vested with the consumer unless otherwise specified by any other laws of Kenya. The Energy Act, 2019 acknowledges carbon credit trading as a means of promoting the development and exploitation of renewable energy sources
Penalties  Any person who operates without a Net-metering Agreement, contravenes the provisions of a Net-metering Agreement or makes any alterations to permanent installations without the approval of the Licensee is liable to a fine of KES 1 million upon conviction.
Disputes and appeals  Complaints and disputes arising under the Regulations are to be referred to EPRA for resolution. Persons aggrieved with EPRA’s decision are to lodge an appeal with the Energy and Petroleum Tribunal.

Though a further appeal from the decision of the Energy and Petroleum Tribunal is not explicitly provided for in the Draft Regulations, a reading of section 37 of the Energy Act indicates that appeals from the decision of the Tribunal are to be made to the High Court.

The passage of the Net Metering Regulations will spur an uptake in the number of consumers who produce their own energy for consumption. This will in turn result in load reduction in the national grid since less power will have to be produced to meet consumers’ needs. Consequently, this may impact electricity sales to Kenya Power owing to load reduction in the national grid.

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