MINISTRY OF ENERGY
FEED-IN-TARIFFS POLICY
ON
RENEWABLE ENERGY RESOURCE
GENERATED ELECTRICITY (SMALL-
HYDRO, BIOMASS AND BIOGAS)
Initial Issue: March 2008
1st Revision: January 2010
2nd Revision: December 2012
3rd Revision: January 2021
Feed-in-Tariffs policy for wind, biomass, small hydros, biogas and solar,3rd revision, January 2021
FEED-IN-TARIFFS POLICY FEED-IN-TARIFFS POLICY
ON
RENEWABLE ENERGY RESOURCE GENERATED ELECTRICITY (BIOMASS, SMALL-
HYDRO AND BIOGAS)
TABLE OF CONTENTS
1. DEFINITIONS............................................................................................................................ 2
2. INTRODUCTION ...................................................................................................................... 4
The Policy Framework................................................................................................................ 4
The Feed-in-Tariff Instrument .................................................................................................... 4
3. POLICY STATEMENTS ON SPECIFIC ISSUES .................................................................... 6
Large renewable energy projects (capacity exceeds 10 MW) .................................................... 7
4. DESIGN OF FEED-in-TARIFFS ............................................................................................... 7
Feed-in Tariff for Biomass Energy Resource Generated Electricity .......................................... 7
Feed-in Tariff for Small Hydro Power Resource Generated Electricity..................................... 8
Feed-in Tariff for Biogas Energy Resource Generated Electricity ............................................. 8
5. CONNECTION OBLIGATIONS............................................................................................... 8
6. PURCHASE OBLIGATION ...................................................................................................... 9
7. APPLICATION AND IMPLEMENTATION PROCEDURES ................................................. 9
8.COMPLIANCE WITH TECHNICAL, LEGAL AND REGULATORY REQUIREMENTS .... 9
9. REVIEW OF FEED-IN-TARIFFS POLICY............................................................................ 10
APPENDIX – FiT VALUES ........................................................................................................ 11
Feed-in-Tariffs policy for Biomass, Small Hydros, and Biogas3rd revision, January 2021 1
1. DEFINITIONS
In this Feed-in-Tariffs Policy, unless the context otherwise requires, the following capitalised
words shall have the following meanings:
i. "Agreement" or "PPA": Power Purchase Agreement means the agreement between the
Investor and the Off-taker together with any related agreement(s) and approved by the
Energy and Petroleum Regulatory Authority (EPRA);
ii. “Commissioning”: the conduct of tests necessary to put an interconnection facilities,
Unit or the Plant (as the case may be) into operation and supply to the grid;
iii. “Commercial Operation Date” – the date on which the plant is available for commercial
operation after Commissioning.
iv. "Consumer Prices Index " or "CPI": the index known as "The Consumer Prices Index
for All Urban Consumers (CPI-U) for the US City Average for All Items 1982-84 = 100,
as published by the United States Department of Labor, Bureau of Labor Statistics;
v. “EPRA”: Refers to Energy and Petroleum Regulatory Authority as defined in the
Energy Act No. 1 of 2019
vi. “FiT Policy”: refers to the Feed in Tariff Policy.
vii. “Feed-in-Tariff power plant”: refers to renewable energy power plants procured under
this policy also referred to as “Plant”
viii. Integrated National Energy Plan (INEP)”: refers to the national energy plan in respect
of coal, renewable energy and electricity developed by the Cabinet Secretary for the time
being responsible for Energy pursuant to section 5 of the Energy Act 2019
ix. “IPP”: Refers to Independent Power Producer
x. “kW”: abbreviation for kilowatt where one (1) kW is equal to one thousand (1000) Watts
xi. “kWh”: abbreviation for kilowatt hour where one (1) kWh is equal to one thousand
(1000) Watt-hours;
xii. “Least Cost Power Development Plan (LCPDP)”: The national power development
plan as updated from time to time covering a specified time period or its successor.
xiii. “MoE”: Refers to the Ministry of Energy
xiv. “MW”: abbreviation for megawatt being one thousand (1,000) kW;
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xv. “Off-Taker”: The Buyer of electrical energy for the purpose of selling the electricity to
consumers connected to the national grid.
xvi. “RE”: Refers to Renewable Energy
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2. INTRODUCTION
The Policy Framework
1. The Government of Kenya recognises that Renewable Energy (RE) which include
wind, biomass, small hydros, geothermal, biogas, solar and municipal waste energy,
have potential to generate income and employment, over and above contributing to
the electricity supply and diversification of generation sources. The National Energy
Policy 2018 (The Energy Policy) and operationalized by the Energy Act No. 1 of 2019
(The Act) provides for a feed in tariff system that promotes generation of electricity
from Renewable Energy sources so as to enhance the country’s electricity supply
capacity.
2. The Energy Policy under section 3.4, 3.7 and 3.8 incorporates strategies to promote the
contribution of the RE in generation of electricity and section 3.11.1 of the Energy
Policy provides for the feed in tariff system.
3. Section 75 of the Energy Act 2019 provides for the development and use of renewable
energy technologies, including but not limited to solar, biomass and wind and section
91 of the Act provides for the establishment of a renewable energy feed in tariff system
4. Section 7 of the Energy Policy provides for the Government to undertake pre-
feasibility and feasibility studies and maintain data with a view to availing the same
to developers of energy resources and infrastructure to create investor and consumer
awareness on the economic potential offered by other renewable sources of energy.
5. In view of the time and resources required to undertake feasibility studies, MoE
prepared a Position Paper in the Financial Year 2007/08 proposing to set Feed-in-Tariffs
(FiT) for electricity generated from RE, specifically for wind, biomass and small hydro.
This was to safeguard the investments made by the respective developers in data
collection, undertaking feasibility studies and to boost the development of renewable
energy generation.
The Feed-in-Tariff Instrument
6. The Feed-in-Tariffs (FiT)Policy is an instrument for promoting generation of electricity
from renewable energy sources. FiT allows power producers to sell renewable energy
generated electricity to an Off-taker at a pre-determined tariff for a given period of
time.
7. The objectives of the FiT Policy are to:
a) Facilitate resource mobilization by providing investment security and market
stability for investors in electricity generation from renewable energy sources;
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b) Reduce transaction and administrative costs and delays associated with the
conventional procurement processes;
c) Encourage private investors to operate their power plants prudently and
efficiently.
d) Encourage local investors to participate in power generation.
8. The advantages of electricity from renewable energy sources include:
a) Environmental integrity including reduction of greenhouse gas emissions
(where feasible, project developers are encouraged to pursue carbon credit
benefits);
b) Enhancing energy supply security, reducing the country’s dependence on
imported fuels, and coping with the global scarcity of fossil fuels and its
attendant price volatility;
c) Enhancing economic competitiveness, job creation and other local economic
benefits.
9. The first FiT Policy was published in March 2008 following approval by the Public
Procurement Oversight Authority. The Policy covered wind, small hydro and biomass
sources, for plants with capacities not exceeding 50MW, 10MW and 40MW
respectively.
10. The first revision of the Policy was published in January 2010. It contained revised
tariffs for wind and biomass, and introduced tariffs for geothermal, biogas and off-
grid solar resources.
11. The Second revision of the policy published in December 2012 was supplemented by
a comprehensive study entitled “Technical and Economic Study for Development of
Small Scale Grid Renewable Energy in Kenya”. The revised edition included tariffs for
grid-tied solar, standardized PPA templates and reduced the lower threshold for
biogas plants.
12. MoE in July 2016 completed a feasibility study for introduction of renewable energy
auctions, to explore viability of implementing competitive bidding and propose the
necessary instruments and frameworks required. This study was updated in January
2021.
13. In November 2016 the Cabinet Secretary for Energy appointed a Task Force on Review
of the Independent Power Producers (IPP) Power Purchase agreements (PPA) upon
directive of His Excellency the President. In April 2020, the Cabinet Secretary
appointed an interagency committee to review and update the report by the Task
Force.
14. The studies and the reports by the task force and the interagency committee proposed
introduction of competitive bidding for medium to large scale renewable energy
projects and review of FiT policy for small scale Biomass, Biogas and Small Hydro
projects.
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15. Further, stakeholder feedback from the PPA negotiation process has necessitated
review of some of the FiT policy clauses for clarity and ease of interpretation of the
policy as well as negotiation and implementation of the PPA.
16. In 2015, the PPP Committee acting on section 61 of the PPP Act 2013, approved the FiT
Policy as a mechanism of procuring and developing renewable energy projects aligned
to the PPP Act.
17. The FiT Policy provides for review every three years from the date of publication. The
last review was undertaken in December 2012, hence the need for the current review.
18. This Policy applies to renewable energy power plants not exceeding 20MW in
Biomass, Biogas and Small Hydro technologies. The thresholds are provided for in the
Appendix.
3. POLICY STATEMENTS ON SPECIFIC ISSUES
19. Renewable energy power plants shall be contracted through a Standardised PPA
applying the tariffs specified in the appendix to this policy.
20. The sites for development of renewable energy resources shall be approved on a first-
come, first-served basis.
21. The FiT Standardised PPA established under this policy incorporates the following
features:
a) the PPA term shall be a maximum of 20 years
b) the plants may not be despatchable;
c) the PPA is offered to projects that demonstrate technical and economic
viability, meet the grid connection requirements and are able to secure all
necessary legal and regulatory approvals and financing within the
timeframe specified in the Application and Implementation Guidelines;
22. The following principles underlie the calculation of the FiT values:
a) the values are computed using cost plus reasonable return on investment;
b) the feed in tariffs are denominated in US dollars;
c) the feed in tariffs for small hydros are calculated for minimum and
maximum capacity as set in this policy with linear interpolation being used
to determine the applicable value based on the actual capacity of the power
plant;
d) the feed in tariff shall be fixed over the term of the PPA except for the O&M
component which will be subjected to indexation using the US CPI. The
applicable base index is the prevailing index at the time of signing the PPA.
e) the feed in tariffs may be denominated in Kshs for willing developers. The
feed in tariff shall be fixed over the term of the PPA except for the O&M
component which will be subjected to indexation using the Kenyan CPI
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23. The escalable portion of the tariff for each respective technology is provided in the
Appendix.
24. The cumulative contracted capacity contribution by FiT projects of up to 20MW shall
not exceed 10% of system-wide generation capacity. When the total contracted
capacity of the embedded generators approaches the 10% limit, the Government will
review the capacities based on the existing system technical capabilities and national
requirements.
Large renewable energy projects (capacity exceeds 20MW)
25. All Solar and wind power projects, as well as other RE projects larger than 20MW will
be procured under the Renewable Energy Auction Policy. Geothermal projects will be
procured under the Policy on Licensing of Geothermal Greenfields.
4. DESIGN OF FEED-In-TARIFFS
26. Electricity generation costs vary according to the RE technology used. Therefore, the
FiT levels are technology specific and depend on:
a) The investment cost for the plant (including the costs of feasibility studies, site
development, construction, and grid connection);
b) The operations and maintenance (O&M) Costs;
c) The fuel costs where applicable;
d) The financing costs (including interest during construction) and a fair return
on the invested capital. The availability of concessionary finance will be taken
into account when estimating such costs;
e) The estimated economic lifetime of the power plant;
f) The amount of electricity to be generated based on estimated capacity factor.
27. The FiTs values are based on the generation costs in Kenya benchmarked to FiT
policies in other parts of the world and the specific socio-economic conditions in
Kenya.
28. The Developers will be required to optimize on the available resource for the economy
to benefit from the economies of scale.
Feed-in Tariff for Biomass Energy Resource Generated Electricity
29. In this policy, biomass refers to plant or animal based energy resource and includes
agricultural waste, agricultural products, municipal waste, bio-fuels, forestry waste
and fuel wood.
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30. The FiT values for biomass energy projects are set out in the appendix. The FiT shall
apply for upto 20 years from the commercial operation date of the biomass power
plant.
Feed-in Tariff for Small Hydro Power Resource Generated Electricity
31. An assessment of small hydro resource potential carried out by the Ministry of Energy
indicated that there are many suitable sites for small hydro power development in the
country. However, developers will be required to carry out detailed feasibility studies
to establish the financial and economic viability of specific sites for power generation.
32. The FiT values for small hydro energy projects are set out in the Appendix. The FiT
shall apply for upto 20 years from the commercial operation date of the small hydro
power plant.
Feed-in Tariff for Biogas Energy Resource Generated Electricity
33. In this Policy, biogas energy refers to renewable energy from gas-based energy
resources such as agricultural waste and municipal waste.
34. The FiT values for biogas energy projects are set out in the Appendix. The FiT shall
apply for upto 20 years from the commercial operation date of the biogas power plant.
5. CONNECTION OBLIGATIONS
35. The Feed-in-Tariffs values set in this policy are inclusive of grid interconnection costs.
The costs of interconnection, including the costs of construction, upgrading of
transmission/distribution lines, substations, associated equipment and way-leave
acquisition are to be borne by the developer.
36. Upon prior arrangements, the Off-taker may construct or upgrade the grid at a
reasonable economic expense to facilitate interconnection and meet all technical
requirements. The aforementioned interconnection costs will be borne by the
developer upfront.
37. Developers will be required to undertake grid connection study which shall take into
consideration existing and other approved generation projects as well as planned
infrastructural projects likely to impact on the grid in the same locality. The study
shall require to be approved by the FiT Policy Committee.
38. The grid connection study should conform to the grid connection guidelines issued in
this policy and should include steady state and dynamic/transient stability analysis.
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39. The expected commissioning of the renewable energy power plant is to be aligned
with the most current LCPDP/INEP, notwithstanding the approval given.
6. PURCHASE OBLIGATION
40. The Off-taker will facilitate grid interconnection for plants generating electricity from
renewable energy sources.
41. The Off-taker will on a priority basis purchase all electricity supplied by small
renewable energy projects as defined in this policy. Capacity payments shall not be
applicable under this policy. Deemed Generated Energy payments shall be paid if the
grid availability falls below the guaranteed levels as specified under standard PPA at
a rate equivalent to 75% of the applicable tariff values provided under appendix.
42. The Off-taker shall recover from electricity consumers the feed-in tariff as it may be
directed by EPRA at the time of approval of the PPA or review thereafter. All
contracted capacity will be included in the offtake base tariff approved by EPRA in the
preceding tariff review period. Recovery of cost from Feed-In tariffs power plants
contracted prior to tariff review shall be done as pass-through cost such that the off-
taker remains revenue neutral.
43. All projects approved for implementation under this policy shall not require any form
of security or guarantee from Government including Government Letter of Support.
7. APPLICATION AND IMPLEMENTATION PROCEDURES
44. Renewable energy generators feeding into the grid will require a PPA. The project
sponsor for such renewable generation projects must be an entity legally incorporated
in Kenya. In the event the initially approved developer cedes some shareholding in
order to incorporate equity partners, the developer shall retain at least 30% of the
shareholding.
45. The procedures for applying for and implementing the FiT shall be in accordance with
the Application and Implementation Guidelines, as published under this policy, the
first step being the submission of an Expression of Interest (EOI) to the Ministry of
Energy.
8.COMPLIANCE WITH TECHNICAL, LEGAL AND
REGULATORY REQUIREMENTS
46. All projects implemented under the Feed-in-Tariff system shall comply with all the
relevant technical, legal and regulatory requirements of the Republic of Kenya.
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47. Projects will abide by the provision of the Connection Guidelines for Small-Scale
Renewable Generation Plant as well as the Kenya National Grid Code.
9. REVIEW OF FEED-IN-TARIFFS POLICY
48. This Feed-in-Tariffs policy shall be subject to review every three years from the date
of publication. However, a policy review may be undertaken earlier than three years
in exceptional cases. Any changes made during such reviews shall only apply to
renewable energy power plants developed after the revised policy is published. For
the avoidance of doubt, FiT values applying to PPA contracts entered into previously
will remain unchanged.
49. The tariff, capacities and other terms applicable to an approved Feed in Tariff project
shall be those prevailing on the date when the PPA is signed.
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APPENDIX – FiT VALUES
50. The FiT values for small renewable projects connected to the grid are provided in the
tables below.
FiT values for small renewable projects below 10MW
Installed Capacity Standard FiT (US Percentage
(MW) cents/kWh) Escalable portion
of the Tariff
Hydro* 0.5 9.00 8%
10 8.20
Biomass 0.5-10 9.50 15%
Biogas 0.2- 10 9.50 15%
*For values between 0.5-10MW, interpolation shall be applied to determine tariff rounded to two decimal
points.
FiT values for small renewable projects above 10MW
Installed Capacity Standard FiT (US Percentage
(MW) cents/kWh) Escalable portion
of the Tariff
Hydro 10 – 20 8.20 8%
Biomass 10.1 - 20 9.50 15%
Biogas 10.1 - 20 9.50 15%
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