The Energy Act, 2019 came into effect on 28 March this year, repealing the Energy Act, 2006, the Kenya Nuclear Electricity Board Order No. 131 of 2012 and the Geothermal Resources Act, 1982. Some of the highlights from the new law are as follows:
The Energy Act, 2019 was enacted in response to calls to consolidate the laws relating to energy; promote renewable energy; promote exploration, recovery and commercial utilization of geothermal energy; regulate midstream and downstream petroleum and coal activities, among others. It is expected to create an enabling environment for the Government’s Big Four Agenda.
Energy and Petroleum Regulatory Authority
It establishes the Energy and Petroleum Regulatory Authority ("EPRA") in place of the Energy Regulatory Commission ("ERC"). You will have seen a media blitz in the Kenyan dailies informing the public of the rebranding from ERC to EPRA.
This change shall not affect any right, privilege, obligation or liability acquired by any licensee or other person in any contract or under any written law prior to commencement of Energy Act, 2019.
All rights, duties, obligations, assets and liabilities of ERC existing as at the commencement of the Energy Act, 2019 shall be automatically and fully transferred to EPRA and any reference to the ERC in any contract or document shall be deemed to be a reference to EPRA.
Rural Electrification and Renewable Energy Corporation
It establishes the Rural Electrification and Renewable Energy Corporation ("REREC") as successor to the Rural Electrification Authority ("REA").
In addition to overseeing the implementation of the Rural Electrification Program, REREC’s extended mandate includes developing and updating the renewable energy master plan; establishing energy centers in the Counties; developing, promoting and managing use of renewable energy (excluding geothermal); coordinating research in renewable energy; developing appropriate local capacity for renewable technologies; offering clean development mechanisms such as carbon credit trading, among others.
Energy and Petroleum Tribunal
The Energy and Petroleum Tribunal ("Tribunal") replaces the Energy Tribunal that existed under the repealed Energy Act.
The scope of the Tribunal has been expanded to hear and determine disputes and appeals relating to the energy and petroleum sector arising from the Energy Act, 2019 and any other statute. Under the repealed Energy Act, the Energy Tribunal could only hear appeals from decisions of the ERC.
The Tribunal now also has power to grant equitable reliefs including but not limited to injunctions, penalties, damages, specific performance and power to, on its own motion or upon application by an aggrieved party, review its judgments and orders.
Nuclear Power and Energy Agency
The Nuclear Power and Energy Agency ("NPEA") takes over from the Kenya Nuclear Electricity Board that existed under the repealed Kenya Nuclear Electricity Board Order.
Local Content Requirements
The Energy Act, 2019 imposes local content requirements on energy projects and states that "every person carrying out any undertaking of works under the Act shall comply with local content requirements in all of its operations".
EPRA is required to issue guidelines and format for the preparation of local content plans. In addition, the Energy Act, 2019 requires that the local content plan should ensure that: (i) first consideration is given to services provided within the County and goods manufactured in Kenya, where the goods meet the relevant specifications; (ii) qualified and skilled Kenyans are given first consideration with respect to employment at all levels of the value chain; and (iii) adequate provision is made for the training of Kenyans on the job.
Renewable Energy Feed-in Tariff System
The Energy Act, 2019 provides for a Feed-in Tariff ("FiT") System aimed at catalyzing the generation of electricity through renewable energy sources; encouraging local distributed generation thereby reducing demand on the network and technical losses associated with transmission and distribution of electricity over long distances; encouraging uptake of, and stimulating innovation in, renewable energy technology; and reducing greenhouse gas emissions. The Cabinet Secretary, Ministry of Energy has power to pass regulations to implement the Feed in Tariff System. The regulations for the administration and implementation of the FiT System are not yet in place but may include regulations on: the technical and operational requirements for connection to the grid; duration of the feed-in-tariff approval; tariff to be paid by distribution licensees to licensees under the FiT System; and the priority of purchase by distribution licensees of electrical energy generated using renewable energy sources.
If you would like advice or guidance in respect of the above, please do not hesitate to contact us.