Kenya: The Draft Energy (Energy Management) Regulations, 2020

published on 04th December 2020

The Energy and Petroleum Regulatory Authority (EPRA) has developed updated energy management regulations in order to account for changes brought about by the Energy Act, 2019 and learnings following a regulatory impact assessment study conducted by the EPRA on the current regulations, the Energy (Energy Management) Regulations 2012.

The regulations at the time of writing this article are in draft form and have been shared with the public for comment.

Below we highlight some of the changes that are being proposed to be made with the draft regulations.

Requirement for Designated Facilities to Appoint Energy Managers

The draft regulations propose making it a requirement for every owner of designated facilities, that is industrial, commercial and institutional facilities with an annual energy consumption of more than 180,000 KWh that are required to undertake an energy audit, to designate an accredited energy manager (previously energy officer). The failure to designate an energy manager will be an offence under the proposed regulations.

The energy manager’s responsibility will be dedicated to ensuring the promotion of energy efficiency within the facility and the pursuance of energy conservation programmes.

Conduct of Energy Audits

The draft regulations propose the increase of the interval for the conduct of energy audits from once in every 3 years to once in every 4 years. The reason for the change in the interval is to allow owners of designated facilities more time for implementation of their energy savings plans.

The audits will have to be conducted by accredited energy auditors, energy audit firms or energy service companies and is required to comply with the Kenya standard KS ISO 50002.

Categorisation of Energy Auditors and Energy Audit Firms

The draft regulations propose the creation of three categories of energy auditors each with a defined scope of work that can be performed.

The three categories of Energy Auditors are as follows:

     
The draft regulations also provide for energy audit firms which may be accredited by the EPRA and allowed to conduct business as such. Accredited energy audit firms will similarly be separated into different categories with different scopes of works they can perform. For accreditation in either category, the energy audit firm is required to have in its employment an accredited energy auditor of the correct class.

The three categories of Energy Audit Firms are as follows:

Conducting energy audits as a firm or as an individual auditor outside the scope of ones category of accreditation is an offence.

Energy Service Companies (ESCO)

The draft regulations will see the introduction of accredited ESCOs. ESCOs are defined as companies ‘engaged in the business of undertaking energy audits and the development, design, financing, and building of energy conservation projects and whose compensation is directly linked to actual energy savings’.

ESCOs have many benefits to facility owners as they take over the administrative and even the financial burden of implementing energy efficiency projects. ESCOs already exist and operate in Kenya. The draft regulations propose the licencing of these entities which will bring regulatory oversight, ensure standards of service and protection of their clients.

If the draft regulations come into force then all ESCO’s will be required to seek accreditation before operating or continuing to operate.

The ESCO will be required to have an accredited category EAMV energy auditor in their employment.
Once ESCOs are accredited they will have the authority to conduct energy audits of medium and high energy users and to develop, design, finance and build or implement energy conservation projects.

ESCOs will be required to enter into written contracts with their customers. The draft regulations specify the terms that must be contained in these contracts. The contracts must contain amongst other things the following:

a. Scope of the work: Setting of energy measurement baseline; energy baseline period; measurement and verification protocol to be applied (how to measure energy and financial savings); and target savings

b. Mode of payment: Whether profits sharing and profit formula or payment from savings (state percentage for ESCO and Client) and payment period (how long will the ESCO earn from the project).

The energy service contracts must within 30 days be submitted to the EPRA to check for compliance. EPRA shall review the contracts and revert back to the ESCO and the client on any reservations.

Continual Professional Development and Accreditation Upgrades

Accreditation as an energy manager, energy auditor, energy audit firm or ESCO will be valid for 3 years.
In each 3 years, accreditees will be required to have engaged in activities for their continual professional development and to have accumulated a total of 30 credit points.

The points can be accumulated through the following activities:

• Attending relevant trainings or seminars or workshops;
• Giving relevant seminar or training or workshop as a resource person; and
• Presenting a paper on a relevant topic at a conference or publishing a paper in a journal.

Points can also be gained from experience conducting energy audits or measurement and verification of energy savings with points allocated as follows:
 

Accreditees are required to obtain at least 10 points in every year of the three year accreditation validity period. The draft regulations do not state what the consequences would be in the event one fails to obtain 10 points in a given year. However there may be an administrative solution implemented to allow accreditees to make up for the failure in a following year.

Accreditees who wish to upgrade the accreditation may only do so at least two years after issuance of the current accreditation certificate. They must also meet the experience or staffing requirements for the upgraded category.

Energy Savings Certificates

Section 191 of the Energy Act, 2019 creates a scheme for the trading of energy savings certificates.

Facilities that consume less energy than the prescribed standards and norms can be issued with an energy savings certificate.

The certificate can be traded with those facilities that have a higher energy consumption than the prescribed standards and norms to enable them to be compliant.

In the draft regulations, designated facilities may apply for and be issued with one of two energy savings certificates.

• A White Certificate – if the energy performance indictor is better than the published best indicator for the sector.
• A Green Certificate – if the energy performance indictor meets the published allowable benchmark for the sector.

The certificates will also have a number of tradeable credits which will be determined from the annual energy saved from implementation of energy saving measures.

Draft Regulations

Should the Draft Regulations come into force, they will create a number of opportunities for those in the energy management sector. A formal framework to govern ESCOs will provide them with further regulatory backing to conduct their businesses and would provide confidence to their clients. Also the energy savings certificates trade will also be one to watch though it may take a number of years to completely flourish.

The regulations are currently in draft form and have been availed to the public for their comments and suggestions on changes. Once the regulations are in a final form the EPRA will submit them to Parliament for scrutiny to confirm that they meet the criteria set out in the Statutory Instruments Act, 2013.

We will make a further update to this article if and when the regulations come into force.

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