Kenya's ambitious plan to expand renewable energy may not make electricity more affordable for consumers, according to experts. The country aims to increase its renewable energy capacity from 1,500 megawatts to 5,500 megawatts, including 2,000 MW of nuclear power, 700 MW of hydropower, and new geothermal projects. Kenya already produces 93% of its electricity from renewable sources, but experts say reforms are needed in utility contracts, electricity grids, financing, and pricing to translate clean energy growth into lower costs.
Peter Njenga, CEO of KenGen, the state-owned utility producing about 60% of Kenya's power, said they have recalibrated their long-term growth trajectory to 5,500 MW. Lawmakers have been pushing for lower electricity rates, and in July, parliament directed Energy Minister Opiyo Wandayi to develop a policy for renegotiating electricity supply agreements with major producers. Mugwe Manga, climate finance lead at FSD Kenya, emphasized that the entire energy system must be viewed holistically to understand the drivers of end costs.
Unlike countries like Morocco, Egypt, and China, Kenya provides limited direct subsidies. Industrial consumers in Kenya pay between $0.18 and $0.23 per kilowatt-hour, compared to about $0.03 in South Africa and Egypt, and $0.05 in Morocco and Ethiopia. Kenya Power CEO Joseph Siror said the perception of expensive electricity is subjective, with prices dependent on infrastructure costs, tariff structures, and outstanding bill recoveries.
One major inefficiency is the distribution network, where more than 20% of electricity is lost to technical failures and illegal connections, compared to a global average of 8-10%. High financing costs also contribute, as renewable energy developers in Africa borrow at higher interest rates due to perceived risks. Kenya's power purchase agreements, including "take-or-pay" clauses, have come under scrutiny, with critics arguing they force consumers to pay for surplus electricity.
Albert Nganga, senior regulatory manager at CrossBoundary Energy, noted that electricity prices are determined by the whole system, not just generation costs. Recently proposed open-access reforms could increase competition by allowing large consumers to buy directly from generators. Cynthia Angweya-Muhati, CEO of the Kenya Renewable Energy Association, said the ambitious targets require predictable investment policies and reforms, and the real test will be whether additional clean generation is matched by reforms that lower costs for consumers.