Kenya’s tea industry is turning to renewable energy and efficiency upgrades as rising power costs and tightening wood fuel supplies strain the economics of processing one of the country’s most important export crops.
- •The African Development Bank (AfDB), through its Sustainable Energy Fund for Africa, has launched a technical study to identify clean energy solutions for factories managed by the Kenya Tea Development Agency (KTDA), seeking to prepare a pipeline of bankable projects that could reduce energy costs and modernize operations across the sector.
- •Tea processing is among the most energy-intensive activities in the Kenyan agricultural sector, with power and fuel accounting for roughly a quarter of black tea production costs.
- •Across 71 factories, annual energy consumption is estimated at about 150 gigawatt-hours of electricity and roughly 900,000 cubic meters of biomass equivalent to around 1,575 gigawatt-hours, leaving factories heavily reliant on wood fuel to meet thermal demand.
The six-month project is designed to produce a roadmap for phased energy transition across KTDA-managed factories, potentially creating one of the largest agro-industrial decarbonization efforts in East Africa
Energy expenditures reached about KSh7.8 billion in the 2023-2024 financial year and electricity accounts for only about 9% of total energy use but nearly 60% of costs because of high tariffs. The mismatch that has squeezed factory profitability and reduced earnings for smallholder farmers supplying leaf to the plants.
The AfDB-backed assignment will analyze energy use across KTDA factories and evaluate renewable and efficiency technologies ranging from solar power and solar thermal systems to biomass optimization, biogas production, waste-heat recovery, and industrial energy-storage systems. The work will also assess the feasibility of hybrid energy configurations capable of supplying both electricity and thermal heat required for tea drying and processing.
The study will be carried out by a multidisciplinary team of energy, financial and regulatory specialists who will analyze factory energy use, assess renewable technologies and evaluate the financial viability of potential investments.
The objective is not immediate construction but preparation of investment-ready projects that can attract financing from development lenders, private investors or climate-finance facilities. The consultancy will deliver a feasibility study identifying the most technically and financially viable energy options, including cost-benefit analysis, lifecycle emissions reductions and implementation timelines.
Thermal demand in the industry is largely met through wood fuel, but supplies have tightened because of drought, logging restrictions and limited land available for dedicated fuel woodlots. Although factories have invested in tree-growing programs to supply biomass, yields have often fallen short of demand.
Energy modernization has also become a broader policy issue for the sector as factories struggle with high operating costs and aging equipment. A parliamentary inquiry into tea pricing previously warned that many plants are operating with outdated machinery and expensive fuel sources, urging factories to pursue alternative energy systems and efficiency improvements to remain competitive.
The inquiry found widening cost and performance disparities between tea factories in different regions, with some operations burdened by stalled infrastructure investments including incomplete hydropower schemes that have tied up capital without delivering cheaper energy.
The AfDB study will examine the regulatory framework governing renewable energy deployment and industrial power generation in Kenya while assessing financial metrics such as capital costs, operating expenses, payback periods and internal rates of return for potential technologies.
