Kenya’s quest for cheaper and more reliable electricity is slowing, with a new World Bank assessment warning that key reforms have stalled, keeping power prices among the highest in East Africa.
- •The country’s electricity demand has surged to 2,316 megawatts, the highest in five years, according to EPRA.
- •While this signals rising economic activity and broader household access, it also shows that consumption has caught up with generation capacity, leaving virtually no reserve margin.
- •The result is a fragile power system forced to ration electricity during peak hours, even as energy officials tout record generation and clean-energy dominance.
The Energy Act of 2019 was hailed as a transformative milestone for the sector. It sought to unbundle generation, transmission, and distribution while opening space for private investors. The Act also strengthened the Energy and Petroleum Regulatory Authority (EPRA) to ensure fair tariffs and competitive conduct. Yet, despite a decade of legislative reforms, the country is yet to fully reap the benefits.
According to the World Bank, “incomplete operationalization of competitive reforms continues to limit entry, efficiency and downward pressure on prices.” A major bottleneck is the Renewable Energy Auction Policy (REAP), designed to replace costly one-on-one power agreements with open, competitive auctions. These auctions have never started. Without clear guidelines and with a moratorium on new power contracts, Kenya Power remains tied to older, expensive agreements. “These legacy PPAs, many negotiated bilaterally, remain a major driver of high electricity tariffs,” the report notes, emphasizing the need for transparent allocation of new projects to protect consumers.
Open access to the grid is another area where progress lags. Regulations introduced in 2024 require KETRACO and Kenya Power to grant non-discriminatory access to transmission and distribution lines. However, without standardized terms published by EPRA, new producers must negotiate individually, leading to delays and higher transaction costs. The World Bank warns that this slow roll-out risks prolonging a system where costs remain elevated and competitive pressure is weak, undermining Kenya’s efforts to attract cheaper renewable power.
President William Ruto publicly acknowledged this reality, marking the first confirmation of load-shedding as blackouts increasingly disrupt homes and businesses. Speaking in Doha, Qatar, during a meeting with Kenyans abroad, he noted, “Between 5 pm and 10 pm, we have to do load shedding. We have to shut off some areas to power other areas because our energy is insufficient.”
Ruto stressed that Kenya’s ambition to become an industrial and technological hub hinges on a stronger power grid. “If we have to industrialize and engage in manufacturing, we need a minimum of 10,000 MW of energy,” he said, reflecting on the country’s inability to sustain large infrastructure, including data centers and heavy manufacturing outlets. He also cited the 5,400 MW Grand Ethiopian Renaissance Dam in Ethiopia as a model Kenya could emulate.
Adding to the sector’s challenges, lawmakers are now proposing to embed nearly KSh30 billion in rural electrification debt into consumer tariffs. The plan, directed at EPRA, would create a permanent “recovery mechanism” spreading the cost of government arrears across all households and businesses on the national grid. Kenyans already pay a 5% Rural Electrification Programme levy, and incorporating historical debt would treat state liabilities as shared consumer responsibility.
Kenya Power’s balance sheet reflects years of delayed reimbursements, leaving it reliant on revenue streams subject to global fuel-price fluctuations and currency volatility. The debt owed to the utility has swollen from KSh9.2 billion in 2008 to KSh30 billion by mid-2024, crippling dozens of mini-grids with failed batteries and non-functional infrastructure.
Lawmakers argue the move is necessary to stabilize the utility, but it risks further burdening households already contending with high electricity bills driven by fuel-cost adjustments, forex losses, and statutory levies.
