Kenya - Country Commercial Guide
Electrical Power Systems

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-09-13

Energy – Electrical Power Systems






2020 estimated

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All figures in millions of USD with exception of exchange rate in Kenya shillings (Kshs)
Total Market Size = (Total Local Production + Total Imports) – (Total Exports) Data Sources: Global Trade Atlas, Tradestats Express, and BMI

The story of Kenya’s power sector is one of solid performance with a steady growth trajectory over the last couple of years.  For its population and per-capita GDP, Kenya is performing well in terms of power generated with a per-capita power consumption of 178 kWh (2017e) compared to 126 kWh in Nigeria, which has a per-capita GDP nearly 3 times higher.  Moreover, Kenya has remarkable renewable resources, as evidenced by its track record as one of the lowest cost developers of geothermal power in the world.  Kenya has also aggressively pursued connections, having more than doubled electricity access from 32% to 73% of households in five years.  The national electrification strategy target aims to achieve universal access by the year 2022 at acceptable quality of service levels.

It should be noted that the COVID-19 pandemic has had negative effects on the sector with power demand declining as companies/factories scale down operations and businesses grapple with staying afloat.  The decrease in demand and a situation where there is excess power capacity is not tenable in the long run and the Ministry of Energy has entered negotiations with Independent Power Producers (IPPs) to reach an agreement on best way forward so as to forestall a force majeure.   The Commercial Service is monitoring this situation.

Additionally, the Finance Act 2020 and the Tax Amendment Act 2020 will have a negative impact on the energy sector as the laws in effect have abolished tax exemptions previously enjoyed by businesses in the sector.  The two acts introduced 14% Value Added Tax (VAT) charges on supplies imported into the country for use in the construction of power generating plants and off-grid solar power equipment.  This will, among other impacts, result in the increased capital expenditures costs for IPPs and imposition of 14% VAT on Solar Home System (SHS) equipment.

Generation: The installed capacity as of 2019 stands at 2.791MW, a significant growth from 1,800MW in 2014 but still low for a country with a population of over 50 million.  However, this is against a maximum peak demand of 1,926MW.  The Government of Kenya (GOK) is pursuing efforts that will increase power supply and lower the cost of electricity by injecting cheaper renewable energy sources such as geothermal, wind and solar; addition of coal to the energy mix and weaning off/conversion to gas of the more expensive HFO plants.  It is expected that generation will reach 5,000MW by the year 2030 with the bulk of it coming from geothermal, natural gas (imports), wind and solar.  Kenya also has long term goals of developing nuclear power with the first project estimated to come online in 2030.  The sector presents opportunities for trade & investment, especially in renewable sources like geothermal, solar and wind, where Kenya has excellent potential.

Around 30% of Kenya’s installed capacity is owned and operated by IPPs across several plants, including small-scale hydro plants, geothermal, biomass, wind, solar and heavy fuel oil plants.  The remaining 70% capacity is owned and operated by Kenya Electricity Generating Company (KenGen), which is 70% government owned.

Renewable Sources: Over 70% of Kenya’s electricity is generated from renewable / clean energy sources.  Of these, geothermal remains the most significant source as the country focuses on increasing geothermal capacity and weaning off thermal sources.  Today, Kenya’s vast geothermal potential, estimated at 10,000MW, remains relatively unexploited with current installed capacity at less than 700MW.  This notwithstanding, Kenya today is the 8th largest geothermal producer in the world and is home to the single largest geothermal power plant, the 280MW Olkaria IV plant.  Most generation is being carried out by government with only one IPP operating in the sector, U.S. firm Ormat producing 140MW and the rest being produced by state owned KenGen. Government efforts in geothermal production seem to be paying off with various projects currently underway by both the public and private sector at that should realize over 1,100MW capacity by 2022.

Wind is another key growth area.  Kenya is estimated to have a wind power potential of 3,000MW.  The Lake Turkana Wind Power plant is the single largest wind plant in Africa supplying 310MW to the grid and is the single largest private investment in Kenya’s history valued at $690m.  Additionally, GE Energy is the technology supplier for the 100MW in Kipeto wind power plant, an OPIC (now DFC) funded project that completed construction mid-2020.  KenGen’s 80MW wind project in Meru has been put on hold owing to permitting and land rights issues.  It will be important for future investors to engage early with communities to ensure acceptance and ownership at community level.

Kenya has a high potential for solar power given the high irradiation levels available throughout the year. Currently, the Rural Electrification & Renewable Energy Corporation (REREC) owns the Garissa Solar Plant, East & Central Africa’s largest solar plant at 50MW funded by the Chinese and completed in 2019.  The GOK has signed contracts for construction of an additional 325MW in new solar capacity that should begin coming online from 2020.  There is also a huge untapped demand for off-grid solar connecting communities located far from existing transmission infrastructure. Plans are also underway to convert off-grid diesel stations to solar-hybrids to lower power costs.

Kenya signed a nuclear power deal with China in 2015 which will enable Kenya to obtain expertise and technical support.  In addition, Kenya signed a partnership agreement with three top South Korean nuclear power firms as well as cooperation agreements with Russia and Slovakia.  Kenya is also pursuing a similar cooperation agreement with the United States.  All this is in readiness for Kenya’s plans to become a nuclear power producer by 2030.  Kenya is working together with IAEA as it builds capacity towards this end.   

The Tax Amendment Act 2020 did away with the bulk of incentives that were available to IPPs in the sector in 2020.  These include re-introduction of 14% VAT on supplies imported for use in geothermal resource exploration and supplies used in the building of power plants.  Investment Deduction which stood at 100% has been reduced to 50% in the 1st year and 25% for every other year on the reducing balance.

Transmission: The aging transmission and distribution networks largely contribute to approximately 16% system loss of the power generated. To address this, KETRACO is in the process of constructing ~4,500 km new lines, more than doubling the transmission network and introducing Kenya’s first high-voltage 400 kV and 500 kV DC lines as well as three major regional interconnectors to Ethiopia, Uganda, and Tanzania.  Beyond these lines that are under construction, KETRACO is planning a further ~4,200 km of lines to expand and strengthen the grid.  In addition, Kenya Power is building in redundancies, reducing losses and adding in smart technologies to help strengthen the grid.

Kenya is also keen to begin selling surplus power to her neighboring countries and has jointly embarked on an interconnection program to connect Kenya to Uganda and Rwanda on one side, and Ethiopia and Tanzania. Kenya signed an agreement to sell 30MW to Rwanda beginning fall 2015 and plans to increase this as more power is added to the grid. Kenya has also signed an agreement with Zambia to sell power in 2017.

Distribution: Kenya Power (KP) is currently the sole distribution company in Kenya. It operates Kenya’s interconnected grid, as well as several off-grid stations in the northern regions of the country.  As the single off-taker in the country, KP negotiates Power Purchase Agreements (PPAs) with generation providers and distributes to consumers.  Most impressively, KP nearly doubled access in Kenya from 26% of households in 2013 to 77% in 2018, meeting best-in-class benchmarks globally.  KP has been assisted in this effort by REREC. Founded in 2006, REREC’s mandate has been to accelerate the pace of rural electrification across all 47 counties.  Since its inception, REREC has helped move rural electrification from 4% to 32% of rural households, largely through its efforts to connect ~60,000 public facilities (mostly primary schools) around the country and all household consumers within 600 meters of those facilities.

Together, KP and REREC have 4 major objectives to develop distribution and access in Kenya:

  • Reach near-universal access by 2022 by adding 1 million new customers to the grid each year.  The plan is to achieve this largely through the Last Mile Connectivity Program (connecting all consumers within 600 meters of an existing transformer with a subsidized connection price) and through further subsidized connections for consumers in informal settlements.  The World Bank has partnered with Kenya in providing financing for this program.
  • Build a stronger and more flexible grid by building in redundancies, reducing losses, and adding in smart technologies.  Current transmission losses are 4.5%, distribution losses are 15%.
  • Increase renewable off-grid access.  Currently, there are 19 off-grid diesel-powered stations, but there are plans to convert these to solar-diesel hybrids as well as add 43 greenfield solar “mini-grids” through the Scaling Up Renewable Energy Program (SREP)

Oil and Gas:  Kenya is an increasingly promising player in the booming East Africa oil and gas market.  The multiple onshore discoveries announced by Tullow Oil since 2012 have led exploration and production companies to sound optimistic notes about the country’s potential.  A total of 63 oil exploration blocks have been gazetted, of which 37 are licensed to International Oil Companies (IOCs) and one to the National Oil Corporation of Kenya (NOCK).  Twenty-five blocks are open for licensing.  A total of 78 wells have so far been drilled, with 10 showing oil discoveries and 2 with natural gas shows.  Tullow estimates current crude oil recoverable reserves at approximately 750 million barrels.  The company has allocated $100mn for pre-development spending in Kenya, in addition to $125mn for exploration and appraisal spending with a potential for another $75mn.

While the exploration and appraisal work is ongoing in 2017, Tullow also plans to start small scale production to start recovering some cash flow for the project.  Initial production is planned for mid-2017 and will export around 2,000bbl per day via truck to Mombasa.  Cash earned from the Early Oil Pilot Scheme will help fund ongoing exploration and development work, in addition to the ultimate aim of building an export pipeline from the Lokichar Basin to the port of Lamu.  The planned pipeline is estimated to cost $2.1bn and will be 890km in length with the partners aiming to reach a final investment decision for the project by late 2018, followed by first production after 2022.

Current Energy Mix:  Kenya’s energy mix predominantly consists of green energy with geothermal, hydro and thermal power accounting for roughly 29% each.  The remainder is filled by wind, solar and biomass. Geothermal will continue to grow as more investments are put towards weaning off of expensive HFO plants and less reliance on hydro which suffers greatly in drought years.

Kenya Energy Mix by type, Installed





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Electricity Sector Institutions - The key public-sector institutions involved in managing and regulating the Kenyan electricity sector are:

Ministry of Energy & Petroleum (MOEP) - The MOEP is responsible for national energy policy formulation – including determining the policy on Feed-in-Tariffs (FIT) — and for creating a framework to allow growth, investment and efficient operations in the sector. The MOEP also grants and revokes generation and distribution licenses upon the recommendation of ERC.

Energy & Petroleum Regulatory Authority (EPRA) -The EPRA is responsible for regulation of the energy sector. The Energy Act of 2006 established EPRA as an independent energy regulatory authority with responsibility for economic and technical regulation of electric power, renewable energy, and downstream petroleum sub-sectors, including tariff setting and review, licensing, enforcement, dispute settlement and approval of power purchase and network service contracts.

Kenya Power (formerly Kenya Power and Lighting Company) – Kenya Power (KP) is the wholesale buyer of electricity and is obligated to purchase electricity from all power generators – including KenGen and IPPs — based on negotiated PPAs. KP is responsible for onward transmission of purchased electricity and is the sole distributor of electricity from the national grid to consumers in Kenya. KP is listed on the Nairobi Stock Exchange, is 49.9% owned by private shareholders, with the remainder owned by the Government of Kenya.

Kenya Electricity Generating Company (KenGen) – KenGen manages all public power generation facilities and is the main generator of electricity in Kenya which it sells on a wholesale basis to KP. KenGen, which produces approximately 70% of the Kenya’s electricity, has a current installed capacity of 1,632MW. KenGen is responsible for developing new public sector generation facilities to meet increased demand. KenGen is listed on the Nairobi Stock Exchange, is 30% owned by private sector shareholders and 70% owned by the Government of Kenya.

Geothermal Development Company (GDC) – GDC is 100% owned by the Government of Kenya. GDC has the mandate to undertake the high-risk exploration and development of geothermal fields, including exploration, appraisal and production drilling, and the management of proven steam fields. GDC is also responsible for entering into Steam Sales Agreements with investors in the electricity sector, including KenGen and IPPs, in order that these entities can develop electricity generation capacity, with energy sourced from geothermal wells.

Kenya Electricity Transmission Company (KETRACO) – In 2008, the Kenyan government created KETRACO to develop new, high-voltage electricity transmission infrastructure to facilitate grid access, allow for grid interconnection with new generating plants, and enable regional power trade with neighboring countries. KETRACO is 100% owned by the Government of Kenya and is responsible for planning, designing, constructing, owning, operating and maintaining new high voltage (132kV and above) electricity transmission infrastructure.

Rural Electrification Authority (REA) – In 2007, the government established REA to spearhead electrification projects in rural areas. Currently, rural connectivity stands at 48%, up from 4% at REA’s inception. The REA coordinates the implementation of rural electrification projects with the help of KP, which acts as a contractor on their behalf. The program aims to connect load centers such as schools, trading centers, health centers and public institutions to the grid. It was renamed to Rural Electrification and Renewable Energy Corporation.

Power Africa Support: Power Africa is a market-driven, U.S. Government-led public-private partnership aiming to double access to electricity in Africa.  It offers private sector entities tools and resources to facilitate doing business in Africa’s power sector.   In 2016, the Electrify Africa Act institutionalized Power Africa.

In Kenya, Power Africa is supporting the development of the energy sector through financing, grants, technical assistance, and investment promotion.  Power Africa helps advance power projects in the pipeline by raising debt and equity financing, assisting in Power Project Agreement and Government Letter of Support negotiations, and providing technical and financial advisory services.  Power Africa also has used innovative financial solutions, such as the USAID Development Credit Authority, to support grid connections and small on-grid power generation projects.  In the off-grid sector, dedicated Power Africa advisors provide targeted technical assistance to over 40 small-scale renewable energy providers, assisting them with market development and funding, among other priorities.  Learn more about how Power Africa is partnering to address key challenges in Kenya’s electricity sector and supporting private sector investment in power infrastructure at:

Leading Sub-Sectors

Although installed capacity is relatively small, Kenya is the leading generator in Eastern Africa.  The REA is focused on connecting major town centers, schools and hospitals to the grid as well as looking at off-grid solutions such as diesel fired plants.  However, REA is now issuing tenders to convert these plants to hybrid solar PV plants.  Opportunities also exist for mini grids to solve power needs in county development plans. Currently, there are 19 off-grid diesel-powered stations, but there are plans to convert these to solar-diesel hybrids as well as add 43 Greenfield solar “mini-grids” through the Scaling-Up Renewable Energy Program (SREP).

In addition, a government directive in 2010 that all new home developments must include solar energy panels has seen an increase in the demand for solar panels.  This directive is meant to ease the burden on the grid. Solar is also in use in rural Kenya where there is no access to the grid.  This creates a great opportunity for solar panels; however, there is a great onslaught of Chinese cheap imports that have flooded the market.  However, some establishments such as hotels are turning to solar lighting and water heating to reduce their power bills. Here lies an opportunity for high end products from U.S. firms.

The Solar Home Systems (SHS) segment has experienced significant growth over the last seven years and have been widely disseminated in both urban and rural Kenya.  They contribute greatly to rural electrification and access to clean energy.  Players in the sector have had to innovate to increase uptake such as the “Pay As You Go” (PAYG) model, a credit financing system where one pays very low daily rates over a long period of time to own the system.  According to a World Bank-funded study, Kenya has now become the world’s second largest stand-alone SHS market after India, with millions benefiting from the off-grid lighting solutions.  Kenya has also adopted national standards for solar equipment thus ensuring the quality of products offered in the market.

Since 2009, nearly 6.2 million SHS products have been sold in Kenya.  Of those, 3.41 million were sold between 2016 and 2018, providing improved energy access to almost 14 million people as of December 2018.  In the first half of 2019, record sales of almost one million units were made, demonstrating the pace with which the country has embraced off-grid solar solutions.

The four leading SHS companies in Kenya by volume sold are all U.S.-registered (BioLite, d.Light, Greenlight Planet & M-Kopa).  They hold approximately 42% overall market share and between them, distribute almost 1.2 million SHS in 2018-19 with a 34% annual growth rate.  With the government’s target of universal access by 2022, the SHS segment will continue to play a significant role in powering rural Kenya.

Best prospects for U.S. exporters include drilling materials and associated equipment, generation, substation, transmission and related equipment, electric and electrical cables, transformers, electric meters, electric poles, and switchgear, wind turbines, solar thermal and solar PV equipment, inverters, deep cycle batteries, smart grid systems and consultancy services.


The GOK is focused on developing the geothermal potential in the country with a 10-year $2.6bn geothermal exploration plan that will involve sinking 566 wells in the Rift Valley.  KenGen plans to add 560MW of geothermal power to the grid through joint ventures in addition to 80MW of wind and various solar installations at their existing hydro sites. GDC plans to develop 2000MW from the Bogoria-Silali geothermal block and has received an $89 million concessional loan from the German Development Bank for this development, part of which will be applied to drilling of exploration wells. Numerous other exploration activities are underway in 10 other blocks.

The ongoing Last Mile Connectivity Project will maximize the use of the Kenya Power’s 46,000 existing distribution transformers spread across the country to extend low voltage lines to households located in the vicinity of the transformers.  The total project cost is estimated at $147mn, with the GOK contributing the remaining $14 million.  The project will power public facilities such as schools, trading, administrative and health centers and water points.

Both Ketraco and KP are undertaking extension of the transmission and distribution grid network.  In 2017, KP launched the $1bn upgrade program aimed at reducing losses and improving power supply.  They are also undertaking a project to lay an underground electricity cables within and around Nairobi to ensure quality power supply within the city.  These projects will see opportunity for EPC firms for transmission lines, substations and affiliated materials.   In addition, the live line maintenance of distribution networks will require live line equipment where the United States has an advantage.  The same applies to the expansion of the underground cabling system where U.S. firms can compete to provide the necessary equipment/materials.

KETRACO plans to construct over 10,000km of high voltage transmission infrastructure including lines, switch gears, and sub-stations over the next 4years.  These will be financed either by the Kenyan government, development partners, IFIs and through PPPs.  These projects will also require consultancies and/or advisory services.

REREC is implementing solar mini-grids in the off-grid areas in Kenya to serve households and provide other socio-economic benefits such as education, health, water and food preservation.  In addition, the World Bank is funding the Kenya Off Grid Solar Access Project (KOSAP) that seeks to electrify 14 underserved counties that represent 72% of the land mass.  The project will implement mini-grids, standalone solar systems, solar water pumps and clean cooking solutions. These are being implemented through the private sector.

One key challenge in the sector is the delay by EPRA in approving PPAs and the GOK reluctance to issue Letters of Support which are a key component in projects getting to financial close. The delays may be because Kenya now has surplus power and may need to stagger new connections to the grid so as to manage electricity costs.

Web Resources

Geothermal Development Company

Kenya Electricity Generating Company (KenGen)

Kenya Electricity Transmission Company (KETRACO)

Kenya Ministry of Energy
Kenya National Bureau of Statistics

Kenya Power & Lighting Company Ltd. (KPLC)

Rural Electrification & Renewable Energy Corp (REREC)
World Bank


For More Information please contact:


Mary Masyuko
Senior Commercial Specialist
U.S. Commercial Service, U.S. Embassy Nairobi
U.S. Department of Commerce | International Trade Administration
Tel: +254 (20) 363-6063;