Power policy

Kenya is gradually increasing its non-large hydro renewables by adding solar, wind and geothermal. The government offers a feed-in tariff for these technologies and is planning an auction-based scheme, but only for wind and solar energy. In September 2020, the Energy and Petroleum Regulatory Authority (EPRA) developed the Energy Regulations 2020, along with the associated draft Regulatory Impact Statement, which will operationalize the Energy Act 2019. Auction regulations were to be available in 2021. Kenya is discussing a net-metering policy that can help an owner of a renewable power generator of 1 megawatt or less sign up with a distribution licensee or retailer, under the proposed Energy Policy and Bill.

Power prices and costs

Kenya Power introduced off-peak tariffs for commercial and industrial customers in December 2017, which are applicable during the nighttime, if a customer meets a certain threshold of monthly power consumption. Power prices in Kenya are higher compared to neighboring economies such as Ethiopia, where cheap large hydro is available, and Tanzania, where the government keeps tariffs lower than generation costs.

Power market

The liberalization of the generation market has seen more than 10 independent power producers cut into KenGen’s market share. The government has also mandated Ketraco to compete with Kenya Power on transmission. In March 2019, the president signed the Energy Bill 2017, which liberalized the electricity retail market on paper. But the market has been so far monopolized by Kenya Power in practice. It would take another year or more to set up detailed regulations. Large hydro and geothermal are the two main sources in Kenya’s generation mix.

Doing business and barriers

Kenya’s peak power demand grew 5% from 2020 to 2021, reaching 2,036 megawatts. It was driven by growing demand from residential customers that could benefit from a subsidized grid connection, and from commercial as well as industrial customers. Kenya has the largest off-grid solar market in Sub-Saharan Africa and is poised to grow further under its National Electrification Strategy launched in December 2018, which aims to attain universal access by 2022.

Land access has been a challenge for both site selection and transmission connection. Developers usually spend two years negotiating to acquire land.

EV market

The country is aiming to increase the use of electric buses in their public transportation fleet.

EV policy

Kenya has a reduction of excise duty on electric vehicles. Finance Bill of 2019 proposed a reduction on the excise duty for all vehicles with only an electric motor for propulsion (battery electric vehicles) from 20% to 10%.

Buildings market

They expect to reduce lighting in public buildings by 50%.

Buildings policy

In 2020, the government published the National Energy Efficiency and Conservation Strategy, which says the government will ensure sustainable exploitation, utilization, management and conservation of the environment and natural resources. This is the document from which the government draws its actions on the improvement of energy efficiency.