Power play: How Kenya’s energy gamble could reshape Africa

A Special Report by Ethical Business

Kenya’s power grid, a rare African success story built on a foundation of geothermal steam and hydropower, faces a paradoxical crisis of its own making. The very abundance of renewable power that insulates it from global fuel shocks now exposes a more profound vulnerability: the difficulty of managing an erratic natural bounty to meet the demands of a growing economy. The recent, much-publicised blackouts were not a failure of generation, but a failure of foresight – a warning that building a grid is one thing, but mastering it is another.

The country’s energy story reads like a development miracle with a catch. Kenya has transformed its power mix from 50% renewables in 2000 to over 81% today, placing it third among African nations in the World Economic Forum’s Energy Transition Index. Yet this transformation comes with sobering realities: 25% of Kenyans still lack electricity, 69% of households rely on polluting cooking fuels, and the grid’s emissions factor of just 0.049 tonnes of CO₂ per megawatt-hour conceals persistent inequities.

The stakes extend far beyond Kenya’s borders. As the country targets net zero emissions by 2050 with a staggering $600 billion investment plan, its choices will echo across a continent where 600 million people still live without electricity. Success could demonstrate that poor countries can achieve rapid development while maintaining environmental sustainability. Failure could reinforce perceptions that climate action remains a luxury developing nations cannot afford.

The grid that defied expectations

Walk through the Olkaria Geothermal Complex in Kenya’s Rift Valley and witness what patient government investment can achieve. Steam rises from volcanic earth, feeding turbines that generate 943.7 MW – nearly 40% of Kenya’s electricity and a testament to strategic risk-taking that private investors initially avoided.

Kenya’s electricity mix at the close of 2024 shows renewable dominance:

The paradox appears in solar power: despite 484.9 MW of installed capacity, solar contributes just 3.2% of actual generation. This gap shows the challenge of integrating variable renewable sources into a grid designed for predictable baseload power. Kenya’s success with geothermal and hydropower (both dispatchable sources) contrasts with solar’s intermittency challenges.

The Lake Turkana Wind Power Project shows both the promise and complexity of renewable development. Africa’s largest wind farm supplies 13.6% of national electricity while cutting emissions by 700,000 tonnes annually. Yet the project faced years of delays due to transmission line constraints and community disputes over land rights.

The $600 billion gamble

Kenya’s Energy Transition and Investment Plan requires KSh 77.4 trillion ($600 billion) through 2050 (roughly equivalent to building the entire Kenyan economy four times over). About 90% must flow to power generation, grid expansion, transport electrification, and green fuel production.

The mathematics are unforgiving. At current rates of investment, Kenya faces an annual financing deficit of KSh 903 billion to KSh 1.03 trillion ($7-8 billion) for energy transition projects. The recently endorsed KSh 9.03 billion ($70 million) Climate Investment Fund plan, while significant, represents less than 1% of annual needs. Even South Africa’s pioneering Just Energy Transition Partnership, with KSh 1.5 trillion ($11.6 billion) in international commitments, covers only a fraction of that country’s total requirements.

The financing landscape reveals stark regional disparities. While Africa accounts for less than 4% of global greenhouse gas emissions, it receives just 2% of global climate finance. Structural biases mean solar projects in Nigeria cost three times more to finance than identical installations in Madrid (not due to technical differences but perceived risk premiums that often reflect investor prejudices rather than actual project risks).

Kenya has attempted to address these challenges through innovative mechanisms:

• Green bonds launched in 2019, with East Africa’s first sovereign green bond targeting sustainable infrastructure
• Blended finance structures combining concessional DFI funding with commercial capital
• Net metering regulations allowing distributed solar up to 1 MW
• Renewable energy auctions replacing administratively set feed-in tariffs

Yet gaps persist. SME access to green finance remains limited, skills deficits constrain local value chains, and rural communities often lack meaningful participation in transition planning despite bearing project impacts.

Lessons from Johannesburg’s coal reckoning

Drive southeast from Johannesburg toward Secunda and you encounter the epicenter of South Africa’s energy transition challenge. The Sasol synthetic fuels plant, converting coal to liquid petroleum, produces more carbon dioxide than entire countries while employing thousands of workers whose livelihoods depend on fossil fuel infrastructure.

South Africa’s Just Energy Transition Partnership offers Kenya both inspiration and caution. The $11.6 billion international commitment represents unprecedented coordination among donor countries, but early implementation reveals the complexity of managing transformative change.

The South African model stresses comprehensive planning across six portfolios: electricity generation, regional economic diversification, electric vehicles, green hydrogen, skills development, and municipal infrastructure. This approach addresses multiple transition dimensions at once rather than treating energy as an isolated sector.

Important lessons surface from South Africa’s experience:

Scale matters, but so does sequencing. South Africa’s Investment Plan requires 1.5 trillion rand over five years. The international commitment, while substantial, covers only a portion of needs. Kenya must prepare for similar financing complexity whilst avoiding over-reliance on debt that could worsen fiscal problems.

Justice cannot be added later. South Africa’s coal-dependent Mpumalanga Province faces job losses and economic disruption requiring proactive intervention. Kenya’s transition may displace fewer fossil fuel workers, but rural communities must see tangible benefits early in the process to maintain social support.

Institutional coordination is vital. South Africa established a Presidential Climate Commission and dedicated Project Management Unit to drive implementation. Kenya’s fragmented governance structure requires similar coordination mechanisms to prevent policy incoherence and implementation delays.

The early results are mixed. While South Africa has established robust monitoring systems and stakeholder engagement processes, disbursement has been slower than projected. Questions remain about whether donor countries will honor long-term commitments as domestic political priorities shift.

Morocco’s desert ambition

Flight paths over the Sahara reveal Morocco’s renewable energy transformation in stark visual terms. The Noor Ouarzazate Solar Complex stretches across 3,000 hectares, its 580 MW of concentrated solar power and photovoltaic capacity representing the world’s largest installation of its kind.

Morocco’s strategy offers different lessons from South Africa’s comprehensive social planning. The kingdom has pursued large-scale project development with clear export orientation, particularly targeting European markets through proposed subsea cables. Three Emirati energy firms (Masdar, AMEA Power, and TAQA) have committed a potential KSh 1.29 trillion ($10 billion) for wind projects in the Sahara Desert, showing how ambitious targets can attract substantial foreign investment.

By 2030, Morocco aims for 52% renewable electricity capacity through investments approaching KSh 1.6 trillion ($12.3 billion). Government funding of KSh 297 billion ($2.3 billion) is complemented by KSh 1.29 trillion ($10 billion) in foreign commitments, primarily for Sahara wind projects.

The concentrated solar power plants at Noor provide dispatchable renewable generation through molten salt storage systems that enable eight hours of power production after sunset. This technology addresses intermittency challenges that plague solar development elsewhere, offering potential models for Kenya’s grid integration needs.

Morocco’s experience highlights several elements Kenya could adapt:

• Clear, stable regulatory frameworks that attract international capital despite emerging market risks
• Morocco’s industrial strategy linking renewable energy to manufacturing growth, with projections of 160,000 new jobs and KSh 5.16 trillion ($40 billion) GDP contribution by 2030
• Proactive planning for social and environmental risks, particularly land use competition and water access in arid regions

The kingdom’s green hydrogen ambitions parallel Kenya’s own emerging interests in power-to-X technologies. Morocco’s strategic location near European markets provides natural export advantages, whilst Kenya’s abundant geothermal and solar resources could support similar industrial development within East African regional markets.

The justice gap

Kenya’s renewable energy achievements conceal persistent inequities that threaten social stability and economic inclusion. While overall electricity access reached 79% by 2023, regional disparities remain stark. Nairobi accounts for over 43% of national electricity consumption, contrasting sharply with North-Eastern, South Nyanza, and other rural regions where grid penetration remains limited.

The numbers show the scale of ongoing exclusion:

• 8 million Kenyans still lack electricity access, mostly in rural areas
• 69% of households rely on traditional biomass for cooking, creating indoor air pollution responsible for 26,000 annual deaths
• Power tariffs rank among Africa’s highest, making electricity unaffordable for many low-income households even where grid connections exist

Gender dimensions compound these challenges. Women bear disproportionate burdens from energy poverty, spending hours daily collecting firewood and biomass while facing health risks from indoor air pollution. Clean cooking solutions represent a critical intersection between energy transition and gender equity, yet policy implementation remains uneven.

Community displacement presents another justice concern. The Lake Turkana Wind Power Project and Kinangop Wind developments faced legal challenges over inadequate consultation and compensation for pastoral communities. While good practices are emerging, revenue-sharing agreements at Kipeto Wind, community engagement protocols at Akiira Geothermal, the imperative remains to treat affected communities as shareholders rather than mere stakeholders.

Kenya’s policy framework explicitly commits to “leaving no one behind” through social protection, decent work creation, skills development, and community benefit sharing. However, implementation gaps persist between national policy aspirations and local realities. Rural communities often lack meaningful participation in transition planning despite bearing project impacts, while benefits frequently accrue to urban centers and connected industrial users.

Manufacturing’s green future

Kenya’s Vision 2030 identifies manufacturing as a key economic pillar, targeting growth from 10% to 20% of GDP over the next decade. The energy transition creates both opportunities and challenges for achieving this industrial transformation.

Clean energy abundance could attract energy-intensive industries seeking to meet international environmental standards. The Rift Valley’s geothermal resources offer particular promise for heat-intensive processes including food processing, textiles, and cement production. Direct geothermal applications could reduce costs while eliminating industrial carbon emissions.

Recent developments suggest momentum towards green industrialisation:

• A 3.2 trillion yen (KSh 287 billion, $2.2 billion) Samurai bond from Japan supports EV manufacturing and grid upgrades
• Special Economic Zones increasingly focus on green technology parks and renewable manufacturing
• Local value chains are expanding, with 30,000 new jobs projected in green technology by 2030

Kenya could also position itself as a green hydrogen hub, leveraging abundant renewable resources for clean fuel production. Early feasibility studies suggest competitive hydrogen markets by 2030, particularly for shipping and industrial applications. However, realizing these opportunities requires substantial investment in human capital, technology transfer, and institutional capacity.

The policy framework increasingly supports green industrial development through the Energy Act (2019), Green Economy Strategy, and targeted SEZ incentives. Yet gaps remain in skills development, SME financing, and environmental regulation enforcement. TVET institutions need curriculum reforms aligned with green industry needs, while regulatory capacity requires strengthening to ensure environmental compliance and public accountability.

Regional integration and power politics

The East African Community provides a framework for regional energy cooperation that could significantly enhance Kenya’s transition prospects. Integrated markets offer energy security through diversified supply, cost reductions through economies of scale, and grid stability by balancing renewable sources across larger geographic areas.

Kenya’s strategic position within regional energy networks creates both opportunities and responsibilities. The country already exports electricity to Uganda and Tanzania during surplus periods while importing power when domestic generation falls short. The Lake Turkana wind facility’s output varies seasonally, requiring flexible regional arrangements to maintain grid stability.

Yet current regional integration efforts include:

• East African Power Pool interconnections with Ethiopia and Tanzania
• Bilateral power purchase agreements with neighboring countries
• Joint planning for renewable resource development across borders
• Coordination through multilateral financing mechanisms

However, realizing regional integration potential requires substantial infrastructure investment and policy reforms. Cross-border transmission capacity remains limited, regulatory frameworks vary significantly between countries, and political considerations about energy sovereignty constrain deeper cooperation.

Kenya’s relatively advanced financial sector, strong institutions, and renewable energy leadership position it to serve as a regional energy hub. Success in domestic transition could create template for broader East African energy integration while generating additional revenue streams through power exports and clean energy services.

The implementation challenge

Kenya’s impressive policy framework, from the 2025-2034 National Energy Policy to the Energy Transition and Investment Plan, confronts stubborn implementation challenges that reveal gaps between aspiration and achievement.

Regulatory modernisation attempts to align investment incentives with equity goals through net metering regulations, renewable energy auctions, and carbon market frameworks. The Integrated National Energy Plan Regulations (2025) provide binding requirements for planning, public participation, and funding coordination across government levels.

Yet a 2024 review in Energy Strategy Reviews identified poor policy implementation as a key constraint on renewable energy development. Governance challenges include:

• Coordination failures between national and county governments
• Limited capacity in regulatory agencies to oversee complex transition projects
• Inadequate stakeholder engagement, particularly with rural and marginalized communities
• Monitoring and evaluation systems that track inputs rather than outcomes

The establishment of institutions like the Geothermal Development Company demonstrates how focused public entities can overcome market failures. However, scaling similar approaches across the broader energy system requires sustained political commitment and adequate financing for institutional development.

International partnerships offer both resources and complexity. Donor coordination through frameworks like Power Africa and bilateral agreements with Japan, Germany, and others provides technical assistance alongside financing. However, managing multiple international partners with different priorities and procedures creates administrative burdens that can slow implementation.

The road ahead

Kenya stands at a crossroads that will define its development trajectory for generations. The country’s remarkable progress toward renewable electricity provides a foundation for completing the transition while addressing persistent access and equity challenges.

The path forward requires embracing complexity while maintaining focus on core objectives: sustainable, equitable energy development that serves all Kenyans while contributing to global climate goals. This means moving beyond technical solutions to address governance challenges, social inclusion, and regional coordination.

Success demands several critical elements:

• Innovative financing that combines international support with domestic resource mobilization
• Comprehensive planning that integrates electricity, transport, cooking, and industrial energy needs
• Just transition principles that ensure benefits reach marginalized communities while protecting vulnerable workers
• Regional cooperation that creates larger markets while maintaining national sovereignty
• Institutional capacity that can implement complex programs while maintaining accountability

The stakes extend beyond Kenya to influence climate action and development prospects across Africa. The continent contributed least to global emissions while facing disproportionate climate impacts and receiving minimal international support for addressing them. Kenya’s transition represents an opportunity to demonstrate alternative development pathways that other countries can adapt to their circumstances.

International partners have crucial roles in providing financing, technology transfer, and capacity building support. However, external assistance must align with national priorities and local ownership rather than imposing external agendas. The South African experience demonstrates both the promise and challenges of coordinated international support for energy transitions.

Kenya’s energy future remains unwritten. The power blackouts need not stay off if the country can successfully navigate the complex politics, economics, and social dynamics of transformation. The decisions made over the next five years will determine whether Kenya becomes a beacon for green development or another cautionary tale of unmet potential.

The outcome will shape not only Kenya’s future but also broader debates about climate justice, development finance, and whether the global community can deliver on promises to support developing country transitions. Kenya’s grid may be at a crossroads, but with sustained commitment to justice and inclusion, it can choose the path toward a more equitable energy future.

References: Sources cited include South Africa’s Just Energy Transition Platform 4, CATF’s analysis of African energy transition financing 8, Morocco’s renewable energy investment opportunities 10, Kenya’s energy policy developments 12, and Nature’s feature on Kenya’s renewable bet 13.