Kenya generates green energy. It should be manufacturing it, too
By Mureithi Mworia
The green economy is projected to exceed USD 7 trillion by 2030, up from USD 5 trillion in 2024, positioning itself as the second-fastest growing sector after technology. Yet Africa captured just 3% of global clean energy investment despite representing 18% of the world’s population. This disparity reveals not merely an investment gap, but a structural misalignment between where green capital flows and where climate adaptation needs are most acute.
Kenya’s trajectory illustrates this tension with particular clarity. The country has attracted KES 129 billion (USD 1 billion) in renewable energy investment over the past five years, primarily in geothermal and wind infrastructure. Geothermal now supplies 47% of Kenya’s electricity, making it a regional standout. Yet this achievement masks a deeper vulnerability: the country’s green economy participation remains confined to proven technologies whilst nascent sectors requiring patient capital and regulatory innovation struggle to gain traction.
The cost deflation paradox
The World Economic Forum’s latest analysis, developed in collaboration with Boston Consulting Group, identifies a critical threshold that has profound implications for emerging markets. Solutions addressing over 50% of global emissions are now cost-competitive without subsidies. Solar photovoltaic, wind power, and battery storage have crossed what researchers term the “S-curve”, the inflection point where technology costs decline sufficiently to enable mass deployment. Since 2010, solar PV costs have fallen approximately 90%, offshore wind by 50%, and lithium iron phosphate batteries by 90%.
Yet the benefits of this cost deflation accrue asymmetrically. China manufactures 85% of global polysilicon and 76% of battery cells, having invested USD 659 billion in clean energy in 2024 alone, nearly three times America’s outlay and substantially more than Europe’s USD 410 billion. China’s solar PV capacity has almost quadrupled and its wind capacity has doubled since 2020, whilst the country now operates over 12 million charging stations for electric vehicles.
African nations, Kenya included, find themselves as price-takers in this market. Whilst solar panel imports have surged across 20 African countries over the past year, the continent manufactures virtually none of these components domestically. This import dependency exposes economies to currency fluctuations and supply chain disruptions whilst forgoing the industrial policy benefits of jobs, skills transfer, and technological capacity that China, Europe, and increasingly India are capturing through deliberate manufacturing strategies.
“Energy security is a critical priority for a developing country like India,” noted Sumant Sinha, founder and chief executive of ReNew, one of India’s leading renewable power producers. “We are rich in renewable energy resources, so the more energy we produce domestically, and the more equipment we manufacture to enable that, the safer and more resilient we become in the current context.” His observation applies with equal force to Kenya and the broader African context, where energy independence remains aspirational rather than operational.
The adaptation opportunity
The adaptation economy presents different dynamics entirely, one where African nations hold inherent advantages that remain largely unexploited. Climate adaptation markets now account for 22% of the USD 5 trillion green economy, standing at USD 1.1 trillion annually and projected to grow at over 6% through 2030. These markets extend beyond the Global South into developed economies facing mounting climate risks, from California’s wildfires, which caused an estimated USD 250 billion in damage in January 2025, to Spain’s deadly floods in 2024.
Kenya faces escalating climate risks that make adaptation not merely prudent but economically essential. Droughts threaten agriculture, which employs 40% of the workforce and contributes roughly 34% of GDP. Irregular rainfall patterns disrupt hydroelectric generation, creating energy security vulnerabilities despite the country’s geothermal capacity. The economic case for adaptation investment is clear. The report estimates that climate inaction costs roughly three times the USD 4 trillion needed annually to combat climate change globally.
Yet adaptation technologies remain fragmented and under-capitalised compared to their mitigation counterparts. Climate-resilient seeds, drought-resistant construction materials, advanced water management systems, and early warning systems for extreme weather lack the economies of scale that make solar panels economically compelling. Companies developing these solutions face what investors term “technology immaturity risk”, the uncertainty whether innovations will achieve cost parity with conventional alternatives before capital runs out.
Three missing accelerators
The report identifies three “growth accelerators” that distinguish successful green economy participants: achieving technology maturity whilst driving cost efficiency; shaping favourable regulation and ecosystems; and accessing diversified capital. Kenya’s performance across these dimensions reveals both capability and constraints.
On technology maturity, the country has demonstrated competence in deploying proven solutions but shows limited activity in harder-to-abate sectors. Low-carbon hydrogen, carbon capture and storage, and advanced biofuels, technologies essential for industrial decarbonisation, require regulatory frameworks and offtake guarantees that Kenya has not yet established. The European Union committed EUR 40 billion (approximately KES 5.7 trillion) between 2020 and 2030 specifically for scaling these nascent technologies through programmes including Horizon Europe, NextGenerationEU, and the Innovation Fund. Africa’s comparable commitment remains negligible.
Bayer’s Matthias Berninger, who oversees public affairs, science, and sustainability for the agricultural giant, articulated a principle with direct relevance to African economies: “R&D budgets are the true sustainability reports. If your R&D budget is not aligned with your sustainability goals, then the rest is noise.” Bayer invests over EUR 2 billion annually in agricultural research and development, targeting climate-resilient crops including drought-resistant varieties and those requiring reduced pesticide volumes. Kenya’s entire national research budget across all sectors approximates KES 13 billion (USD 100 million) annually, a mismatch that constrains indigenous innovation capacity.
Regulatory shaping represents a particular challenge for African economies operating within institutional frameworks that often lack the technical sophistication required for complex green economy partnerships. The report highlights how leading companies actively co-create standards and policies with governments, de-risking investment through mechanisms like contracts for difference, extended producer responsibility schemes, and harmonised certification standards for green products.
European policy exemplifies this approach. The Clean Industrial Deal presents measures to boost every stage of production in energy-intensive industries such as steel, metals, and chemicals. Kenya’s regulatory environment, whilst improving incrementally, lacks comparable sophistication. Permitting processes remain opaque, carbon pricing mechanisms are absent, and the institutional capacity to evaluate and de-risk novel technologies falls short of what private capital requires.
“Partnering along the entire building value chain is a new sign of leadership,” observed Miljan Gutovic, chief executive of Holcim, the Swiss building materials company. “It helps to de-risk legal, financial and regulatory shifts.” This observation underscores a structural deficit in African markets, where value chain integration remains embryonic and regulatory predictability uncertain.
The capital premium problem
Capital access shows the sharpest disparity between developed and emerging markets within the green economy. The report’s analysis of over 7,760 companies found that those with material green revenues obtain capital at an average of 43 basis points below conventional peers globally. In utilities, this discount reaches 104 basis points; in materials, 58 basis points. Companies with green revenues exceeding 60% of turnover commanded valuation premiums of 12% to 15% on revenue multiples between 2016 and 2024.
In Kenya, the situation reverses. The premium for green projects often exceeds 200 basis points due to perceived country risk, effectively negating the global cost-of-capital advantage that companies in developed markets exploit. Development finance institutions provide some relief. British International Investment and other DFIs have supported renewable projects across East Africa, but their capital represents a fraction of the estimated KES 2.6 trillion (USD 20 billion) Kenya requires for climate adaptation and mitigation through 2030.
The practical implications are measurable and consequential. Analysis of 6,500 publicly listed companies worldwide found green revenues grew at 12% annually between 2020 and 2024, double the rate of conventional business lines. In nine of the 11 largest industrial sectors, green revenues outpaced conventional growth. The energy sector showed particularly strong performance, with green revenues growing at 33% compound annual growth rate compared to 14% for conventional energy revenues.
Kenyan firms, predominantly focused on conventional sectors, largely miss this growth premium and the valuation benefits that accompany it. The country’s listed companies show minimal green revenue exposure outside the electricity generation sector, reflecting both the nascent state of domestic green industries and the absence of disclosure frameworks that would make such revenues visible to investors.
Beyond solar panels
What Kenya requires is not inspiration but infrastructure, both physical and institutional. This means manufacturing capacity for climate-adapted agricultural inputs, technical standards for green building materials that reflect tropical conditions rather than European specifications, financial instruments that align patient capital with long-term climate resilience needs, and regulatory frameworks sophisticated enough to enable rather than obstruct innovation.
The country cannot simply import solar panels and declare victory in the green transition. As Feike Sijbesma, founder and co-chair of the World Economic Forum’s Alliance of CEO Climate Leaders, notes: “The green market is one of the greatest economic opportunities of our time. From clean energy to sustainable finance, it is driving new engines of growth. Companies that lead today are not just future proofing; they are creating the markets of tomorrow.”
The window for strategic positioning remains open but narrowing. As China consolidates manufacturing dominance and Europe strengthens regulatory frameworks, African nations risk permanent relegation to consumer status in the green economy. Kenya’s choice, and Africa’s, is whether to build industrial capacity and institutional sophistication now, when costs and competition allow, or accept dependency on technologies, standards, and value chains determined elsewhere. The USD 7 trillion market projected by 2030 will be captured by those who invest decisively today, not by those who wait for perfect conditions that will never arrive.
