Kenya Triples Renewable Power Target, Adds Nuclear Plans

Kenya has tripled its long-term target for expanding renewable energy capacity to meet surging demand and support industrialization, though the move may not translate into cheaper power for consumers.

The new plan calls for renewable generating capacity of 5,500 megawatts, up from about 1,500 MW currently. That includes 2,000 MW of nuclear power, alongside 700 MW of hydropower and new geothermal projects.

"We have recalibrated our long-term growth trajectory from 1,500MW to a 5,500MW renewable energy development pipeline," said Peter Njenga, CEO of KenGen, the state-owned utility that generates about 60% of Kenya's power.

Kenya already produces 93% of its electricity from renewable sources, making it a global leader in clean energy. But experts say reforms to utility contracts, electricity grids, financing and pricing are needed before that growth lowers costs for consumers.

Lawmakers have pressed the government to cut electricity rates. In July, parliament directed Energy Minister Opiyo Wandayi to develop a policy for renegotiating supply agreements with major power producers, arguing lower wholesale prices could let Kenya Power reduce consumer rates.

Industrial consumers in Kenya currently pay between $0.18 and $0.23 per kilowatt-hour, compared with about $0.03 in South Africa and Egypt and $0.05 in Morocco and Ethiopia.

Mugwe Manga, climate finance lead at the nonprofit FSD Kenya, said more than 20% of electricity is lost to technical failures and illegal connections, compared with a global average of 8% to 10%. "That offers a great low-hanging fruit to improve efficiency and pass that efficiency dividend to end consumers through reduced tariffs," he said.

High financing costs also weigh on prices, as renewable developers in Africa borrow at higher rates than counterparts in wealthier economies due to perceived risk. Long-term power purchase agreements with "take-or-pay" clauses, which require Kenya to pay for contracted electricity even if it isn't consumed, have also drawn criticism, though Manga said such guarantees are necessary to secure financing.

"The real test will be whether that additional clean generation is matched by reforms that lower electricity costs for consumers," said Cynthia Angweya-Muhati, CEO of the Kenya Renewable Energy Association.