By Benadeta Mwaura - Reporter
Kenya, April 16, 2026 - The government has moved to calm growing concerns over a possible surge in electricity costs, even as fuel prices hit record highs in the latest review by the Energy and Petroleum Regulatory Authority (EPRA).
Energy officials insist that the recent spike in petroleum prices will not translate into a significant increase in electricity tariffs, arguing that the country’s power mix remains largely insulated from global oil market shocks.
This comes at a time when Kenya is grappling with one of the sharpest fuel price increases in recent months, with diesel prices in particular rising steeply, raising concerns over a broader cost-of-living ripple effect.
According to the Ministry of Energy, electricity generation in Kenya is still predominantly driven by renewable sources, including geothermal, hydro and wind, which together account for the bulk of the national grid supply. As a result, reliance on thermal power, which is directly affected by fuel prices, remains limited.
However, this reassurance comes against a more complex reality.
While thermal generation contributes a smaller share of the energy mix, it plays a critical stabilising role, particularly during periods of low hydro generation or peak demand. Diesel-powered plants are often deployed as backup, meaning fluctuations in fuel prices still find their way into electricity bills through the fuel cost charge component.
The fuel cost charge, a variable element in electricity billing, is directly influenced by the cost of running thermal plants. When diesel prices rise sharply, as seen in the latest EPRA review, this charge tends to increase, even if the base tariff remains unchanged.
Energy analysts note that while the government’s position is technically accurate, it may understate the indirect impact of fuel volatility on electricity pricing.
“Thermal generation may not dominate the energy mix, but it is critical for grid stability. Any sustained increase in diesel prices will inevitably reflect in the fuel cost adjustment,” an energy economist familiar with Kenya’s power sector explained.
The concerns are further compounded by the timing of the fuel price hike.
The latest increase, which pushed diesel prices above KSh200 per litre in Nairobi, is expected to raise operational costs across multiple sectors, including manufacturing and transport. For power producers relying on diesel, the cost pressure is immediate.
And this creates a layered effect.
Even if electricity tariffs do not spike dramatically in the short term, the underlying cost structure of power generation is shifting. Over time, this could translate into higher charges, particularly if reliance on thermal plants increases due to weather variability or rising demand.
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The Kenya Power and Lighting Company (KPLC), which passes generation costs to consumers, has in the past adjusted fuel cost charges in response to changes in thermal generation expenses, a trend that could resurface if high fuel prices persist.
At the same time, broader economic pressures are already building.
Rising fuel costs are pushing up transport and production expenses, factors that indirectly influence electricity demand and consumption patterns. Industries facing higher operational costs may pass these on to consumers, further intensifying inflationary pressures.
The government, however, maintains that ongoing investments in renewable energy will continue to shield consumers from extreme price volatility.
Kenya’s geothermal capacity, one of the largest in Africa, remains a key pillar of this strategy, providing relatively stable and predictable generation costs compared to fossil fuel-based alternatives.
Yet the current situation highlights a structural vulnerability.
While the country has made significant progress in reducing dependence on thermal power, it has not entirely eliminated exposure to global energy markets. In periods of volatility, even a small thermal component can introduce cost pressures into the system.
For consumers, the message remains cautiously optimistic but uncertain.
Electricity prices may not rise as sharply as fuel prices, but the link between the two has not been fully broken.
And in an economy where energy costs are deeply interconnected, the question is no longer whether fuel prices will affect electricity, but how much of that impact can be absorbed before it reaches the consumer.