By Benadeta Mwaura - Reporter
Kenya, July 24 ,2026 - Kenya's ambition to remain Africa's renewable energy powerhouse has been slowed by years of uncertainty over power purchase agreements (PPAs), with a new Bloomberg analysis showing that the government's freeze on new electricity contracts discouraged investment and delayed billions of shillings worth of clean energy projects despite rising electricity demand.
The report argues that while Kenya remains one of Africa's cleanest electricity producers, with more than 90 percent of grid electricity generated from renewable sources such as geothermal, hydro, wind and solar, the moratorium on signing new PPAs has created uncertainty among investors who require long-term revenue guarantees before financing large energy projects.
The government suspended the signing of new Power Purchase Agreements in 2021 as part of a review aimed at reducing the cost of electricity and addressing concerns that some contracts were expensive and exposed consumers to high capacity charges.
While the review was intended to protect consumers, industry the analysts now say the prolonged freeze came with unintended consequences.
According to Bloomberg's findings, several renewable energy developers either postponed investments, scaled back expansion plans or redirected capital to markets with more predictable regulatory environments.
African Energy's latest analysis similarly notes that Kenya has added relatively little new generation capacity since 2021, even as electricity consumption has continued to grow, increasing pressure on the national grid.
The slowdown comes at a time when Kenya's electricity demand is rising steadily.
Peak electricity demand reached a record 2.44 gigawatts in late 2025, while domestic generation capacity has not expanded at the same pace. Analysts warn that unless new investments are unlocked, the country could face supply constraints as industrialisation, electric mobility, digital infrastructure and data centres increase power consumption.
The challenge has already become evident in other strategic investments.
Earlier this year, plans by Microsoft and UAE-based G42 to establish a major data centre in Kenya reportedly stalled after concerns over electricity supply and commercial guarantees emerged during negotiations with the government.
Despite the slowdown, Kenya remains one of Africa's leading renewable energy markets.
The country is globally recognised for its geothermal resources in the Rift Valley and has made significant investments in wind projects such as Lake Turkana Wind Power, alongside expanding solar generation.
Renewable sources account for the overwhelming majority of Kenya's electricity generation, giving the country one of the lowest-carbon electricity systems on the continent.
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This clean energy mix has increasingly become a competitive advantage as multinational companies seek locations powered by low-carbon electricity to meet their environmental commitments.
Energy experts say the issue is no longer Kenya's renewable resource potential but policy predictability.
Independent power producers rely on long-term PPAs—often spanning 20 years—to secure financing from commercial banks and development finance institutions.
Without legally binding agreements guaranteeing electricity purchases, investors struggle to reach financial close, delaying projects even where technical feasibility has already been established.
African Energy argues that lifting the moratorium could unlock a fresh wave of renewable investment, provided Kenya adopts transparent procurement processes and commercially sustainable electricity pricing.
The government has consistently defended the review of PPAs, arguing that expensive contracts signed in previous years contributed to high electricity costs for households and businesses.
The challenge now lies in striking a balance between protecting consumers from costly electricity tariffs while maintaining an attractive investment environment capable of financing the country's growing energy needs.
The debate has become even more significant as Kenya pursues ambitious industrialisation targets under Vision 2030, expands manufacturing and seeks to position itself as a regional technology hub.
With the review of PPAs largely complete and new energy projects gradually returning to the pipeline, analysts believe Kenya has an opportunity to regain momentum in renewable energy investment.
However, they caution that policy consistency, regulatory certainty and timely approval of commercially viable projects will determine whether Kenya maintains its leadership position or loses investment to competing African markets aggressively courting clean energy developers.