By Benadeta Mwaura - Reporter
Kenya, August 20, 2026 - Kenya's plan to more than triple its electricity generation capacity may not automatically translate into cheaper power for households and businesses, energy experts have warned.
The government is targeting an increase in installed generation capacity from about 1,500 megawatts to 5,500MW, including 2,000MW from nuclear power, 700MW from hydropower and additional geothermal generation.
But experts say the cost of electricity is determined by much more than the amount of power generated.
Mugwe Manga, climate finance lead at FSD Kenya, said the government needs to examine the entire electricity supply system rather than focusing only on increasing generation.
“The answer to this conundrum is not as straightforward as it may seem,” Manga said.
One of the biggest concerns is the amount of electricity Kenya loses before it reaches consumers.
More than 20% of electricity is lost through technical failures and unlawful connections, compared with a global average of about 8 to 10%, according to the experts cited in the report.
Reducing these losses could therefore provide a quicker route towards lower electricity costs than simply building more generation capacity.
The government's own energy planning documents have identified system losses as an area requiring intervention, with a target of reducing losses to 15% by 2030.
This means that even if Kenya succeeds in producing significantly more electricity, consumers may not see the full benefit if a substantial share continues to be lost through the transmission and distribution network.
The financing of new electricity projects is another challenge.
Energy developers in Africa generally face higher borrowing costs because investors consider many projects riskier. Those financing costs ultimately have to be recovered through the electricity system and can therefore feed into the price consumers pay.
The issue is particularly important as Kenya considers major investments, including nuclear generation, which will require substantial upfront financing.
Increasing generation capacity therefore creates another question for policymakers: how much will the additional electricity actually cost to produce and finance?
Experts are also questioning Kenya's existing power purchase agreements, particularly contracts containing take-or-pay clauses.
Under such arrangements, a buyer can be required to pay for contracted electricity even when it does not consume all of the power.
Independent power producers currently account for about 40% of Kenya's total power capacity under long-term contracts signed after the electricity generation sector was liberalised.
This has become an increasingly important part of the debate over electricity prices, with Parliament last month directing Energy Cabinet Secretary Opiyo Wandayi to develop a policy for renegotiating electricity supply agreements with major power producers.
Kenya's electricity generation mix is already heavily dominated by renewable sources.
More from Kenya
About 93% of the country's electricity generation comes from renewable energy, including geothermal, hydro, wind and solar power.
But experts caution that having relatively cheap and clean sources of generation does not necessarily result in cheap electricity at the meter.
Albert Nganga, senior regulatory manager at CrossBoundary Energy, summed up the problem by noting that:
“Electricity prices are determined by the whole system, not only by the cost of power generation.”
That system includes generation, power purchase agreements, transmission, distribution, financing and the recovery of costs across the electricity supply chain.
The debate comes after Kenya Power withdrew an application to increase the base electricity tariff following government intervention.
Kenya Power had submitted the application to the Energy and Petroleum Regulatory Authority in March, seeking approval for higher base tariffs. The proposed review was subsequently withdrawn after the government said it wanted to protect households, businesses and industries from additional cost pressures.
The Ministry of Energy said any future tariff review must follow the legal process under the Energy Act, including technical evaluation, stakeholder consultations and public participation.
That makes the government's promise of cheaper electricity particularly significant.
Kenyans are not simply waiting for more megawatts. They are looking for lower electricity bills.
The planned expansion of generation could help Kenya meet rising demand and support industrialisation.
But experts argue that the government must simultaneously tackle electricity losses, expensive financing, contractual obligations and inefficiencies across transmission and distribution if the additional power is to translate into meaningful savings for consumers.
The challenge is therefore not simply whether Kenya can generate 5,500MW.
It is whether the country can build and finance that capacity, move the electricity efficiently through the grid and structure the market in a way that allows the savings to reach households and businesses.
For consumers, the real test of Kenya's energy expansion will not be how many megawatts are added to the grid, but how much they ultimately pay for a unit of electricity.