Kenya to triple its electrification efforts in 2025

From the newsletter
In its published 2025 Draft Budget Policy Statement, Kenya intends to connect 1.44 million households to electricity, three times more than it did in 2024. The statement mentions a focus on renewables, with targets including drilling 33 geothermal wells and plans for hydropower and biogas development.

• The budget statement, which is open for public feedback until the end of January, focuses not only on energy generation but also on transmission and distribution, with plans to construct 1,742 km of transmission lines and 21 transmission substations, and 1,050 km of distribution lines and 33 distribution substations.

• The energy infrastructure development will involve both the government, through its Rural Electrification and Renewable Energy Corporation (REREC), and the private sector through public-private partnerships (PPPs).

More details

• Kenya’s diverse renewable energy mix provides a strong foundation for clean energy expansion. Current capacity includes geothermal (943.7 MW), hydropower (872.4 MW), wind (436.1 MW), and solar (442.9 MW). This abundance presents significant opportunities for energy investors to scale operations, particularly with the government’s goal of achieving 100% renewable energy by 2030.

• The 2025 Draft Budget outlines extensive electrification projects such as drilling 34 geothermal wells led by the Geothermal Development Company (GDC). As geothermal currently provides 41.71% of the country’s electricity demand, further development will strengthen baseload capacity, ensuring a stable and reliable energy supply.

• The budget also prioritises decentralised renewable energy, aligning with off-grid electrification goals. Plans include the installation of 4,350 solar PV systems, 50,823 stand-alone solar systems and 80 wind resource data loggers across the country. This presents growth opportunities for energy companies involved in solar and wind installations, while manufacturers of solar equipment and wind technology gain new market entry points.

• The policy highlights public-private partnerships (PPPs) as a critical tool for financing large-scale energy infrastructure. The $77 million Nairobi street lighting project, alongside with the proposed construction of 1,742 km transmission lines & 21 transmission substations, demonstrates the government’s readiness for private investment. Foreign and local investors can co-develop wind farms, solar PV installations, and grid expansion projects, supporting Kenya’s renewable energy targets while ensuring profitability.

• The focus on modernising the national grid through expanding transmission lines and substations underlines Kenya’s commitment to energy efficiency. Notable projects include the completion of the Isinya-Namanga (132kV) and Turkwel-Ortum (220kV) transmission lines. This modernisation effort presents opportunities for energy storage developers and technology providers to enter the market.

• Clean cooking and bioenergy initiatives feature prominently, with the establishment of 55 institutional and 1,800 household biogas plants, the deployment of 195 energy-efficient charcoal kilns, and the promotion of clean cooking solutions by the Ministry of Energy and REREC. This focus supports sustainable energy use and health improvement, especially in rural areas.

• The recently gazetted Energy (Net Metering) Regulations signal a favourable regulatory environment for renewable energy investments. Net metering allows consumers to feed excess solar power back into the grid, reducing barriers for both residential and commercial renewable energy installations while incentivising private sector participation.

Our take

• Energy companies and investors can capitalise on Kenya’s renewable energy expansion, particularly in solar PV, geothermal, and wind projects, provided the policy draft’s proposals are enacted. The rise of public-private partnerships (PPPs) offers secure investment channels for infrastructure projects, reducing risks while ensuring profitability for investors contributing to generation and distribution projects.

• Energy storage and grid modernisation projects present significant opportunities for technology providers and financiers, ensuring long-term grid stability and enhanced energy efficiency. Kenya’s ambitious goal of achieving 100% renewable energy generation by 2030 provides a long-term growth trajectory for renewable energy companies seeking market expansion.

• The commitment to expanding energy equity through rural electrification and decentralised systems highlights a socially inclusive growth strategy, benefiting both communities and stakeholders involved in energy access initiatives.