Kenya’s electricity sector has witnessed a significant shift in its energy sourcing strategy, as the country has increasingly turned to its neighbors, Ethiopia and Uganda, to meet growing power demands. According to data from the Kenya National Bureau of Statistics (KNBS), the country’s electricity imports surged by 56% in the financial year from June 2023 to June 2024. This rise in imports reflects Kenya’s efforts to address local power generation deficits and ensure a stable supply for its consumers.
Ethiopia Emerges as Top Power Supplier
Ethiopia has solidified its position as Kenya’s leading external electricity supplier, contributing over 672 million kilowatt-hours (KWh) of power to the national grid in the first half of 2024. This marks an 88% increase compared to the same period in 2023, highlighting the growing importance of Ethiopia’s energy resources to Kenya’s power infrastructure.
The surge in imports from Ethiopia is largely attributed to a 25-year Power Purchase Agreement (PPA) that Kenya signed with Ethiopia in 2022. Under this agreement, Kenya secured electricity at a rate of Ksh8.6 per kilowatt, a price point that was notably lower than the tariffs charged by independent power producers (IPPs) within Kenya. The deal, which is set for review in 2027, was strategically timed to stabilize Kenya’s power supply, particularly during periods of severe drought, which have historically strained the country’s hydropower generation capacity.
Uganda’s Supply Declines Amid Rising Ethiopian Imports
While Ethiopia’s contribution to Kenya’s electricity supply has grown, Uganda’s role has diminished. In the first six months of 2024, Uganda supplied 106 million KWh of power to Kenya, a 24% drop from the 141 million KWh provided in the same period in 2023. Despite this decline, Uganda remains a crucial partner in Kenya’s power exchange program, which allows the two countries to support each other’s energy needs during periods of shortfall.
Total Power Imports Surge
In total, Kenya imported 778 million KWh of power from Ethiopia and Uganda between January and June 2024, a sharp increase from the 498 million units imported during the same period in the previous year. This rise in imports underscores Kenya’s growing reliance on external sources to meet its electricity demands, particularly as the country’s domestic power generation has shown minimal growth.
Between January and June 2024, Kenya generated over 6.098 billion KWh of power locally, a slight increase of just 0.2% compared to the same period in 2023. This stagnation in local generation has made Kenya a net importer of electricity, relying on neighboring countries to bridge the gap.
Government’s Efforts to Lower Consumer Bills
Kenya’s decision to increase power imports is part of a broader government strategy to lower electricity costs for consumers. By securing more affordable electricity from Ethiopia and Uganda, Kenya aims to reduce the overall cost of power, which has been a significant burden on households and businesses alike. The PPA with Ethiopia, in particular, was seen as a crucial step in achieving this goal, offering a more cost-effective alternative to the high tariffs imposed by IPPs.
However, the reliance on imported power also presents challenges, including the need for infrastructure upgrades to handle increased cross-border electricity flows and the potential for geopolitical tensions to impact supply. As Kenya continues to navigate these challenges, the government will need to balance its import strategy with efforts to enhance domestic power generation capacity.
Conclusion
Kenya’s increased electricity imports from Ethiopia and Uganda reflect a strategic response to growing domestic power demands and challenges in local generation. While the move has helped stabilize supply and lower costs, it also underscores the need for continued investment in Kenya’s energy infrastructure to ensure long-term sustainability and security. As the country approaches the 2027 review of its PPA with Ethiopia, the terms of the agreement will likely play a critical role in shaping Kenya’s future energy landscape.
