A new report by the Parliamentary Budget Office (PBO) has revealed that Kenyan households pay significantly more for electricity compared to other countries in the Eastern and Central African region.
According to the report, the average cost of electricity in Kenya stands at $0.26 (Sh33.60) per unit, a rate notably higher than in neighboring nations such as Uganda, Tanzania, and Ethiopia.
The data indicates that electricity costs in Uganda average $0.17 per unit, while Tanzania charges $0.09, South Africa $0.12, and Ethiopia remains the lowest at just $0.006 per unit. The report highlights that, despite efforts to bring down electricity costs, Kenyan consumers continue to face higher prices compared to their regional counterparts.
The findings come at a time when scrutiny is increasing over power purchase agreements (PPAs) signed between Kenya Power and independent producers, as well as various regulatory charges that influence electricity pricing.
Although there has been a slight decline in power prices over recent months, Kenya remains among the most expensive electricity markets in the region. For instance, in February, consumers paid Sh1,255.06 for 50 units of electricity—an improvement from Sh1,406 a year earlier.
Unlike Kenya, households in Ethiopia and Uganda not only enjoy cheaper electricity but also benefit from a more stable power supply, attributed to smaller distribution networks and a heavy reliance on hydropower.
The high cost of electricity in Kenya has primarily been linked to expensive wholesale power purchase agreements signed years ago, making it difficult to reduce consumer prices without causing financial losses to Kenya Power.
Additional charges, including four types of taxation, foreign exchange adjustments, fuel levies, and consumption charges, further contribute to the high cost of electricity for Kenyan consumers.
In 2022, the government attempted to negotiate lower wholesale prices from power producers, aiming to ease the financial strain on consumers. However, independent power producers—many of whom are backed by foreign investors—rejected the proposal, keeping electricity costs elevated.
In response, Parliament is exploring new policy measures aimed at regulating power producers and ultimately reducing electricity prices for both households and businesses.
While Kenya grapples with expensive electricity, some countries with cheaper rates, such as South Africa and Tanzania, experience frequent blackouts, limiting the benefits of lower prices. Ethiopia and Uganda, on the other hand, maintain lower costs primarily due to the dominance of hydropower and state-controlled electricity providers.
Meanwhile, Kenya Power has reported an increase in electricity demand, with sales rising by 8.5 percent in January 2025 to 956.76 million kilowatt-hours (kWh). This marks the sixth consecutive month where consumption has exceeded 900 million kWh, except for December 2024, when it briefly dropped to 882.09 million kWh.
According to the Kenya National Bureau of Statistics (KNBS), the growing demand is driven by expanding industrial activity and business growth. Commercial and industrial users remain the largest consumers, accounting for approximately 55 percent of total electricity sales.
To meet this rising demand, local power producers, including the Kenya Electricity Generating Company (KenGen), have increased production, with electricity generation in January 2025 reaching 1,085.14 million kWh—the highest level recorded in nearly a year.
Kenya Power’s total electricity sales for the 2023 financial year surpassed 10,000 gigawatt-hours (GWh), closing at 10,516 GWh by June 2024. Looking ahead, the company projects peak electricity demand to exceed 2,800 megawatts within the next four years as more households and businesses connect to the national grid.
