Nairobi, Kenya — Cabinet Greenlights Key Energy Reforms: Phase III Last Mile Electrification & Olkaria VII Geothermal Plant

In a decisive Cabinet meeting held on July 29, 2025, chaired by President William Ruto at State House Nairobi, the Kenyan government approved two landmark initiatives to propel the country’s energy transformation: Phase III of the Last Mile Connectivity Project, and the Olkaria VII geothermal power plant.

Phase III: Reaching 180,500 New Connections

• Scope: The electrification drive will bring power to 180,500 households, schools, health facilities, and MSMEsacross underserved regions.

• Financing & Partnerships: Supported by the African Development Bank (AfDB) and the Canada‑AfDB Climate Fund.

• Technical Strategy: The rollout prioritises areas without prior support, utilises idle transformers, installs new equipment, and upgrades overwhelmed substations to boost reliability.

• Projected Impact:

  • Provision of power to over 10,500 MSMEs, enabling expanded access to three-phase electricity.

  • Enhanced operations for electrified health centres and improved digital learning at schools.

  • Expanded access to affordable energy for hard-to-reach communities.

Olkaria VII: Adding 80.3 MW of Clean, Baseline Power

• Capacity & Timeline: With 80.3 MW expected by June 2027, Olkaria VII will strengthen Kenya’s baseload power capacity.

• Development Details: Involves tapping 19 production wells, with scope to expand via seven additional wellsover a 25-year lifespan. Reinjection of geothermal fluids will support environmental sustainability.

• Funding & Collaboration: Developed under a public–private partnership backed by the Government of Japan and the European Investment Bank, at an estimated US $247 million (approx. KSh 32 billion).

• Strategic Role: The plant aligns with national energy demand forecasts projecting 100 MW annual growth and 334 MW EV-related demand by 2032. It supports Kenya’s aim to reduce dependence on high-cost, polluting fossil fuels.

Strategic Implications

1. Evergreener Energy Mix: Olkaria VII advances Kenya’s drive toward a clean energy-led grid, with geothermal accounting for over 26% of the current energy mix and a national target of reaching 50% by 2030.

2. Inclusive Socio-Economic Gains: By energising businesses and health/school facilities, Last Mile Phase III fosters inclusive growth, equipping even marginalised communities with essential energy access.

3. Jeopardy Mitigation & Grid Sustainability: The combined reforms address long-standing infrastructural gaps—transformer underutilisation, weak rural grids—while promoting future-proof consumption patterns aligned with Kenya’s industrialisation.

4. Stepping Stone to Universal Access: These investments reinforce Kenya’s commitment to achieving universal electricity access by 2030, as embedded in its Vision 2030 strategy and medium-term development plans.

Looking Ahead

• Key Implementation Features:

  • New connections will be rolled out county by county, focusing on equity and low-penetration zones.

  • Integration with broader grid improvements and targeted community engagement.

  • Regular progress tracking by energy regulators and development partners.

• Risks & Recommendations:

  • Budgetary discipline will be essential to avoid delays or cost overruns.

  • Operational oversight needed to ensure transformer deployment aligns with community needs.

  • Environmental safeguards critical, especially around geothermal fluid management and biodiversity preservation within Hell’s Gate National Park.

Conclusion

Kenya’s Cabinet approval of both Phase III of the Last Mile Connectivity Project and the Olkaria VII Geothermal Plant marks a watershed moment in its energy policy. These initiatives are strategically poised to expand clean power access, reinforce grid resilience, and catalyse socio-economic transformation with lasting impact — in alignment with the country’s green transition goals and inclusive growth agenda.

If you’d like a county-by-county analysis of the rollout or a breakdown of projected financial returns, I’d be happy to assist.