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Kenya has seen a recent increase in thermal power utilisation, prompting concerns among stakeholders regarding its impact on electricity costs and the nation's clean energy transition goals. This surge coincides with record-high electricity consumption across the country.
Kenya's reliance on thermal power has increased, a development that analysts suggest could significantly influence public discourse and policy implementation in the near future. Stakeholders are calling for greater transparency regarding the timelines, costs, and safeguards associated with this energy source.
The Energy and Petroleum Regulatory Authority (EPRA) reported that electricity consumption reached a new peak demand of 2,316.2 MW in the financial year 2024/2025, a 6.38 percent rise from the previous year's 2,177 MW. This surge reflects robust economic growth, with domestic consumption increasing by 13.03 percent and small commercial consumers by 11.5 percent. Another report indicated an even higher peak demand of 2,362.28 MW on July 23, 2025, and 2,363.41 MW on August 5, 2025. This growing demand is attributed to accelerating industrial activity, rapid urbanisation, and increased household consumption, particularly during evening peak hours around 7:40 PM EAT.
Thermal power plants, which primarily use heavy fuel oil, diesel, or kerosene, are the most expensive source of electricity in Kenya, costing over $0.20 per unit. This is four times more expensive than hydropower and more than twice the cost of geothermal and wind energy. The increased reliance on thermal power has directly led to a rise in the Fuel Cost Charge (FCC) component of electricity bills. EPRA increased the FCC to KSh 3.60 per unit for September 2025, up from KSh 2.99 in August. This reverses a declining trend in power costs observed since April 2025.
Kenya has made significant strides in transitioning to renewable energy, with geothermal, hydropower, and wind collectively contributing over 90% of total electricity generation between July 2024 and June 2025. Geothermal energy alone accounts for nearly half of the clean power. The country's energy sector aims to achieve 100 percent clean energy by 2030.
Despite this commitment, thermal plants have historically served a crucial role as backup, providing stability during downtimes in weather-dependent hydropower and less flexible geothermal sources. They are typically activated during peak demand, usually in the evening from 6:00 PM to 10:00 PM EAT, when cheaper sources are fully utilised but additional power is still needed.
The share of thermal power in Kenya's generation mix had significantly decreased from over 30 percent in 2013 to below 10 percent in recent years. However, its contribution rose to 11.05 percent of power consumed in the first six months of 2025, up from 8.54 percent in the same period in 2024. This increase is partly due to a drop in hydropower generation, which accounted for 26.1 percent of power production in the first half of 2025, down from 30.2 percent in the previous year. Geothermal remained the largest source, contributing 44.89 percent.
The Kenya Electricity Generating Company (KenGen), the country's leading power producer, remains central to Kenya's energy strategy. KenGen aims to add 1,500 MW of new renewable capacity, including geothermal, hydro, wind, and solar, while phasing out reliance on thermal power. The company plans to drill 42 new geothermal wells in the Olkaria field over a five-year period to increase clean energy by 200 MW, an investment estimated at $1.8 billion.
Energy Principal Secretary Alex Wachira expressed confidence at the Sustainable Energy Conference (SEC25) in Olkaria, Naivasha, that Kenya would phase out thermal power within five years, noting that 93 percent of electricity is currently from renewable sources. KenGen is also exploring an additional 40 MW from hydropower in Webuye.
The increased electricity demand and the subsequent use of thermal power have direct implications for consumers, who may face higher costs through the Fuel Cost Charge. The narrowing margin between supply and peak demand also increases the risk of outages. Industrial consumers, while seeing opportunities in rising demand, may continue to invest in captive generation and storage until grid stability improves.
The increased reliance on thermal power, while addressing immediate demand, poses several risks. It drives up electricity costs for consumers due to the high price of fossil fuels. Environmentally, fossil-fuelled thermal plants emit greenhouse gases, conflicting with Kenya's commitment to clean energy. Furthermore, the narrowing reserve margin on the grid increases vulnerability to outages.
The specific timelines for phasing out existing thermal power plants and the detailed cost implications of sustained thermal power use remain areas requiring further clarity. The long-term impact of the increased Fuel Cost Charge on household budgets and industrial competitiveness also needs close monitoring.
Observers will be keenly watching government policy adjustments to balance rising electricity demand with the commitment to renewable energy. The implementation of KenGen's geothermal expansion plans and the impact of the Fuel Cost Charge on consumer bills will be key indicators. Further, the development of battery energy storage solutions to manage fluctuations in renewable energy supply will be critical.
Kenya's energy sector continues to focus on expanding its renewable energy portfolio, with significant investments in geothermal and hydropower projects. The ongoing efforts to increase grid connectivity and promote electric mobility are also contributing to the overall rise in electricity demand.
