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Kenya's reliance on thermal power has increased, contributing to higher electricity costs for consumers, despite the nation's push for cleaner energy sources and record-breaking power demand in 2025.
Kenya's electricity grid has experienced a significant surge in demand, reaching historic peaks in 2025. The national grid recorded a system peak of 2,362.28 MW on July 23, 2025, with a slightly higher peak of 2,363.41 MW reported on August 5, 2025, at 8:00 PM EAT. This marks a substantial increase from the previous year's peak demand of 2,177 MW, representing a 6.38 percent rise. The heightened demand is attributed to economic expansion, industrial growth, increased electrification, and a rapid expansion of on-grid connections, with Kenya Power connecting 401,848 new customers in the financial year ending June 30, 2025.
Despite Kenya's commitment to transitioning to renewable energy, the country has seen an increased reliance on thermal power plants. In the first six months of 2025, thermal power accounted for 11.05 percent of the power consumed, up from 8.54 percent in the same period in 2024. This surge in thermal power use is partly due to a drop in electricity generated by hydropower plants, whose contribution fell from 30.2 percent to 26.1 percent over the same period. Thermal power plants, which primarily use heavy fuel oil or diesel, are significantly more expensive than renewable sources like hydropower and geothermal.
The increased dependence on costly thermal electricity has directly impacted consumers through higher electricity bills. The Energy and Petroleum Regulatory Authority (EPRA) increased the Fuel Cost Charge (FCC) to KSh 3.60 per unit for electricity consumed in September 2025, up from KSh 2.99 in August. This charge compensates thermal power producers for fuel acquisition costs. Analysts suggest that this development could influence near-term public debate and policy execution, with stakeholders urging clarity on timelines, costs, and safeguards related to energy generation.
Kenya remains a leader in green energy, with renewable sources accounting for over 80% of its electricity mix. Geothermal energy is the leading source, contributing 39.51 percent of total energy generated, followed by hydro at 24.21 percent, and wind at 13.18 percent in the financial year 2024/2025. The country aims to achieve 100 percent clean energy by 2030. To support this, the Kenya Electricity Generating Company (KenGen) plans to drill 42 new geothermal wells in the Olkaria field to add 200 megawatts of clean energy to the national grid over five years.
The Energy and Petroleum Regulatory Authority (EPRA) has expressed optimism regarding the increased electricity consumption, viewing it as a positive trajectory for the sector. However, the reliance on thermal power poses challenges to the country's clean energy goals and affordability for consumers. While thermal plants offer crucial backup during downtimes in weather-dependent hydropower and non-flexible geothermal, their expensive nature, tied to global fuel prices, means they are typically only activated during peak demand. Ethiopia has emerged as a critical source of imported electricity for Kenya, supplying 83 percent of total power imports in the year to June 2025, which has been more cost-effective than domestic thermal generation and helped avert power rationing.
The increased reliance on thermal power, while providing grid stability, leads to higher electricity costs for consumers due to the fluctuating global fuel prices. This could hinder the country's progress towards affordable energy and its 100% clean energy target by 2030. Furthermore, operating the system with thin reserves during peak demand increases the risk of outages if a plant or transmission line fails.
Observers will be keenly watching policy decisions regarding the balance between meeting surging electricity demand and maintaining the commitment to renewable energy sources. The progress of KenGen's geothermal expansion projects and the ongoing negotiations for increased power imports from Ethiopia will be crucial in shaping Kenya's future energy landscape.
