Imagine running a factory in a country known for its geothermal energy, wind farms and hydropower, only to find that electricity remains one of your biggest operating expenses.
That is the contradiction facing businesses in Kenya.
The country has built a strong renewable electricity sector. In 2023, nearly 90% of its electricity generation came from renewable sources, including geothermal, hydropower, wind and solar. Yet businesses continue to face electricity prices that can make manufacturing more expensive and weaken their ability to compete with producers in other markets. (International Energy Agency)
If Kenya generates so much renewable electricity, why hasn’t that translated into cheaper power for businesses?
Because the cost of electricity depends on more than how the power is generated.
Kenya’s electricity bills are influenced by the costs of generation, transmission and distribution, alongside taxes, levies and adjustments linked to fuel prices and foreign exchange movements. The country’s energy policy also recognises that foreign-currency obligations and fuel-cost adjustments can affect the prices paid by consumers.
Renewable generation reduces dependence on imported fossil fuels, but it does not eliminate every cost within the electricity system. Businesses can still feel the effects of expensive infrastructure, contractual obligations and changes in the value of the Kenyan shilling.
What does this mean for a Kenyan manufacturer?
Consider a factory producing clothing, packaging or processed food. Electricity powers machinery, lighting, refrigeration and other essential operations. When power becomes more expensive, the factory must absorb the additional cost, increase its selling prices, improve efficiency or find savings elsewhere.
Each option has consequences.
Absorbing higher bills can reduce profit margins. Raising prices can make products less competitive against imports. Cutting other expenses may limit a company’s ability to hire workers, maintain equipment or expand production.
The problem extends beyond individual businesses. In April 2026, the German Chamber of Commerce’s Eastern Africa office highlighted concerns that Kenya’s high electricity costs were undermining manufacturing competitiveness. The report linked these costs to pressures on industrial output and investment, including the risk that businesses could relocate to lower-cost markets. (AHK Eastern Africa)
Could expensive electricity affect Kenya’s ability to attract foreign investment?
Yes. A company deciding where to establish a manufacturing plant will consider more than access to customers. It will also examine the cost of producing goods, the reliability of infrastructure, logistics, labour and the regulatory environment.
If electricity is significantly more expensive in one location than in a competing market, that difference can influence where a business invests.
This matters for Kenya’s ambitions to expand manufacturing and benefit from regional trade. Businesses need to produce goods at competitive costs if they are to serve domestic customers and sell into neighbouring markets.
The World Bank has also identified high power costs as an obstacle to private-sector investment in Kenya, calling for greater private investment in the electricity sector. (Ecofin Agency)
So where does the opportunity lie?
Part of the answer may lie in improving the systems that connect renewable energy resources to businesses at affordable, reliable prices.
Kenya needs investment not only in power generation, but also in transmission and distribution infrastructure, energy efficiency, and solutions that help businesses manage their consumption. Its renewable resources also create opportunities for companies developing clean-energy technologies, industrial energy solutions and new approaches to financing infrastructure.
For investors and businesses looking towards African markets, this is an important distinction. A country can have abundant natural resources and still have gaps in the infrastructure and commercial systems needed to turn those resources into affordable services.
Kenya’s experience raises a question that extends beyond its borders: What happens when a country has the resources to power its industries, but the cost of delivering that power limits their growth?
The opportunity is not simply to generate more renewable electricity. It is to make the electricity system work better for the businesses that depend on it.
Kenya’s renewable-energy achievements show what the country can generate. The challenge now is ensuring that those achievements translate into power that businesses can afford, industries can compete with, and investors can build around.
