Kenya eyes extra Ethiopia power to escape rationing

This will be in addition to the deal that allows Kenya to import up to 200MW from the neighbouring country, underlining Nairobi’s reliance on power imports to secure its electricity needs.

“We are just asking for additional power between 6 pm and 10 pm because it is the time we have the highest electricity demand. We want a flexible arrangement where, like when the wind is not generating well, then they [Ethiopia] can give us more,” Dr Siror told the Business Daily in an interview.

“We started formal engagements over this matter from around the 7th this month to allow us to take additional power from 50MW but not more than 100MW.”

Kenya’s reserve margin – the extra generation capacity available above demand – has shrunk to less than 4.0 percent, which contrasts sharply to the range of between 15 percent and 35 percent that is recommended by the International Energy Agency (IEA).

This has pushed Kenya close to a power crisis that could prompt blackouts and power rationing running for hours on alternating days.

Kenya’s electricity reserves are under intense pressure amid rising demand that forced the government to load shed in August last year after the country’s reserve margin stood at just 9MW-- against a reserve margin requirement of 310MW-- after peak demand hit a record 2,238MW.

Kenya’s electricity peak demand hit a fresh high of 2,316 MW on February 13, 2025, up from the previous record of 2,304 MW in January, though a jump in unused capacity, commonly known as the spinning reserve, helped to cushion against possible power rationing.

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The country recorded seven new demand peaks in 2024 alone-- signalling the growing appetite for electricity by homes, industries, and businesses. Kenya has an installed capacity of 3,811.60 MW of electricity.

However, local generation stands at 2,882MW. Imports add a further 200MW, bringing the total generation to 3,082MW.

“To meet the growing electricity demand, the focus should now shift toward increasing the country’s electricity generation. This will improve spinning reserves to the standard 15 percent level to cater for contingency scenarios that have increased in recent years,” Dr Siror said earlier.

A freeze on new power purchase agreements (PPAs), which has been in place for nearly four years, has meant that Kenya Power cannot enter into new PPAs, preventing construction of new electricity generators amid scarcity that has forced Kenya to rely on imports from Ethiopia and Uganda.

Former President Uhuru Kenyatta in 2021 and later MPs triggered the freeze following an investigation into PPAs being negotiated with Kenya Power and their input in steep electricity bills. The Kenya Power boss said that the targeted additional imports from Ethiopia will shore up Kenya’s reserves and lower the risk of load shedding, especially during peak hours.

Electricity imports from Ethiopia have been critical in ensuring a stable Kenya Power grid. The imports came in handy, especially when Kenya was faced with a ravaging drought that significantly reduced hydro generation at the start of 2023.

Kenya commenced electricity imports from Ethiopia in 2022 through a 25-year deal in which the supplies are priced at 6.50 US cents per kilowatt-hour (kWh), making it significantly lower than what Kenya Power sources from independent power producers locally.

Under the import deal with Ethiopia, Kenya Power had committed to tap a maximum capacity of 200MW in the first three years, rising to 400MW for the remaining period. This is now bound to change as Kenya eyes an extra 50- 100MW from Ethiopia to plug its unprecedentedly rising demand.

Data shows that Kenya is the biggest foreign buyer of electricity from Ethiopia. For instance, Kenya purchased electricity worth 3.63 billion Birr (Sh1.634 billion) in the year ended July 2024, making it the single-biggest buyer and underlining the vital role Ethiopia plays in ensuring a stable energy supply in Kenya.

The electricity sales to Kenya accounted for 13.4 percent of the 27.04 billion Birr that EEP reported as revenue from electricity sales in the year to July 2024.

The value of electricity purchased by Kenya from Ethiopia in the year to July 2024 was also an increase of nearly threefold from the 1.32 billion Birr (Sh514.48 million) worth of units bought the previous year, when Kenya trailed Sudan and Djibouti in tapping power from Ethiopia.

Electricity sales to Kenya accounted for 13.4 percent of the 27.04 billion Birr that EEP reported as revenue from electricity sales in the year to July 2024.

Kenya’s electricity woes have been compounded by the freeze on new PPAs. The moratorium on new PPAs has been in force since 2018 and was meant to allow for scrutiny of the existing ones. This was part of the recommendations by a presidential task force.

The projects that were cancelled had a combined generation of 2,345.07 MW. The revocation was meant to allow the government to align all new PPAs to the Least Cost Power Development Plan (LCPDP).

LCPDP’s key objective is to develop a capacity expansion plan to meet the projected demand at minimal cost.

This situation has left Kenya in a delicate situation where electricity demand has outpaced generation, piling pressure on Kenya Power.

The Cabinet lifted the freeze in 2022, but lawmakers reinstated it, because the suspension would allow for investigations into the current PPAs, which are costly and at the centre of failed efforts to lower the retail prices of electricity.

Besides Ethiopia, Kenya has a power exchange deal with Uganda and Tanzania, with the country that imports more from the other paying after a defined period. Kenya has largely been a net importer in this arrangement.

Kenya in late 2024 activated a link line with Tanzania, two months after Kenya Power signed a power exchange agreement with the Tanzania Electric Supply Company Limited (Tanesco). Tanesco is the sole power distributor in Tanzania.