Kenya Moves to Procure 1,112 MW from IPPs as Parliament Lifts PPA Freeze

Kenya is set to restart large-scale private power procurement after the National Assembly lifted a long-standing freeze on new Power Purchase Agreements (PPAs), clearing the way for Kenya Power to negotiate 1,112 MW of new generation capacity with Independent Power Producers (IPPs).

The decision follows a series of reforms aimed at increasing transparency and reducing electricity costs. Parliament has directed the Business Registration Service (BRS) to publish full shareholder and beneficial-ownership details of all IPPs within six months, addressing long-standing concerns over opaque ownership structures linked to high tariffs.

According to a report presented to lawmakers, the Ministry of Energy and Petroleum is in talks with 54 developers on new PPAs. A significant portion of the proposed capacity will come from hydropower, with 65 hydro projects under review—40 of them small hydro plants. Kenya is also evaluating multiple wind power proposals, including four 50 MW projects and a 100 MW wind project being advanced by Hewani Energy, part-owned by Seriti Green and Envision Energy.

The reforms include a shift to competitive auctions for wind and solar, replacing direct bilateral negotiations, and a requirement for all PPAs to undergo mandatory review by the Attorney General. A flexible currency framework has also been introduced, allowing PPAs to be denominated in Kenyan shillings, foreign currency, or a hybrid model to balance investor risk and consumer protection.

The move comes amid rising electricity demand, which reached a record 2,362 MW on 25 July 2025—an increase of 250 MW over three years. Kenya is currently importing around 200 MW from Ethiopia to manage the supply gap.

Lawmakers have also raised concerns over high legacy PPA prices, noting that private geothermal producers have charged up to KSh 17.28/kWh, compared to KenGen’s KSh 8.24/kWh. Several MPs have proposed that new PPAs be capped at 7 US cents/kWh to ensure affordability.

The government says the 1,112 MW procurement drive, combined with the new rules, is intended to stabilise the grid, attract investment, and lower costs in the medium term—marking one of the most significant energy-sector realignments in Kenya in recent years.