Kenya Has One Of The Highest Electricity Prices For Households In Africa; A Comparative Analysis With Other African Countries

By Steve Biko Wafula / Published May 15, 2023 | 2:42 pm




KEY POINTS

The main sources of electricity generation in Kenya are hydro, geothermal, thermal, and wind. As of 2020, the installed capacity of electricity generation was 2,818 MW, while the peak demand was 1,976 MW.


KPLC Electricity

KEY TAKEAWAYS


The electricity access rate in Kenya was 71.4% as of 2020, which is higher than the sub-Saharan Africa average of 48.6%. However, there are still significant disparities between urban and rural areas, as well as between regions.


According to GlobalPetrolPrices.com, Kenya has one of the highest electricity prices for households in Africa, with 0.160 U.S. dollars per kWh as of September 2022.

This is higher than the average price of electricity in the world for that period, which is 0.171 U.S. dollars per kWh. Some of the factors that contribute to the high cost of electricity in Kenya are:

This is so because of the high dependence on fossil fuels for power generation, which is subject to price fluctuations and import costs. Not to mention the inefficiencies and losses in the transmission and distribution network, which increase the cost of service delivery.

Related Content: Expanding Access To Electricity: A Critical Step Towards Building A Sustainable Future For Kenyans

Furthermore, the high taxes and levies imposed on electricity bills, which account for about 40% of the total cost. This has been a subject of debate for a while but with no tangible solution in sight.

In addition, the low access and penetration of electricity in rural areas reduces the economies of scale and increases the cost per unit. Despite support from World Bank, this has not helped to reduce the cost of electricity.

Some of the possible solutions to make electricity more affordable in Kenya are:

Currently, there is a conversation across all levels of government and stakeholders to reduce the cost of electricity so that the cost of living can come down and manufacturing can pick up. Here are some of the possible solutions;

  1. Increasing the share of renewable energy sources, such as geothermal, wind, solar, and hydro, which are cheaper and more environmentally friendly than fossil fuels.
  2. Improving the infrastructure and management of the power sector, such as upgrading the grid, reducing technical and commercial losses, and enhancing customer service.
  3. Reviewing and rationalizing the taxes and levies on electricity bills, such as reducing or removing the value-added tax (VAT), fuel cost charge (FCC), inflation adjustment (IA), and foreign exchange rate fluctuation adjustment (FERFA).
  4. Expanding and subsidizing the access and connection of electricity in rural areas, such as through off-grid solutions, mini-grids, and prepaid meters.

Related Content: Kenya Has The Highest Electricity Tariffs In East Africa

Here is a table that compares the household electricity prices in some African countries as of December 2021:

Electricity

Related Content: Cost Of Electricity Per Unit In Kenya Compared To Other Countries

The main sources of electricity generation in Kenya are hydro, geothermal, thermal, and wind. As of 2020, the installed capacity of electricity generation was 2,818 MW, while the peak demand was 1,976 MW. The main provider of electricity in Kenya is the Kenya Power and Lighting Company (KPLC), which owns and operates most of the transmission and distribution network and sells electricity to over 7.5 million customers.

The electricity tariffs in Kenya are structured according to different customer categories, such as domestic, commercial, and industrial. The tariffs consist of fixed charges, energy charges, demand charges, and surcharges.

The electricity access rate in Kenya was 71.4% as of 2020, which is higher than the sub-Saharan Africa average of 48.6%. However, there are still significant disparities between urban and rural areas, as well as between regions.

The electricity sector in Kenya faces several challenges, such as inadequate generation capacity, high system losses, low reliability and quality of service, high cost of power production and supply, and environmental and social impacts.

Related Content: Kenyan Demand For Electricity Hits 2,036MW, Highest In History




About Steve Biko Wafula

Steve Biko is the CEO OF Soko Directory and the founder of Hidalgo Group of Companies. Steve is currently developing his career in law, finance, entrepreneurship and digital consultancy; and has been implementing consultancy assignments for client organizations comprising of trainings besides capacity building in entrepreneurial matters.He can be reached on: +254 20 510 1124 or Email: info@sokodirectory.com

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