The Future of Kenya’s Energy Lies in Integration, Innovation, and Collaboration

Last Updated 3 weeks ago by Kenya Engineer

Kenya’s electricity sector is at a turning point, from rapid renewable energy expansion to the integration of regional power markets. At every step of these changes is the Electricity Sector Association of Kenya (ESAK), which brings together private investors and industry players to shape policy, drive investment, and promote innovation. In this exclusive interview, Kenya Engineer’s Samuel Eyinda sat down with George Aluru, ESAK’s CEO, to discuss his journey, the challenges and opportunities facing Kenya’s power sector, and his vision for the next decade.

Samuel: George, can I ask you to start us off? Briefly share your journey in the energy sector and how those experiences have shaped your perspective as President and now CEO of ESAK.

George Aluru: My name is George Aluru, I’m the CEO of the Electricity Sector Association of Kenya. I’ve been in the energy sector for about 16 years. I graduated from Jomo Kenyatta University with a degree in telecommunications engineering, which might seem unusual for someone working in energy. But I always wanted to be in this sector, even though my degree was in telecoms.

My first job was with Industrial Promotion Services (IPS), one of the Aga Khan group of companies focused on infrastructure and industry. I started out in general manufacturing — producing polypropylene sacks, chain-link fences, carton boxes and the like — before moving to the energy division. IPS was at the time developing power plants such as the Bujagali Power Plant in Uganda and running Tsavo Power in Kenya.

After a while, I took a break to pursue a Master’s degree in Renewable Energy at the University of Oldenburg in Germany. When I returned to Kenya, I rejoined IPS before moving on to Sowitec Kenya, a German developer of solar and wind projects. I set up Sowitec in Kenya as Managing Director, leading development of solar and wind power projects across Kenya, Zambia and Zimbabwe.

After about six years, I left Sowitec and joined Ecoener Kenya again as Managing Director, establishing their Kenyan operations. There we focused on mini-hydro, solar and wind development, mainly in Kenya but also exploring opportunities in Malawi and Uganda.

During my time at Sowitec, the sector was facing many challenges. Companies were struggling to get traction with regulators and ministries, and often issues were handled in isolation, making it easy for authorities to divide and rule. This stalled progress.

At the time, I was also Vice Chair — and later Chair — of the KEPSA Energy Sector Board. While KEPSA provided a strong umbrella platform for private sector advocacy, it wasn’t specific enough for electricity sector issues. We realized we needed a focused body, which led to the founding of ESAK.

Together with others, we began conversations around forming an association to give the industry a collective voice. That’s how the Electricity Sector Association of Kenya (ESAK) was born.

I served as the founding treasurer, then chair for about two years, bringing together independent power producers (IPPs) and other stakeholders. When I later left Ecoener, I transitioned from Chair to CEO of the Association. I’ve now been CEO for about two years, running ESAK on a day-to-day basis.

Samuel Eyinda: You mentioned challenges that led to forming ESAK. Could you highlight some of them, and tell us more about the association’s role in the sector?

George Aluru: Before ESAK, companies approached regulators such as EPRA or NEMA individually. Their issues rarely gained traction, and decisions often favored whichever company could lobby best. This slowed licensing and stalled the sector.

Today, ESAK has 47 members. These include electricity generators — both those selling to Kenya Power and those generating directly for commercial and industrial customers. We also have advisory members like law firms and financial consultants.

We work across four key areas:

1. Power generation – traditional IPP model, selling to Kenya Power.
2. Commercial & industrial (C&I) generation – rooftop and behind-the-meter projects.
3. Transmission – private sector participation in building transmission lines alongside KETRACO.
4. Electricity markets – advancing frameworks like net metering, wheeling, the East African Power Pool, and emerging areas like green hydrogen.

ESAK is technology-agnostic. While many members focus on renewables, we also represent thermal plants and geothermal developers. Essentially, we bring together all the major IPPs under one umbrella.

Samuel Eyinda: What would you say is the current state of the energy sector in Kenya?

George Aluru: It’s a mixed picture. Over the last 20 years, we’ve made good progress in diversifying generation. Back in the 1990s and early 2000s, we faced frequent power shortages because we relied too heavily on hydropower. Since then, we’ve added thermal, wind, solar and captive power plants.

Today, the grid has about 3.3 GW of installed capacity, plus roughly 600 MW of captive power from industries. Access to electricity has grown tremendously — we are now at nearly 80% coverage. That’s a big leap since 2010.

However, challenges remain. The most pressing is the cost of power, which is still high for consumers. We also need to increase capacity, because demand is rising faster than supply. Licensing and building new power plants has slowed down.

On the positive side, regional interconnections have expanded. Ten years ago, we were only linked to Uganda. Now, we are connected to Ethiopia (already importing 200 MW with potential for 200 more) and Tanzania (whose plants are coming online). Uganda’s line is also being upgraded. This integration is strengthening the East African power market.

In summary: we’ve made great strides in technology mix, capacity and access. But to keep up with economic growth, Kenya must accelerate licensing of new power plants and expand generation, while making power more affordable.

Samuel Eyinda: That leads us to climate targets. Kenya has committed to ambitious climate goals. How do we balance these with the need to keep electricity affordable?

George Aluru: That’s a very important question — and one of the biggest struggles we face. The grid is about 80% renewable by installed capacity and around 90% by energy that is actually delivered. In a way, one could argue that our grid is very green compared to most countries in the world. As a matter of fact, the biggest contributor to CO₂ emissions in Kenya is not the grid, but agriculture and farming waste from animals.

That said, Kenya has committed to reaching 100% renewable energy by 2030. Usually, getting to the first 80–90% is relatively easy, but the last 10–20% is where the challenge lies. The cost of adding that final share of renewables becomes disproportionately high.

To achieve this, we need to change how we procure power. Right now, we use the feed-in tariff system, but this should shift to competitive procurement methods like auctions. If done correctly, this can drive down prices. However, it must be transparent and competitive to avoid collusion and undue influence that could keep prices high.

My personal view is that we may not realistically reach a full 100% renewable grid because of the intermittent nature of solar and wind. To balance that, you either need storage solutions like batteries or back-up thermal “peaking” plants. These could run on heavy fuel oil or, preferably in the future, liquefied natural gas, which is cleaner. I think a target of around 95% renewable should be acceptable, as pushing beyond that could cost more than the benefit gained.

Samuel Eyinda: In line with that, what do you think are the biggest opportunities in renewables today?

George Aluru: The biggest opportunity right now is storage. Since we already have significant solar and wind in the system, which are intermittent, storage would allow us to capture excess energy and dispatch it during peak demand, such as at night.

Beyond storage, traditional opportunities like building new power plants still exist. But there are also emerging opportunities such as green hydrogen, which could help decarbonize industrial processes. These are new frontiers for investment in the sector.

Samuel Eyinda: And for investors looking at these opportunities, what is your view on the current investment climate in Kenya, and what challenges do they face?

George Aluru: Kenya has a very progressive Energy Act (2019), which provides for things like auctions, wheeling, and ancillary services. On paper, the regulatory framework is strong. The main challenge is implementation — particularly delays in licensing. These delays discourage investment, as capital is not patient and will move to countries with faster processes.

If you’re developing grid-connected projects, you may face licensing delays of up to 8–10 years. On the other hand, if you work directly with private consumers, say installing a solar plant on a company’s rooftop, the process is much faster — within a year you can be operational. So, while laws are progressive, the practice on the ground is still slow, and that hurts investor confidence.

Samuel Eyinda: Let’s talk about grid reliability. What role can the private sector play in improving the grid?

George Aluru: It’s quite straightforward. The private sector can contribute significantly through ancillary services, such as installing battery systems or equipment like statcoms to stabilize the grid.

Private investors can also help expand transmission infrastructure. If allowed, they could bid for and build transmission lines, then operate them under concession agreements. This would strengthen and densify the grid across the country.

Another critical point is distributed generation. Right now, much of our generation is concentrated in places like Olkaria. That means delivering power efficiently to regions like the coast or western Kenya is difficult. If we had power plants spread across the country, especially in areas where the grid is weak, voltage stability would improve significantly.

Finally, private sector involvement could also help Kenya Power address challenges like technical and commercial losses. If these were packaged as investment opportunities — where a private player takes responsibility for reducing losses in a given region in return for a profit— private firms could bring in capital and efficiency to solve these persistent issues.

Samuel Eyinda: You’ve mentioned the progressive Energy Act of 2019. Beyond what exists, do we need further policy changes to move the sector forward?

George Aluru: At the policy level, we’re in a good place. The Energy Act and the updated National Energy Policy provide a solid foundation. The real issue now is in developing and implementing specific regulations.

For example, we already have a net metering regulation, but in practice it’s not operational because the framework to implement it is missing. Similarly, regulations on electricity markets, wheeling, and open access need to be finalized and tested in real projects.

We don’t need new policy — we need execution. Once developers can practically apply these regulations, then we’ll see real progress in the sector.

Samuel Eyinda: What do you think is Kenya’s role in driving the energy transition on the African continent?

George Aluru: At the continental level, Africa is working toward the Africa Single Electricity Market (AFSEM), an initiative of the African Union to create one integrated electricity market. For this to succeed, the focus is on regional power pools: Eastern, Western, Southern, Central, and Northern Africa. Kenya sits within the Eastern Africa Power Pool, which has 13 member countries.

Kenya’s role is significant. We are a leader in private sector participation in the energy sector, and as regional regulations are developed, our experience allows us to encourage our neighbors to involve more private players. We also have a responsibility to ensure regional integration works by harmonizing regulations, grid codes, and control mechanisms across member states.

Specifically, Kenya has vast renewable potential in geothermal, wind, and solar. For example, we have an estimated geothermal potential of about 10 gigawatts. If we developed all of it today, our domestic demand would not be able to absorb it. That makes cross-border trade essential. At present, Kenya actually imports hydropower from neighboring countries, so we play both supplier and buyer roles.

Since Kenya’s regulatory environment is among the most advanced in Africa—our regulator, EPRA, has consistently been ranked in the top three over the past five years—we are in a position to share best practices with neighboring countries to strengthen regional integration.

Samuel Eyinda: Captive power has become a trend in Kenya. What is your perspective on its role and impact?

George Aluru: Captive power makes a lot of sense, especially for industries. From a consumer perspective, grid power is viewed as expensive and sometimes unreliable due to blackouts, brownouts, low voltage, or surges. Some consumers are also environmentally conscious, though in Kenya that’s less of a factor since the grid is already predominantly renewable.

The real driver is cost and reliability. Many developers now offer models where the consumer doesn’t pay for installation. A company will put a solar plant on your rooftop, and you only pay for the electricity consumed—usually at a tariff lower than Kenya Power’s. Financially, it’s a win for consumers.

Currently, Kenya has around 600 MW of captive power. Without this, we would likely be facing load-shedding, because demand on the grid has outpaced supply. Captive power has therefore played a vital role in stabilizing supply.

Some argue that it threatens Kenya Power, since industries—the utility’s largest customers—are also the ones investing in captive power. But captive power doesn’t replace the grid; it complements it. Most industries only cover 30–40% of their demand with captive systems and still rely heavily on the grid.

In the bigger picture, captive power, grid improvements, wheeling, and regional power pools all work together to benefit consumers. The goal should always be to put consumers in the best position to maximize their productivity—whether that’s through grid supply, captive installations, or a mix.

Samuel Eyinda: Which technological innovations are most important in shaping the future of electricity in Kenya and beyond?

George Aluru: The biggest challenge is making renewable energy behave more like conventional power in terms of stability. Solutions such as batteries, pumped hydro, and STATCOMs will be critical in balancing intermittency.

Equally important are electricity markets. A well-designed market allows both private and public participants in the market to step in with solutions when the grid has a gap—whether through batteries, conventional plants, or renewable energy. The key thing is that the market pays for the service delivered, such as voltage support or capacity, rather than the underlying technology. This flexibility will be vital for the transition.

Samuel Eyinda: What skills are most needed to drive the energy transition?

George Aluru: Kenya already has strong engineering talent—electrical, telecom, civil, power systems, and mechanical engineers. What we need is to embed complementary skills. For engineers, that includes training in environmental management, communication, and community engagement.

Beyond engineering, we need more lawyers, particularly in contract law, because legal costs can account for up to 5% of a power project. The strength of a project often depends on solid contracts even before engineers begin work.

We also need specialized environmental experts. For example, wind projects require ornithologists to study bird migration patterns, while hydro projects need hydrologists to assess river behavior. Social scientists are equally important to handle community engagement, which is often a weak point in project development.

In short, the energy transition is not just about engineers. It requires an interdisciplinary approach, bringing together engineers, lawyers, environmental scientists, social scientists, and communication specialists and others to ensure projects are technically sound, environmentally sustainable, and socially accepted.

Samuel Eyinda: Land acquisition often presents challenges in energy projects. How important are social aspects in this process?

George Aluru: They are extremely important. We need social scientists who understand how energy projects work and can help us communicate effectively with landowners. Communities must understand the impact of giving—or not giving—land, not just on the project but also on their own pockets, health and welfare in terms of costs and benefits.

All projects are undertaken within communities. Ensuring that we do-no-harm and leave communities better than we found them will endear energy projects, and safeguard livelihoods and profits.

Samuel Eyinda: You’re pursuing a PhD in electricity markets. What do you see as the potential benefits of your research to the industry?

George Aluru: My research focuses on integrating renewable energy into the Eastern Africa Power Pool and the region’s electricity market. This market was supposed to launch this year, starting with what is called a “day-ahead market,” where trading happens on an hourly basis rather than through long-term contracts.

Instead of signing 20-year power purchase agreements, market participants would agree today on the price of electricity to be supplied tomorrow. It’s not as short-term as a stock exchange, but it brings flexibility and efficiency to power trading.

My work explores what needs to be done for us to cooperate regionally and build this market, and more importantly, how it affects affordability and reliability for consumers. From my findings so far, moving to a wholesale power market significantly lowers prices. In fact, with a high share of renewables, we could even see negative prices.

This is excellent for consumers—more supply options at lower costs. However, it raises challenges for producers: why would anyone invest if the market consistently shows negative prices? My research therefore also examines what regulatory frameworks are needed to keep prices attractive for investors while still delivering affordability for consumers.

Samuel Eyinda: Looking ahead, what changes do you expect in the next 10 years for Kenya’s electricity sector and for ESAK?

George Aluru: In 10 years, if things progress as we anticipate, Kenya will have a functioning wholesale market where electricity can be traded almost like stocks—hour by hour. We’ll also be wheeling power more efficiently, meaning that a company in Kisumu can sell electricity to a consumer in Nairobi through the transmission system.

Net metering will be mainstream, allowing households with rooftop solar to sell excess power back to the grid. Consumers will enjoy multiple supply options and even opportunities to participate as producers.

By then, we’ll see more diverse players and skill sets engaged in the sector—not just engineers but also financiers, lawyers, environmentalists, and social scientists. For this vision to become reality, however, we must start making deliberate, sometimes difficult, policy decisions now—about competition, net metering, and market liberalization.

If we stay consistent, Kenya could have a market resembling Europe’s. For example, in Germany during summer, rooftop solar from the south supplies much of the grid, while in winter, wind energy from the north takes over. Regional integration also allows Germany to trade with France and Norway. That’s the kind of flexible, interconnected market I envision for Eastern Africa.

Samuel Eyinda: Any final thoughts as we wrap up?

George Aluru: My vision is for a sector where both customers and investors have choices. If you’re a consumer, you can choose from various supply sources. If you’re an investor with a billion dollars, you can decide whether to put it into captive power, regional power pools, or a new generation plant in Kenya.

This will only happen if we keep making those hard decisions—step by step. Change won’t come overnight, but with consistent progress, we can get there.