High electricity prices continue to strain Kenyan businesses. Energy costs are reducing profits and pushing up prices of goods and services.
For a long time, companies in Kenya have complained that expensive electricity is hurting their operations. From factories and farms to transport firms and hotels, energy bills remain a major driver of rising expenses.
As costs go up, businesses are forced to either accept lower profits or pass the burden to consumers through higher prices.
Kenya’s ambition to move from a lower-middle-income economy to an upper-middle-income one depends heavily on affordable energy. Without cheaper power, industries struggle to grow and compete both locally and abroad.
This reality has pushed regulators to focus on energy efficiency as a practical way to reduce costs without cutting supply.
The Energy and Petroleum Regulatory Authority (EPRA) has rolled out new Energy Management Regulations for 2025. These rules are designed to promote better use of electricity and fuel across the economy.
Under the regulations, any commercial, industrial, or institutional facility using more than 180,000 kilowatt-hours of energy per year is now classified as a designated facility. Such facilities must adopt structured energy management systems.
EPRA has also set energy performance targets for key sectors. These include sugar, tea, cement, dairy, hotels, flower farming, FMCG manufacturing, and other industries.
Companies within these sectors will be required to meet the published benchmarks. Those who succeed can apply for energy savings certificates, which represent verified energy reductions.
Facilities that exceed their efficiency targets will be allowed to trade their excess savings. These energy credits can be sold to companies that fail to meet their benchmarks, creating a market-driven push for efficiency.
To qualify, firms must carry out energy audits every four years and implement plans that achieve at least half of the recommended savings.
The rules require high-energy users to make energy management part of daily operations. This includes hiring licensed energy managers, setting clear energy policies, conducting audits, and preparing investment plans for efficiency upgrades.
These steps are meant to ensure that energy saving is not a one-off exercise but a continuous process.
The regulations also open the door for licensing Energy Service Companies (ESCOs). These firms will provide technical support and financing options to help businesses implement energy-saving projects.
In addition, plans by the African Development Bank to establish a Super ESCO are expected to boost the sector further. This entity will help fund projects, especially in public institutions, and work with private ESCOs on implementation.
EPRA believes lower production costs from energy savings will eventually lead to cheaper goods and services. This could strengthen Kenya’s position in regional and global markets.
At the same time, reduced energy use will cut greenhouse gas emissions, helping the country meet its climate commitments under its national targets.
