Kenya’s reliance on diesel-fired power plants has risen by approximately 11%, pushing up electricity tariffs via higher Fuel Energy Charge (FEC) costs and Foreign Exchange Rate Fluctuation Adjustment (FERFA). The Energy and Petroleum Regulatory Authority (EPRA) recently raised the FEC by 3.59 Kenya cents per kWh, contributing to a 2.8% overall increase in power charges in June 2024.
Key Takeaways
- Diesel power generation share escalated, increasing FEC charges.
- EPRA raised FEC to KSh 3.59/kWh and FERFA to KSh 1.76/kWh in June 2024.
- Result: household electricity bills rose by ~2.8% (≈ Sh 3.50/kWh), significantly impacting low‑consumption users.
- Kenya still heavily dependent on renewables (~90%), but diesel capacity (~700 MW) is among main thermal backup sources.
Why Diesel Is Rising and Costs Escalating
- Drought‑induced hydro shortfalls and supply intermittency have forced Kenya Power to depend more on diesel or heavy‑fuel oil generators.
- Diesel plants are the most expensive form of electricity generation on the grid, second only to emergency generators, so the FEC rises when their share climbs.
- EPRA’s tariff reviews reflect both higher usage of diesel plants and currency volatility, since independent power producers (IPPs) are paid in USD or EUR, leading to increased FERFA charges when the shilling weakens.
Also read: Africa Lags Behind in the Global Green Energy Surge, UN Warns
Renewable Majority, But Diesel Persists
According to the IEA’s 2024 Kenya Energy Policy Review, nearly 90% of generation comes from renewables (47% geothermal, 21% hydro, 16% wind, 4% solar), while diesel makes up the remaining ~700 MW capacity.
Diesel’s High Cost: Transparency Issues
The Electricity Consumers Society of Kenya highlighted that poor transparency in contracting diesel capacity contributes to cost inefficiencies and consumer burden.
Mitigation & Hybrids
Kenya Power has started retrofitting 18 out of 30 off‑grid diesel stations with solar PV to reduce fuel costs and emissions, a €33M AFD‑funded project (~Sh 4.3B).
What Consumers Are Experiencing
- Users with monthly consumption under 30 kWh, about 71% of Kenyan households, saw their bills climb from Sh 629 in April to Sh 729 in March, then face the new FEC increase (≈ Sh 3.50/kWh) in June 2024.
- Higher electricity bills are compounding inflation, especially as industries pass increased costs onto consumers.
Data Table: Tariff Impact & Diesel Share
| Metric | Detail |
| Diesel Generation Share | ~11% increase, raising use of thermal plants |
| Fuel Energy Charge (FEC) | Raised to KSh 3.59/kWh in June 2024 |
| FERFA (Currency Adjustment) | Raised to KSh 1.76/kWh |
| Resulting Tariff Increase | 2.8% among users; ≈ Sh 3.50 per kWh baseline impact |
| Renewables Share in Mix | ~90% renewables, ~10% diesel (~700 MW) |
Trends & Policy Implications
1. Temporary Nature of Diesel Reliance
Diesel-fired power typically acts as a peaking or stopgap source during hydro droughts or infrastructure outages. The increased share in 2024 is expected to contract once rainfall returns and grid stability improves.
2. Grid Expansion of Solar & Wind
Kenya is ramping up solar PV and wind capacity; Lake Turkana Wind Power and mini-grid solar systems are key projects targeting to displace diesel usage.
3. Storage & Balancing Need
More variable renewable energy means stronger grid balancing and storage investments will be needed to maintain reliability and reduce reliance on expensive thermal backup.
4. Tariff Management & Transparency
Critics urge EPRA and Kenya Power to improve transparency in IPP contracts, especially diesel PPAs, to protect consumers from unpredictable cost pass-throughs and foreign exchange volatility.
Also read: Can Protests Fix South Africa’s Failing Power System
Modern diesel plants can generate more electricity per dollar than older thermal units: renewable-heavy systems may initially benefit from efficient diesel additions in capacity-constrained settings.
However, renewable technologies are phasing in over time: solar PV capital costs are declining, making investments more competitive, though full grid transition in Kenya is likely decades away.
