Kenya is planning a major expansion of its electricity system, with generation capacity targeted to rise from roughly 1,500 MW to 5,500 MW. But the bigger number does not necessarily mean a smaller electricity bill. The cost consumers ultimately pay depends on the entire power system — from generation and financing to transmission, distribution and losses. That creates what has been described as Kenya’s “power paradox”: the country can build more power and still struggle to make electricity cheaper.
One of the biggest problems is the amount of electricity that disappears before reaching consumers. Kenya Power reported system losses of 21.21% in FY2025, while EPRA’s estimate was higher at 23.36%, against a regulatory benchmark of 17.5%. Roughly speaking, this means that for every 100 units of electricity entering the system, more than 20 can be lost through technical inefficiencies, theft, illegal connections, metering problems and other commercial losses. Kenya therefore has to generate and pay for substantially more electricity than customers ultimately consume.
The problem becomes even more complicated when new generation is financed through expensive projects and long-term power purchase agreements. Take-or-pay contracts, for example, can require Kenya Power to pay for contracted capacity even when that electricity is not fully needed. Meanwhile, expensive debt and financing costs can be incorporated into the price of power. The result is that a new plant can produce relatively cheap electricity at the generator level while the final cost to the consumer remains high once financing, contracted capacity and other system costs are added.
The grid itself is another part of the equation. Kenya can build geothermal, hydro, nuclear and other generation capacity, but that electricity still has to travel through transmission and distribution networks before it reaches homes and businesses. Weak infrastructure, congestion and high technical losses can therefore undermine the economic benefit of new generation. This is particularly important as demand rises: adding generation without simultaneously strengthening the network can leave Kenya with more electricity on paper without enough efficient capacity to deliver it where it is needed.
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The real measure of the 5,500 MW plan, therefore, should not be how many megawatts Kenya builds but how much a household or business ultimately pays for a kilowatt-hour. Reducing the roughly 21–23% system losses, improving the grid, lowering financing costs and renegotiating inefficient contractual structures could have a more immediate effect on bills than simply adding another power plant.
