For years, Kenyan businesses have moaned that high electricity costs adversely affect their competitiveness by contributing to a steep rise to operating costs. All sectors, from manufacturing, agriculture, transport, domestic to commercial sectors, aver that energy costs do contribute to rising operating costs hence a reduction in profits and or an increase in the prices of goods and services.
For Kenya to achieve its aspiration of transforming its economy from low middle income status to upper middle-income status, it needs to establish measures to lower the cost of energy. This calls for imposition of strict energy efficiency processes that can reduce the cost of energy.
In Kenya, the Energy and Petroleum Regulatory Authority (the Authority) has the mandate to entrench energy efficiency and conservation in the energy market through
two major programs: energy management; and standards and labeling programs.
In line with this mandate, EPRA did gazette the Energy (Energy Management) Regulations 2025 were published aimed at improving energy efficiency in designated facilities.
The new regulation requires that any facility (commercial, industrial or institutional) that consumes more than 180,000 kWh a year of thermal and electrical energy be labelled as a designated facility that should institute energy management programmes.
Another energy efficiency initiative that has been instituted by the regulations is the establishment of energy performance benchmarks for various sectors starting with sugar, tea, cement, Fast Moving Consumer Goods, dairy, hotel, industries and flowers.
The designated facilities will be expected to meet their sectors’ energy performance benchmarks as published by the Authority. Designated facilities that meet the energy performance benchmarks may apply to the Authority for an energy savings certificate. The certificate will indicate the tradable energy savings credits that can be sold to facilities that do not meet their benchmarks.
Designated facilities will be expected to meet their sectors’ energy performance benchmarks as published by the Authority. Designated facilities that meet the energy performance benchmarks may apply to the Authority for an energy savings certificate. The certificate will indicate the tradable energy savings credits that can be sold to facilities that do not meet their benchmarks.
This starts with conducting energy audits every four years and coming up with practical plans to implement the energy audit recommendations geared towards achieving at least 50 percent of the recommended energy savings.
In addition, the regulations require designated facilities to embed energy management practices into their day-to-day activities. These practices include appointment of a licensed energy manager; development of an energy management policy; undertaking energy audits; and preparation of an energy investment and implementation plans to prioritise and guide the implementation of the identified energy conservation measures.
The regulations require that high energy consumers establish
The regulations will also facilitate licensing of Energy Service Companies (ESCOs) in Kenya. The ESCOs are expected to unlock the potential for implementation of energy efficiency projects through provision of structured financial products and technical expertise to the facilities. ESCOs’ role is to boost private investments in the implementation of energy efficiency projects. In addition, establishment of a Super ESCO by the African Development Bank, will foster the growth of ESCO industry in Kenya. The Super ESCO will facilitate the development and implementation of energy efficiency projects (including the financing) but subcontract implementation to private-sector ESCOs. The public sector entities have generally lagged its private sector peers in undertaking energy efficiency projects and the super ESCO could play an important role by establishing a revolving fund to support implementation of these projects.
The Authority expects that the resulting reduction in the cost of production, from the energy savings realized, will be passed on to consumers through reduced prices of products. This could enhance Kenya’s competitiveness both regionally and globally. Furthermore, the attendant reduction in GHG emissions will contribute to the achievement of Kenya’s Nationally Determined Contributions (NDCs).
By Eustace Njeru, Ronald Keter and Dr Eng. Fenwicks Musonye are energy efficiency specialists at the Energy and Petroleum Regulatory Authority
