Kenya’s energy regulatory landscape has undergone a significant reset following the Energy and Petroleum Regulatory Authority’s (EPRA) revocation of multiple tariff structures and investment return frameworks previously governing the power sector.
The changes, which were published in the Kenya Gazette and communicated by the regulator, undo several longstanding instruments used to guide pricing and investment decisions in electricity generation, including renewable energy, industry sources indicate. These frameworks included guidelines for allowed return on equity and return on investment, indicative feed-in tariffs for renewable energy technologies, benchmark tariffs for renewable energy auctions, and benchmark generation tariffs for geothermal power. Such frameworks had been published by the regulator pursuant to the Energy Act, 2019 and used in structuring power purchase agreements and investment planning.
The removal of these instruments marks one of the most important shifts in Kenya’s economic regulation of the electricity sector in recent years.
EPRA’s mandate, established under the Energy Act, 2019, includes economic regulation of electricity tariffs, licensing, and the approval of agreements across generation, transmission and distribution. The authority is also responsible for providing a predictable environment for energy investments and ensuring consumer protection.
Regulatory Impact and Potential Opportunities
Analysts and industry stakeholders have described the move as a double-edged development. On the positive side, the elimination of rigid tariff and return frameworks could provide greater regulatory latitude for policymakers and Kenya Power and Lighting Company (KPLC) to pursue lower electricity tariffs and more dynamic pricing mechanisms that reflect market conditions. This flexibility may support broader sector reforms and enable pricing that aligns more closely with competitive market forces.
At the same time, developers and investors note that scrapping these benchmarks and indicative instruments creates an opening to press for fully cost-reflective tariffs. With clearer negotiation frameworks and constructive engagement with KPLC and other off-takers, independent power producers may find a more supportive environment for financing and executing new generation projects.
Broader Sector Context
Kenya’s energy sector has been rapidly evolving, supported by expanding generation capacity, particularly in renewable sources including geothermal, hydro, solar and wind. The country continues to emphasise reliability, sustainable growth and investment attractiveness, with energy demand rising alongside economic activity. Despite reforms, electricity tariffs in Kenya remain high relative to some regional peers, underscoring the importance of cost efficiencies and regulatory predictability.
EPRA’s announcement of the regulatory reset signals a significant shift that will influence how new power projects are structured and priced, and could reshape investor confidence and sector strategy in the medium term.
