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Power and Infrastructure Finance in Kenya: A Plain Guide

In Kenya, Kenya Power (KPLC) is the main buyer of power from KenGen and from independent power producers, and the Energy and Petroleum Regulatory Authority (EPRA) licenses projects and approves tariffs. Kenya has one of Africa's cleanest grids, led by geothermal, hydro, and wind, and lenders focus on the strength of the PPA with Kenya Power.

Updated

How is the power sector in Kenya set up?

KenGen is the state-controlled generator. Kenya Power and Lighting Company (KPLC) buys power and sells it to customers. Kenya Electricity Transmission Company (KETRACO) builds new high-voltage lines.

The Energy and Petroleum Regulatory Authority (EPRA) licenses generators and approves PPAs and tariffs under the Energy Act 2019.

Key projects and programmes

These are public, well-documented examples from the sources below. They show how the market works.

  • Olkaria geothermal fields in the Rift Valley, developed by KenGen and private IPPs.
  • Lake Turkana Wind Power, a 310 MW wind farm that sells power to Kenya Power.
  • Hydro stations on the Tana River run by KenGen.

How are projects financed?

IPPs in Kenya are financed with sponsor equity and loans from DFIs and banks, backed by a PPA with Kenya Power. Some projects also used World Bank or other partial risk guarantees.

Lenders look at Kenya Power's finances, the currency of the tariff, and transmission risk, since delays in building lines can leave a plant unable to deliver power.

What should investors, lenders, and off-takers check?

Common checks include:

  • Kenya Power's ability to pay and any government support letters.
  • Transmission links and who bears the risk if a line is late.
  • Currency of payment and indexation in the PPA.
  • Current government policy on new PPAs and tariffs.

Where does Vektron Merchants fit?

This guide is public information about Kenya. Vektron Merchants does not look for deals there. Vektron Merchants is a marketing agency for energy, commodities, infrastructure financing and industrial firms. We find buyers, offtakers, lenders and partners for companies in these four industries, and we secure meetings with the people who sign.

Frequently asked questions

Who buys power from IPPs in Kenya?

Mainly Kenya Power and Lighting Company (KPLC), under PPAs approved by EPRA.

What is Kenya's main source of electricity?

Geothermal and hydro are the largest sources, with growing wind and solar.

Sources

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General information, not investment, legal or tax advice. Facts are from the public sources listed and may change.