Parliament Breaks a Seven-Year Stalemate as Kenya Races to Keep the Lights On

Kenya’s National Assembly has voted to lift the seven-year freeze on new power purchase agreements, ending one of the most restrictive energy policies in the country’s history. The decision, reached by acclamation on Wednesday evening, reopens the door for private generation projects that have been locked out since 2018.

For years, that moratorium was treated as a safeguard against costly contracts. Now it has become a national liability. The Energy Committee told lawmakers that Kenya faces an electricity shortfall severe enough to threaten blackouts across major towns. The freeze, once meant to protect consumers, has turned into a bottleneck that starved the grid of new capacity.

Majority Leader Kimani Ichung’wah urged the House to “adopt the addendum and address the matter,” a signal that Parliament sees the crisis as both technical and political. Energy officials had pleaded with MPs for months to remove the barrier, warning that without fresh agreements, generation would lag dangerously behind demand.

The new framework sets limits: wholesale prices will be capped at seven US cents per kilowatt-hour, and contracts may now be denominated in either Kenya shillings or dollars. The cap is intended to prevent the runaway costs that triggered the original freeze. But its real test will be whether developers return to the table.

The long freeze that created scarcity

The moratorium began in 2018 after a presidential task force accused private power producers of inflating tariffs and locking Kenya Power into expensive contracts. The idea was to pause new deals, review existing ones, and introduce reforms before reopening the market.

That review stalled. Years passed, and not a single new plant was commissioned. What began as a short audit became an indefinite paralysis. The Cabinet lifted the moratorium in 2023, but MPs reinstated it soon after, arguing that the review was incomplete. In the process, energy planning froze alongside investment.

As the country’s population grew and industries expanded, the generation pipeline dried up. Projects that had been ready for financing lost momentum. Developers withdrew. By 2025, only a handful of small geothermal units at Menengai remained under construction. The rest of Kenya’s power system was running on capacity installed years earlier.

That policy vacuum pushed the grid to the edge. It also exposed a contradiction — a country celebrated for renewable leadership had stopped adding new generation.

Imports fill the gaps

The strain became visible in the numbers. Imports from Ethiopia and Uganda surged to cover domestic shortages. In the year ending June 2025, imported electricity accounted for more than ten percent of Kenya’s total supply — up from less than five percent a year earlier.

The reliance on neighbors provided temporary relief but underscored how vulnerable the grid had become. Hydropower from Ethiopia and Uganda is cheap, but its flow is limited by transmission capacity. The Ethiopia–Kenya interconnector cannot carry enough current to replace local shortfalls during evening peaks.

In western Kenya, Kenya Power has already rationed supply during those hours. President William Ruto confirmed the rationing, calling it a “load management” exercise. Behind that phrase lies the reality of planned blackouts between five and ten at night — a symptom of a system running beyond its limits.

A crisis that forced Parliament’s hand

The public admission of rationing changed the political calculus. For the first time, the government acknowledged that Kenya’s shortage was not caused by drought or vandalism but by stalled policy. Parliament’s vote this week was as much a response to that confession as to the technical data presented by the Energy Committee.

MPs were briefed that peak demand has risen by 243 megawatts in just three years, while generation capacity has barely moved. Kenya Power and the Ministry of Energy warned that without new projects, the country could face rotating blackouts by next year.

Those warnings aligned with reports from industries and households. Factories have been running diesel generators at rising cost, while households in some counties face unscheduled evening outages. The crisis, long downplayed, had reached Parliament’s doorstep.

A system stretched thin

Kenya’s installed generation capacity stands at about 3,300 megawatts. But actual dependable capacity is closer to 2,600. The rest is constrained by maintenance, erratic hydropower, and fluctuating renewable output.

At peak demand — roughly 2,400 megawatts this year — the system operates without a reserve margin. One technical fault or reduced water flow can tip the grid into deficit. Engineers describe the setup as “barely balanced,” sustained only through constant adjustments.

Transmission infrastructure is equally fragile. Losses of around 30 percent erode supply before it reaches consumers. Transformers run above safe thresholds. Substations built decades ago now handle industrial loads they were never designed for.

The grid works, but only because engineers keep adjusting it by hand.

Investors return — cautiously

The lifting of the moratorium is a relief for developers, but enthusiasm is tempered. The last seven years left scars. Private investors lost faith in Kenya’s regulatory consistency after watching approved projects stall for reasons unrelated to performance.

To attract them back, the Energy Ministry must demonstrate that the new cap on tariffs will be implemented predictably, not arbitrarily. Investors will also want assurance that the evaluation and approval process has been streamlined. In the past, even well-structured proposals languished for months in review committees.

Analysts say the new pricing limit could work if paired with clear procurement timelines and transparent criteria. Too low a cap risks deterring renewable developers, especially in solar and wind. Too high could revive public criticism over expensive PPAs. Parliament’s balancing act will be measured by how many new deals reach financial closure within the next year.

The load-shedding that exposed policy paralysis

The current rationing schedule — though never formally published — has been Kenya Power’s emergency response to the stalled generation pipeline. Without new plants, the utility has been forced to rely on imports and old thermal stations that are costly to run.

President Ruto’s acknowledgment of the “load management plan” brought the issue into open view. His statement was also an admission that the freeze had backfired. The delay in approving new PPAs created the very shortage policymakers had sought to avoid.

Within the Ministry of Energy, officials concede that no new large-scale plant can begin construction before 2026. That means the country will remain exposed to supply risks for at least two more years, even with the moratorium lifted.

Parliament’s new gamble

By approving the Energy Committee’s proposal, MPs have taken political ownership of the problem. They are betting that capped tariffs and renewed investor confidence will ease pressure before the next election cycle. The risk is that if power shortages persist, the decision will be judged as too late rather than too bold.

The new framework allows contracts to be denominated in either shillings or dollars, giving flexibility to foreign investors wary of exchange-rate losses. Yet currency volatility remains a threat. A weakened shilling inflates dollar-denominated obligations, which in turn affect retail tariffs.

Lawmakers will need to ensure that the price cap does not become another loophole — an appealing figure on paper but impossible to enforce in practice. Oversight will matter as much as policy.

A grid trying to catch up

Energy Cabinet Secretary Davis Chirchir has described the lifting of the freeze as “a restart” for the sector. The government hopes to onboard new geothermal and solar projects within two years, adding at least 500 megawatts of capacity by 2027.

But experts caution that approvals alone will not solve the problem. Transmission upgrades, financing reforms, and payment security for independent producers remain unresolved. Without them, new generation will struggle to connect to the grid efficiently.

Meanwhile, demand continues to rise. Peak load has climbed sharply as manufacturing expands and electric mobility begins to take hold. The question is whether Kenya can build faster than it grows.

A reckoning delayed too long

The moratorium was intended as reform but became inertia. It outlasted two administrations and turned a pricing dispute into a generation crisis. Parliament’s vote finally ends that paralysis, but recovery will take years.

The lifting of the freeze is both an admission and an opportunity — recognition that policy hesitation has consequences, and a chance to correct course. If new projects move quickly and oversight remains firm, the grid could regain stability by the end of the decade.

For now, Kenya’s load-shedding crisis stands as a warning: when energy policy freezes, the economy does not wait. Power cuts become the measure of delay, and each blackout tells the story Parliament is now trying to rewrite.

Go to TECHTRENDSKE.co.ke for more tech and business news from the African continent.

Follow us on WhatsApp, Telegram, Twitter, and Facebook, or subscribe to our weekly newsletter to ensure you don’t miss out on any future updates. Send tips to editorial@techtrendsmedia.co.ke