The power industry in Kenya is fully unbundled, both vertically and horizontally, and consists of generation, transmission, distribution and retail segments. It includes participants from both the public and private sectors.

The principal law governing the ownership and structure of the power industry in Kenya is the Energy Act, 2019, which was enacted to align the energy sector with the Energy Policy, 2018 and the devolved functions of the national and county governments in accordance with the Constitution of Kenya 2010.

The generation of electricity in Kenya is dominated by the majority state-owned Kenya Electricity Generating Company PLC (KenGen), which produces approximately 54% of the power generated in Kenya. Other players in this segment include independent power producers (IPPs), the Rural Electrification and Renewable Energy Corporation (REREC), several off-grid generation licensees and, more recently, privately owned power utility companies.

The transmission of electricity is undertaken by the Kenya Electricity Transmission Company Limited (KETRACO), which is mandated to operate high-voltage transmission lines of 132kV and above.

The distribution and supply segment is dominated by Kenya Power & Lighting PLC (Kenya Power), which is responsible for the procurement of power, including from projects under the Feed-in Tariff Policy, and for the negotiation of power purchase agreements (PPAs) with IPPs and neighbouring states. It also historically served as a retailer and system operator, in addition to owning and operating part of the transmission infrastructure and the entire distribution network in the country. Over the last few years, the distribution segment has seen the introduction of privately owned distribution and electricity retail players.

Battery Energy Storage Systems (BESS) are still in the early stages of development. KenGen has conducted prefeasibility studies on the installation of utility scale BESS, and the Ministry of Energy & Petroleum (MoEP) has also undertaken a technical analysis on BESS. Following these studies, MoEP has designated KenGen to implement a 200 MWh BESS pilot project to build capacity in the energy sector, and it is anticipated that this mandate will continue to be vested in KenGen.

The principal state-owned players in the generation, transmission and distribution segments include the following.

• KenGen is 70% owned by the government of Kenya and is listed on the Nairobi Securities Exchange. It accounts for slightly over 54% of electricity generated.
• The Geothermal Development Company (GDC) is wholly owned by the government and was established to carry out geothermal exploration, production drilling and management of steam fields.
• The Nuclear Power and Energy Agency (NuPEA) is wholly owned by the government and is responsible for overseeing research and development of nuclear electricity generation in Kenya.
• KETRACO is 100% state-owned and is responsible for planning, design, construction, ownership, operation and maintenance of electricity transmission lines (132kV and above). It is the designated system operator
• Kenya Power is listed on the Nairobi Securities Exchange. The government of Kenya holds a 50.1% stake in the entity, which serves as the main distributor and supplier of electricity in the country, accounting for approximately 95% of electricity sales.
• REREC is wholly owned by the government of Kenya and is charged with the expansion of rural electrification. It is the lead agency responsible for the development of renewable energy resources (other than geothermal and large hydropower) and accounts for about 1.5% of generated electricity.

On the investor side, IPPs currently account for approximately 37% of generated power from various technologies, including wind, solar, thermal, hydro, biogas and biomass. A total of 560 MW of captive power utilising thermal, solar and wind technologies is generated by over 90 private investors. Finally, there are privately owned distribution, supply and retail companies, mostly serving large-scale mixed use developments, including Tatu City and Two Rivers.

Foreign investment is governed by the Investment Promotion Act, 2004 and the Foreign Investments Protection Act, 1964.

Kenya does not impose restrictions on foreign ownership in the power industry. Foreign investors are permitted to fully participate in the generation, transmission, distribution and supply segments, subject to compliance with general investment laws and regulatory approvals.

Local Registration Obligations

A foreign entity seeking a licence under the Energy Act is required to establish an office in Kenya and maintain such office until the expiry of the licence. Generation and distribution licences typically have a term of 25 and 20 years, respectively.

Any entity that executes a project agreement under the Public Private Partnerships Act, including projects in the power sector, is required to establish a project company incorporated in Kenya in accordance with the Companies Act.

Local Content Plan

The Energy Act requires licensees to comply with the local content obligations, which include the preparation of a Long-Term Local Content Plan. The term “local content” is defined in the Act as the added value brought to the Kenyan economy from energy-related activities through systematic development of national capacity and capabilities, and investment in developing and procuring locally available workforce, services and supplies, for the sharing of accruing benefits.

As such, the Local Content Plan should ensure that consideration is first given to services provided within the county and to goods manufactured in the country, where the goods meet the relevant specifications as prescribed by the Kenya Bureau of Standards (KEBS) or, in the absence of a Kenyan standard, any other international standards acceptable to KEBS. The Local Content Plan should provide for qualified and skilled Kenyans to be given first consideration for employment at all levels of the value chain, and adequate provision should be made for the training of Kenyans on the job.

Land Ownership

A key restriction on land ownership is that foreign nationals can only have a leasehold of up to 99 years over non-agricultural land. Prior to the installation of power generation infrastructure, development permission needs to be obtained under the Physical and Land Use Planning Act, and agricultural land needs to be rezoned with a change of user effected from agricultural to industrial purposes (eg, solar power plant).

Protection From Expropriation

The Constitution of Kenya protects all persons from deprivation of property. It provides that no property of any description shall be compulsorily taken possession of, and that no interest in or right over property of any description shall be compulsorily acquired, except where it is necessary in the interests of defence, public safety, public order, public morality, public health, town and country planning or the development or utilisation of any property in such manner as to promote the public benefit. Compensation should be made promptly and in full. The Constitution provides that courts may grant relief in the form of an order for compensation where it is determined that there has been a denial, violation or infringement of a right or fundamental freedom enshrined in the Bill of Rights, or a threat thereto.

These provisions are reiterated in the Foreign Investments Protection Act, which provides that no approved enterprise or any property belonging to such enterprise shall be compulsorily taken possession of, and no interest in or right over such enterprise or property shall be compulsorily acquired, except in accordance with the relevant law and subject to the prompt payment of full compensation.

Finally, the Land Act, 2012 guides the process to be followed for compulsory acquisition and compensation upon the exercise of due diligence, which should include a final survey and the determination of acreage, boundaries, ownership and value. Notably, the Land Act clarifies that the National Land Commission should make payment of the compensation to all relevant persons before taking possession of the land.

General Incentives

These are contained primarily in the Foreign Investments Protection Act and the Investment Promotion Act. “Investment” is defined to include contributions of local or foreign capital by an investor, including the creation or acquisition of business assets by or for a business enterprise, covering the expansion, restructuring, improvement or rehabilitation of a business enterprise.

Investment Certificate holders are entitled to an easier licensing regime, including:

• support from the Kenya Investment Authority for various licence applications, from various national and sub-national governments and agencies;
• certain categories of work permits and dependant passes for expatriate staff and their families; and
• incentives under the Nairobi International Financial Centre Act, 2017 regime, which include:
1. exemption from any nationalisation or expropriation measures or any restrictions on private ownership;
2. freedom to repatriate profits and realise investments;
3. freedom to recruit and employ staff of their choice on such terms as they wish to agree, subject to work permit provisions and any international treaty obligations entered into by the government of Kenya in respect of the terms of employment of employees; and
4. the capability of being owned up to 100% by persons who are not nationals of, or resident in, Kenya.

Dispute Resolution

The Constitution of Kenya requires judicial authorities, the courts and tribunals to be guided by the following key principles:

• justice shall be done to all, irrespective of status;
• justice shall not be delayed; and
• alternative forms of dispute resolution shall be promoted, including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms.

Arbitral proceedings in Kenya are governed by the Arbitration Act, 1995 and the Nairobi Centre for International Arbitration Act, 2013. Kenya has acceded to the New York Convention on the Recognition and Enforcement of Arbitral Awards and to the International Convention on the Settlement of International Disputes (ICSID); the recognition and enforcement of international awards is therefore entrenched in accordance with the Investment Disputes Convention Act, 1966, subject to the provisions of the ICSID.

Subject to prior approval from the Energy and Petroleum Regulatory Authority (EPRA), entities in the power sector are permitted to dispose of any of their assets by any means, including sale, transfer, merger and lease. The sale of generation, transmission and distribution assets is governed by various laws and regulations, including the following primary legislation.

• The Energy Act, Energy (Electricity Licensing) Regulations, 2012 and Licence Conditions, all of which require a licensee to obtain EPRA’s prior approval before:
1. disposing of assets through a sale, transfer, merger, lease or any other means;
2. taking any action that may lead to a decrease in the licensee’s share capital;
3. allowing any acquisition by a third party of more than 25% of the licensee’s share capital;
4. implementing a change in control of the licensee; or
5. any increase or decrease of its authorised or paid-up share capital.
• The provisions of the Companies Act, the Competition Act and the Capital Markets Act would be applicable to mergers, amalgamations and acquisitions of private and publicly listed companies, as the case may be.
• The Public Procurement and Asset Disposal Act and the Public Finance Management Act would also be applicable to the disposal of assets by a state-owned corporation or government-linked corporation (one in which government is a minority shareholder).
• The Income Tax Act would impact the proceeds of the sale of the investments.

The regulator responsible for mergers is the Competition Authority of Kenya (CAK). Where a merger is proposed, each of the undertakings involved is obliged under the Competition Act to notify the CAK of the proposal in writing; the CAK will then make a determination in relation to the proposed merger and may either decline or give an approval for its implementation with or without conditions. The CAK is also responsible for determining thresholds for transactions that require the mandatory merger notification, in which case mergers below the specified thresholds would not need to be notified to the CAK.

Where assets are owned by state-owned entities, the Public Procurement Regulatory Authority is charged with overseeing public asset disposal under the Public Procurement and Asset Disposal Act.

As part of the licence application process, the applicant is required to submit documentation evidencing its financial, technical and operational qualifications to undertake the proposed generation, transmission or distribution activity. The licensee is also obliged to submit at least the following to EPRA:

• an annual performance report incorporating financial and technical performance within 180 days of the end of the licensee’s financial year; and
• financial statements for each financial year, together with the report of an external auditor.

Any new purchaser of electricity assets or acquirer of a business would be required to demonstrate its financial and technical capabilities to EPRA, and to comply with the reporting obligations in the specified licence.

The MoEP is mandated to develop a five-year Integrated National Energy Plan (INEP), and provides strategic direction to facilitate growth of the energy sector The Energy (Integrated National Energy Plan) Regulations, 2025 provide a framework for a co-ordinated approach in energy planning in Kenya. National energy service providers are required to develop plans for the provision of energy services, while county governments are obliged to develop county energy plans, taking into account the national energy policy and all viable energy supply options.

The INEP serves as an energy sector inter-governmental guide on the short, medium and long-term energy requirements based on evolving economic, socio-political and technical issues to ensure the delivery of reliable energy. It is reviewed every three years, and the Cabinet Secretary is tasked with preparing and publishing annual reports highlighting the progress of its implementation.

County governments are charged with the preparation of County Energy Plans incorporating petroleum, renewable energy and electricity master plans. They are also required to undertake physical planning relating to energy resource areas such as dams, solar and wind farms, municipal waste dumpsites, agricultural and animal waste, ocean energy, woodlots and plantations for the production of bio-energy feedstock, as well as the facilitation of energy demand by planning for industrial parks and other energy-consuming activities.

Kenya Power co-ordinates electricity planning in the sector through the Least Cost Power Development Plan (LCPDP), with the most recent covering the period 2024–2043. The LCPDP details planned generation and transmission infrastructure based on projected electricity demand and least-cost technology options.

The following regulations have been passed in the last year:

• the Energy (Integrated National Energy Plan) Regulations 2025, which provide guidelines on the preparation, content, timelines, publication and monitoring of energy plans and the integrated national energy plan;
• the Energy (Energy Management) Regulations 2025, which promote energy management in commercial, industrial and institutional facilities with the aim of reducing energy consumption per unit of production;
• the Energy (Net Metering) Regulations 2024, which promote the use of renewable energy technologies by providing consumers with energy storage on the grid; and
• the Energy (Energy and Petroleum Regulatory Authority Petroleum Levy) Regulations 2024, which impose a levy that shall be used to finance the operations of EPRA.

The following Energy Regulations are undergoing the legislative process in Kenya.

• The Energy (Electricity Market, Bulk Supply and Open Access) Regulations will be applicable to the generation, importation, exportation, transmission, distribution and retail of supply of electricity, and will govern electricity markets as well as obligations relating to open access by market players.
• The Energy (Electric Power Undertaking Licensing) Regulations aim to promote prudent operational practices in the exportation, importation, generation, transmission, distribution and retail supply of electrical energy. The draft was published in April 2025 by EPRA for public consultation and. if passed, will repeal the Energy (Electricity Licensing) Regulations, 2012.
• The Energy (Electricity Supply and Installation) Regulations are proposed to govern all persons involved in the planning, construction, operation and maintenance of electric supply lines, the connection of any premises to an electricity supply system, and electrical installation work at the premises of any consumer.
• The Energy (System Operations) Regulations outline the obligations of the system operator with regards to the safety, efficiency, economy, reliability and security of the national power system.
• The Energy (Reliability, Quality of Supply & Service) Regulations will govern both grid-connected and off-grid systems with clear performance standards in accordance with the Grid Code and service levels with customers/consumers.
• The Energy (Electricity Incident and Accident Reporting) Regulations outline the obligations of persons in the electricity sector, as well as their agents, with respect to fatal and non-fatal incidents as well as dangerous occurrences and environmental damage.

A unique feature of Kenya’s power industry is its reliance on renewable energy sources, including geothermal, wind, solar and hydro power, which comprise close to 85% of installed capacity, with a target of 100% by 2030. In particular, Kenya was the first and leading African country to tap into its geothermal resources and ranks as the sixth largest producer globally, with over 988 MW installed capacity.

Notably, the LCPDP records that all diesel and gas oil power plants are expected to be decommissioned by 2035.

The Energy Act does not specifically list wholesale supply as a licensed activity, and the Energy Policy only references the wholesale electricity market once in recognition of Kenya’s undeveloped legal, regulatory and institutional framework for a competitive wholesale electric power market.

However, the definition of the electricity market in the Energy Act includes the sale of electrical energy to retail licensees for resale to consumers, while “bulk supply” is defined to mean the supply of electrical energy by a licensee to another licensee for the purpose of enabling the supply of electrical energy to consumers. The Energy Act also provides for the execution of bulk supply agreements, and requires EPRA to review the electricity market on a regular basis with a view to enhancing competition, improving efficiency, increasing reliability and security of supply and improving the quality of service by all licensees.

All PPAs currently incorporate capacity payments on a take-or-pay basis as well as energy charges. The tariff for bulk supply is approved by EPRA in accordance with the regulation on electricity tariffs and the Energy Act.

In line with the Power Market Study in the Electric Power Sub-Sector, 2021, the proposed Energy (Electricity Market, Bulk Supply and Open Access) Regulations anticipate that the electricity market shall consist of a wholesale and a retail market, with the former being comprised of generation licensees and other licensees who will trade through the intermediary of an operator, while the retail market shall purchase from the wholesale market and supply to consumers.

Imports and exports of electricity are permitted, subject to licensing by EPRA.

Electricity imports account for 6.4% of the energy mix under a 200 MW PPA with Ethiopia Electricity Power (EEP) and bilateral energy exchange contracts with Uganda Electricity Transmission Company Limited (UETCL) and Tanzania Electricity Supply Company Limited (TANESCO).

All tariffs and ancillary costs in PPAs require prior approval by EPRA. End user pricing is influenced by pass-through charges, which are implemented to cover additional expenses incurred in the generation, transmission and distribution of electricity that are not included in the base tariff. Such charges include:

• the Fuel Energy Charge (FEC);
• Foreign Exchange Rates Fluctuations Adjustments (FERFA);
• the Water Resource Authority (WRA) levy;
• inflation adjustments; and
• taxes and levies.

As of December 2024, the installed generation capacity was 3,236 MW, with a net effective interconnected capacity of 3,082 MW, inclusive of wind and solar. The installed capacity is over 90% renewable and is composed of 940 MW of geothermal, 838 MW hydro, 605.8 MW fossil fuels, 435 MW wind, 212.5 MW solar, 200 MW import and 2 MW co-generation.

The total generation was 7,222.37 GWh, with geothermal being the leading contributor of power to the national grid, accounting for 39.81%, followed by hydropower and wind at 24.74% and 13.46%, respectively.

There are currently no concentration limits regarding the percentage of electricity supply that is controlled by one entity. However, the majority of consumers in Kenya are currently supplied electricity by Kenya Power.

The principal laws governing market concentration limits include the following.

• The Energy Act empowers EPRA to review the electricity market on a regular basis with a view to enhancing competition, improving efficiency, increasing reliability and security of supply and improving the quality of service by all licensees.
• The Competition Act establishes the CAK, which is mandated to investigate any economic sector it has reason to believe may feature one or more factors relating to unwarranted concentrations of economic power. The CAK may require any participant in that sector to grant it – or any person authorised in writing by it – access to records relating to patterns of ownership, market structure and percentages of sales.

The principal laws prohibiting anti-competitive behaviour are as follows.

• The Energy Act empowers EPRA to review the electricity market on a regular basis, with a view to enhancing competition, improving efficiency, increasing reliability and security of supply and improving the quality of service by all licensees. EPRA is also mandated to monitor, in consultation with the CAK, the conditions of contractors’ trade practices and to review the electricity market on a regular basis, with a view to enhancing competition. The regulator also plays a role in ensuring fair competition and transparency in the implementation of a feed-in tariff system.
• The Competition Act is the principal law that prohibits anti-competitive behaviour and establishes a market surveillance and enforcement process.
• The Energy (Electricity Licensing) Regulations promote fair competition by requiring licensees to avoid undue preference or discrimination, refrain from anti-competitive practices or arrangements in any part of the electricity supply chain and comply with all regulatory directives aimed at preserving fair competition.

The Energy Act mandates EPRA to review the energy market regularly, with a view to enhancing competition. In carrying out this role, EPRA has powers to set, review and approve tariff changes, and may also undertake investigations of various power sector players as may be necessary.

Amongst other things, the CAK has the power to carry out an investigation following the receipt of complaints related to restrictive trade practices, abuse of dominance or abuse of buyer power.

EPRA has been granted significant powers of enforcement under the Energy Act, including the power to:

• issue orders in writing requiring or prohibiting certain acts or things from being performed or done;
• formulate, set and review environmental, health, safety and quality standards for the energy sector, in co-ordination with other statutory authorities; and
• investigate complaints and determine disputes between parties over any matter relating to licences and licence conditions under the Energy Act.

The CAK is obliged to make a determination upon the completion of investigations, and may declare that the conduct under investigation constitutes an infringement of the prohibitions in the Competition Act. It may restrain the undertaking from engaging in that conduct, and may impose financial penalties of up to 10% of the annual turnover and order entities with unwarranted concentration of economic power in any sector to dispose of such portion of their interests in the production, distribution or supply of services as the CAK deems necessary to remove the unwarranted concentration.

The Energy Act is the principal law that governs the construction and operation of generation facilities. It came into effect on 28 March 2019, and its main purpose was to consolidate the laws relating to energy. In addition to the Energy Act, the following would be applicable on a case-by-case basis, depending on the proposed project procurement and implementation structure and location, as well as various approvals and permits applicable to the project:

• the Civil Aviation Act (Cap 394);
• the Competition Act (Cap 504);
• the Computer Misuse and Cybercrimes Act (Cap 79C);
• the Employment Act (Cap 226);
• the Environmental Management and Co-ordination Act (Cap 387);
• the Income Tax Act (Cap 470);
• the Land Act (Cap 280);
• the National Construction Authority Act (Cap 118);
• the Occupational Safety and Health Act (Cap 236A);
• the Physical and Land Use Planning Act (Cap 303);
• the Public Finance Management Act (Cap 412A);
• the Public Private Partnerships Act (Cap 430);
• the Public Procurement and Asset Disposal Act (Cap 412C); and
• the Scrap Metal Act (Cap 503).

The Energy Act requires any person who wishes to generate electrical energy exceeding 1 MW to obtain a licence from EPRA, with an exemption where power generated is below 1 MW and is intended for the generator’s own use. Further detailed licensing processes are captured in the Energy (Electricity Licensing) Regulations, which cover procedures for the application, issuance and suspension or revocation of the licence.

Applicants are expected to submit their application together with a newspaper advertisement and letter to the relevant local authority giving notice of the application, and to provide a description of the undertaking (including maps). Accompanying documentation includes:

• a valid environmental impact assessment (EIA) licence;
• audited accounts for the last three years;
• a Certificate of Incorporation;
• a title deed or valid lease agreement for the project land;
• the GPS co-ordinates for the project location;
• an approved PPA/tariff (not applicable for self-consumption);
• a grid interconnection study report; and
• a Letter of No Objection from the county government where the project will be located, together with the development permission from the county as well as identification and immigration status documentation for directors.

The application fee is KES10,000 (approximately USD78).

Applications should be submitted online through the EPRA portal, together with three hard copies delivered to EPRA’s offices. EPRA is obliged to process all licence applications within 60 days after providing written confirmation to the applicant that the application is complete.

Key issues for consideration by EPRA include:

• the cost of the undertaking and financing arrangements;
• the ability of the applicant to operate in a manner designed to protect the health and safety of its employees and users of the service;
• the technical and financial capacity of the applicant to render the service for which the licence is required;
• the proposed tariff; and
• any representations or objections made by the public following a public advertisement of the applicant’s intention to apply for the generation licence.

Developers for renewable energy projects not exceeding 20 MW in biomass, biogas and small hydro technologies to be undertaken under the Feed-in Tariff Policy, 2021 should first submit an Expression of Interest to the Ministry of Energy for approval.

In addition to the generation licence discussed above, the following permits will also be required prior to constructing a generation facility:

• an electrical installation permit issued by EPRA for any person who wishes to carry out electrical installation work;
• an Environmental Impact Assessment Licence and Noise Permit issued by the National Environmental Management Authority (NEMA);
• registration of the contractor and the work site with the National Construction Authority;
• development permission issued by the county government; and
• approval for the height of any structure from the Civil Aviation Authority.

The principle of public consultation is enshrined in the Constitution of Kenya, which recognises the participation of the people as one of the national values and principles of governance, and further provides that the State shall encourage public participation in the management, protection and conservation of the environment.

The Energy Act requires a person intending to lodge a licence application to place a 15-day public notice in at least two newspapers of nationwide circulation. The notice should inform the public of their right to make representations and objections to the grant of the licence, and to address these to EPRA.

The Environmental (Impact Assessment and Audit) Regulations specifically require that public participation is mandatory during the process of conducting an EIA Study and the project proponent is obliged, in consultation with NEMA, to seek the views of persons who may be affected by the project. This impacts all projects that may have a significant adverse environmental impact (including power and infrastructure projects).

Finally, the Physical and Land Use Planning Act (Development Control for Strategic National Projects) Regulations published under the Physical and Land Use Planning Act require a developer undertaking a strategic national project (which includes designated energy projects) to consult, publish, consider national security and hold stakeholders’ meetings before and during the development of the project.

The general terms and conditions contained in the licence for electric power undertakings address the following key issues:

• provisions for bulk and retail tariffs or charges for electrical energy and capacity for different types of licensees and classes of consumers;
• provisions for the determination of charges for use of the transmission and distribution network services;
• the term of the licence;
• the maximum capacity of supply of the undertaking;
• the area of supply of the undertaking;
• a requirement to comply with all applicable environmental, health and safety laws;
• a stipulation that the licensee is subject to liability under tort and contract laws;
• change of control, merger and disposal restrictions;
• financial and performance reporting obligations; and
• incident reporting obligations.

A generation licence also requires the licensee to comply with laws applying to the development, building, operation or maintenance of the undertaking. The generation licensee is further required to co-ordinate with the transmission or distribution network operator for the conveyance of electrical energy produced by it from its generating station or plant, and to comply with the instructions of the system operator, if any.

The Energy Act prohibits EPRA from altering, revising or modifying a term or condition of the licence without the consent of the licensee. An application for an amendment or relaxation of a term or condition of approval should be made to EPRA by the licensee.

The form of licence addresses circumstances when the licensee’s obligations may be relaxed, such as when the licensee is prevented from performing any of its obligations under the licence or permit due to force majeure. In this case, the licensee is obliged to notify EPRA of the obligations they are prevented from performing as soon as reasonably practicable, and EPRA has discretion to suspend those obligations for so long as the force majeure continues, subject to certain conditions.

The Energy Act provides that a person may develop energy infrastructure on, through, over or under any public, community or private land, subject to the provisions of relevant written law.

The applicant for a generation licence must demonstrate rights to the land on which the generation plant will be installed, either through ownership of the land or through a long-term lease or licence for the land. The same is applicable for solar rooftop projects, where the generator must demonstrate rights of access to the property owner’s rooftop if it is not the owner.

The Energy Act recognises that, for purposes of promoting energy investments, the national and county governments should facilitate the acquisition of land for energy infrastructure development.

The acquisition of surface rights over land that is privately owned is based on a willing buyer/lessee–willing seller/lessor basis. Parties negotiate the compensation based on existing market rates, subject to such premiums or discounts as they may deem necessary.

The Energy Act requires any person intending to develop any energy infrastructure to seek the prior consent of the landowner, and to place a public advertisement and announcements on local radio stations if the landowner cannot be traced. If the owner of the land still cannot be traced, the licensee is then obliged to deposit the compensation for such land into a special compensation fund.

The Cabinet Secretary is empowered under the Energy Act to apply for the compulsory acquisition of land in compliance with the Land Act where it is demonstrated that a licence holder reasonably requires such land for the purposes of constructing or operating energy infrastructure and has failed to acquire it by agreement after reasonable attempts to do so. To this end, the Energy (Electricity Licensing) Regulations require the applicant to state whether there will be a requirement for the compulsory acquisition of land to be given through the licence.

The Land Act defines “compulsory acquisition” as the power of the State to deprive or acquire any title or other interest in land for a public purpose, subject to the prompt payment of compensation. The three main pre-conditions that have to be met for compulsory acquisition to be justified by a state are that:

• the expropriation has to be for a public purpose;
• the government has to pay just compensation; and
• the acquiring authority has to abide by the principle of free, prior and informed consent.

The Land Act provides the criteria for assessing value for compulsorily acquired freehold land with reference to the “land value index”, which it describes as an analytical representation showing the spatial distribution of land values in a given geographical area at a specific time. An increase in land value is to be disregarded for various reasons, including where it is occasioned by the intended use of development of the land to be acquired, if the improvement to the land was made within two years prior to the date of publication of the notice of intention to acquire the land or was done after the date of publication.

With regard to leasehold land, the Land Act requires following matters to be taken into consideration:

• the value of the land based on the unexpired term of the lease calculated on the basis of a land value index developed for that purpose in consultation with county governments and approved by the National Assembly and the Senate;
• the value of developments or improvements on the land and any other cost incurred on the basis of the terms and conditions of the grant; and
• any other criteria which the Commission may prescribe in Regulations in consultation with the Cabinet Secretary and county governments, and with the approval of the National Assembly and the Senate.

It is important to note the obligation under Article 40 of the Constitution, which recognises the rights of untenured occupants and records that provision may be made for compensation to be paid to occupants in good faith of land acquired even where they do not hold title to the land.

Another key piece of legislation is the Prevention, Protection and Assistance to Internally Displaced Persons and Affected Communities Act, which requires the government and any other organisation to prevent internal displacement, including in situations resulting from development projects. Any displacement and relocation due to development projects is only considered lawful if it is justified by compelling and overriding public interests and is conducted in accordance with the Act and the Great Lakes Protocol on Protection and Assistance to Internally Displaced Persons, of which Kenya is a signatory.

Finally, the Physical and Land Use Planning (Development Control for Strategic National Projects) Regulations provide for instances where public land that is required for strategic national projects by a public body may be reserved. In these circumstances, the reservation of public land is required to be undertaken during or after the preparation of a national physical land use development plan or county physical land use development plan.

Compensation to a landowner for compulsorily acquired land can take the following forms:

• the allocation of an alternative parcel of land of equivalent value and comparable geographical location and land use to the land compulsorily acquired;
• a monetary payment, either in lump sum or in instalments spread over a period of not more than one year;
• the issuance of a government bond;
• the grant or transfer of development rights as may be prescribed;
• equity shares in a government-owned entity; or
• any other lawful compensation.

With regards to investments on community land, the provisions of the Community Land Act, 2016 require an agreement to be entered into between the community and the investor negotiated through a free, open consultative process, which shall contain provisions on the obligation to:

• conduct an environmental, social, cultural and economic impact assessment;
• undertake stakeholder consultations and involve the community;
• pay compensation and royalties to the community; and
• re-habilitate the land upon completion or abandonment of the project.

No agreement between an investor and the community is valid unless it is approved by two thirds of adult members at a community assembly meeting called to consider the offer and at which a quorum of two thirds of the adult members of that community is represented.

The Energy Act requires the removal of all infrastructure and the rehabilitation of the land. All decommissioning activities must meet any good practices that may be prescribed by the Cabinet Secretary in regulations. The provisions of the Energy Act are also duplicated in the Draft Energy (Electric Power Undertaking Licensing) Regulations, 2024. Where energy infrastructure is removed, the surface of the land should be restored to its former condition as far as possible by the licensee; failure to do so may result in the restoration being carried out by the owner of the land, with costs recoverable from the licensee. The Energy (Draft Abandonment and Decommissioning) Regulations are expected to provide further guidance on decommissioning generation facilities.

NEMA may issue an environmental restoration order requiring the person on whom it is served to restore the environment as near as possible to the state in which it was before the taking of the action that is the subject of the order. Any person who fails or refuses to comply with an environmental restoration order commits an offence and is liable to imprisonment or a fine.

The Scrap Metal Act includes a framework for the disposal of critical national infrastructure, including physical and virtual assets or facilities related to electricity generation, transmission and distribution.

The state entity responsible for the critical national infrastructure is required to dispose of scrap metal from critical national infrastructure to the Numerical Machining Complex and the Kenya Shipyard Limited for smelting into billets. Where there is inadequate capacity at either of these facilities, the state entity is required to seek approval to partner with a local smelter.

The Energy (Electricity Licensing) Regulations require that an application for a generation licence shall include details of any expected subsequent substantial capital outflows, including major decommissioning costs.

All the laws and legislation referred to in 3.1 Constructing and Operating Generation Facilities are applicable to the construction and operation of transmission facilities, as is the Kenya National Transmission Grid Code.

Environment reviews are required, as discussed in 3.2 Obtaining Approvals to Construct and Operate Generation Facilities.

The licence application and approval process is similar to that described for generation facilities in 3.2 Obtaining Approvals to Construct and Operate Generation Facilities.

Additional documents and information to accompany an application for a transmission licence include:

• a sufficient description of the actual or proposed locations of the electric supply lines and electrical plant constituting the intended transmission system and the area to which the application relates;
• an indication of the extent to which those electric supply lines are or will be placed underground, and the locations of such lines;
• identification of the voltages of the electric supply lines forming part of the intended transmission system;
• a statement of particulars of the persons from whom the applicant expects to receive the electricity for transmission for the next five years, and the points at which they expect to receive it;
• particulars of the expected connection points, quantities and interconnections to other transmission systems;
• proposed metering arrangements;
• forecast annual maximum demands for the next five years in their transmission system (MW or GW) and energy (GWh) to be transmitted; and
• a single line diagram of the transmission system.

The public participation obligations for generation projects are applicable to power transmission projects.

In addition to the general terms and conditions as outlined in 3.3 Approvals to Construct and Operate Generation Facilities, specific conditions that need to be adhered to by a transmission licensee include the obligation to:

• build, maintain and operate an efficient, co-ordinated and economical transmission system;
• comply with the directions of the system operator;
• provide non-discriminatory open access to its transmission system for use by any licensee or eligible consumer upon the payment of fair and reasonable transmission or wheeling charges;
• provide information to enable EPRA to approve the wheeling/transmission fees;
• ensure the transmission system is operated with enough capacity (and, if necessary, augmented or extended to provide enough capacity) to provide network services to persons authorised to connect to the grid or take electrical energy from the grid;
• operate, maintain (including repair and replace if necessary) and protect its transmission grid to ensure the adequate, economic, reliable and safe transmission of electricity; and
• operate its network in co-ordination with the transmission or distribution networks to which it is connected directly or indirectly.

The process is generally similar to that described for generation facilities (see 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities).

In recognition of the fact that transmission lines may traverse multiple parcels of land, the transmission licensee is required to acquire rights of way over such land through the grant of an easement, which confers upon the licensee the legal right of access to, and use of, the land strictly for the purposes of constructing, operating, maintaining and repairing the transmission facilities, without conferring any ownership interest. The registered proprietor of the land shall retain legal title and may continue to make limited use of the land, provided such use does not interfere with nor impede the licensee’s rights under the easement.

Forest Land

The process of acquiring a right of way through a forest varies depending on the classification of the forest but is governed primarily by the Forest Conservation and Management Act, 2016, which establishes the Kenya Forest Service. Forests in Kenya are classified into three categories:

• public forests, which are managed by the Kenya Forest Service and include forests on public land defined in Article 62 of the Constitution;
• community forests, which are located on land lawfully registered or held by communities; and
• private forests, which are found on land owned by individuals or institutions under freehold or leasehold tenure.

An applicant intending to acquire a right of way through a public or gazetted forest must submit a formal application to the Kenya Forest Service detailing:

• the purpose of the right of way;
• the exact location and size of the forest land to be affected;
• the intended duration of use; and
• measures to mitigate any environmental impact.

Upon successful application, the Kenya Forest Service may issue a forest user licence or permit, pursuant to Section 56 of the Forest Conservation and Management Act, 2016. The licence shall outline the terms of use, including conservation obligations, access limits and duration.

For community forests, applicants must obtain prior consent from the affected community or group representatives. Public participation is also mandatory under the EIA process.

A transmission licensee has exclusive rights to construct and operate transmission facilities within a specified geographical territory, subject to the provision of non-discriminatory open access to any licensee or eligible consumer upon the payment of fair and reasonable transmission or wheeling charges. The exclusive rights are obtained through a transmission licence issued by EPRA, pursuant to the provisions of the Energy Act.

The exclusive rights are provided for in the transmission licence issued by EPRA, which provides for a specified geographical area of operation. However, as discussed in 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Transmission Line and Associated Facilities, the exclusive right is subject to the transmission licensee providing non-discriminatory open access to its transmission system for use by any licensee or eligible consumer upon payment of fair and reasonable transmission or wheeling charges.

While KETRACO, and partly KPLC, have been the only players in the transmission segment, Kenya is poised to be the first country in Africa to successfully implement independent power transmission lines under the Public Private Partnerships Act, paving the way for private sector participation in this space.

The Energy Act requires all contracts for the provision of transmission network services to be submitted to EPRA for approval before execution, which shall ensure that the rates or tariffs established in the contract are just and reasonable. EPRA has published Guidelines for the Computation of Allowed Return on Equity and Return on Investment for generation, transmission and distribution projects within the country, which should be considered when setting tariffs for transmission charges. Furthermore, Kenya’s Power Market Study notes that a key principle to be used in developing the wheeling tariffs is that network costs should be estimated by voltage level.

With specific reference to the quality of supply and service, the Energy Act requires a licensee to collect, analyse and maintain such data as is necessary to enable the licensee to monitor and report to EPRA on the reliability and quality of supply and service. The Kenya National Transmission Grid Code sets out rules and technical standards for connection to and use of the grid in a manner that will ensure reliable, efficient and safe operation.

The Energy Act defines “open access” as non-discriminatory provision for the use of an electric transmission or distribution system by any licensee or consumer. The Act also provides that a transmission licensee has the duty to provide non-discriminatory open access to its transmission system for use by any licensee or eligible consumer upon the payment of fair and reasonable transmission or wheeling charges, as shall be prescribed in regulations made under the Act.

Open access in the transmission segment is regulated under Section 136 of the Energy Act and is subject to the payment of transmission or wheeling charges, which are set or approved by EPRA. Subject to the payment of the transmission or wheeling charges, users of a transmission service have the right to access a transmission system that is operated with enough capacity to provide network services and that is operated, maintained and protected by the transmission licensee to ensure the adequate, economic, reliable and safe transmission of electricity.

The Energy Act establishes the role of a System Operator, which is responsible for matching consumer requirements or demand with electrical availability or supply, maintaining electric power system security and arranging for the dispatch process. Kenya Power has historically been central to the electricity demand planning process and also served as the System Operator until KETRACO’s designation in January 2022; the transfer of this function is presently underway.

The designation of KETRACO as the System Operator is in line with the provisions of Section 138 (9) of the Energy Act, which requires the System Operator not to be involved in the direct or indirect buying or selling of electrical energy, which is Kenya Power’s core business.

Finally, the Energy Act requires the transmission licensee to operate, maintain (including repair and replace if necessary) and protect its transmission grid to ensure the adequate, economic, reliable and safe transmission of electricity.

All the laws governing the construction and operation of electricity generation and transmission segments apply to distribution, together with the Kenya National Distribution Grid Code.

The approval process and timelines are similar to those described for generation and transmission facilities. Additional documents and information to accompany an application for a distribution licence include:

• specific information relating to the locations of the electric supply lines and electrical plant constituting the intended distribution system;
• the extent to which those electric supply lines are or will be placed underground, and the locations of such lines;
• the particulars of arrangements made for the distribution of electricity and the expected connection points;
• the proposed metering arrangements;
• details of the voltage levels for the next five years; and
• details of the distribution system above 11 kV, including the location of infeeds (connection points), overhead lines, interconnectors, cable routes and associated substations, showing which electric supply lines, cables and substations are to be constructed and which are already in existence, as well as all electric supply lines and electrical plant effecting connection to the system operated by any other authorised distributor and points through which it is proposed that electricity would be conveyed to the applicant’s distribution system.

In addition to the general terms and conditions discussed in 3.3 Approvals to Construct and Operate Generation Facilities, a distribution licensee needs to also comply with specific conditions to:

• build, maintain and keep in a good state of repair suitable and sufficient electric supply lines for the purposes of enabling supply to be given in the area of supply specified in that behalf in the licence;
• operate an efficient, safe, co-ordinated and economical distribution system;
• comply with the directions of the system operator, where applicable;
• provide non-discriminatory open access to its distribution system for use by any licensee, retailer or eligible consumer uponpayment of use of system charges and compliance with the minimum requirements of the distribution licensee; and
• ensure as far as technically and economically practicable that the distribution system is operated with enough capacity (and, if necessary, augmented or extended to provide enough capacity) to provide network services to persons authorised to connect to the network.

The Energy (Reliability and Quality of Electrical Energy Supply and Service) Regulations also provide that a distribution licensee shall undertake to distribute electrical energy in a reliable manner that promotes quality, and shall ensure that any interruption in electrical energy supply shall not exceed one outage of electrical energy supply per month, which shall not last longer than one hour.

The process for the amendment or relaxation of licence terms is similar to that described for generation facilities (see 3.3 Approvals to Construct and Operate Generation Facilities).

The provisions relating to transmission facilities are applicable to distribution facilities (see 4.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Transmission Lines and Associated Facilities).

Like transmission licensees, a distribution licensee has exclusive monopoly rights to provide distribution services within a specified geographical territory, subject to the rights of eligible consumers who are entitled to choose any licensee to be their supplier of electrical energy for their own use upon the payment of use of system charges. The Energy (Electricity Market, Bulk Supply and Open Access) Regulations provide that, for grant of open access, the load shall not be less than 1 MVA in the distribution system.

The Energy Act contemplates that the distribution system within a licensee’s licensed area may consist of the electric supply lines planned and built by REREC or the relevant county government, in addition to those planned and built by the licensee.

The Energy (Net Metering) Regulations, 2024 provide a framework for consumers generating power using renewable energy technologies with an installed capacity of less than 1 MW to supply electricity to the grid in times of over-production and to make use of the credited energy during other times.

The process for establishing distribution system charges and terms of service are similar to those applicable to the transmission sector (see 4.6 Transmission Charges and Terms of Service).

With specific reference to the quality of supply and service, the Energy (Reliability and Quality of Electrical Energy Supply and Service) Regulations require a distribution licensee to distribute electrical energy in a reliable manner that promotes quality, and to submit a reliability and quality of supply indicator report and a quality of service indicator report to EPRA at least once in each month and at the end of the financial year. The Kenya National Distribution Grid Code sets outs the framework for the planning, development, connection, operation, maintenance and performance standards for the distribution system.

The Energy Act requires that Contracts for Bulk Supply and Electricity Supply Contracts for Retailers shall include tariffs to be approved by EPRA, which ensures that the rates or tariffs are just and reasonable. Use of system charges applicable to other licensees and eligible consumers for non-discriminatory open access to a distribution network are also expected to be just and reasonable.

A just and reasonable tariff is defined as one that enables the licensee to maintain its financial integrity, attract capital, operate efficiently and compensate investors for the risks assumed. The Guidelines on Return on Equity and Return on Investment published by EPRA in November 2021 are also applicable to distribution projects within the country and would have an impact on the final tariffs proposed by distribution companies.

In addition, the Draft Energy (Electricity Tariffs) Regulations and the Electricity (Generation, Transmission, Distribution and Supply) Tariff Setting Guidelines propose the guiding principles in determination of a tariff and the applicable methodology in the calculation of tariffs.

Retail tariffs are published by EPRA, with the most recent being the KPLC Retail Electricity Tariff Review for the 2022/23–2025/26 4th Tariff Control Period, effective 1 April 2023.

The Energy Act entitles persons aggrieved by an EPRA decision to appeal to the Energy and Petroleum Tribunal within 60 days of the decision. A further right of appeal to the High Court against a decision of the Tribunal is available within 30 days of the Tribunal’s decision. In addition, all distribution and retail licensees are required to have grievance and complaint handling procedures in place that are accessible to consumers.