Members of Parliament have lifted the seven-year moratorium on new Power Purchase Agreements (PPAs), paving the way for new electricity generation projects. Investors can now generate and sell power to the Kenya Power and Lighting Company (KPLC).
A Power Purchase Agreement is a contract between a power producer and a utility company (or other buyers), ensuring that the electricity generated is sold and paid for at agreed-upon terms. PPAs are crucial for private investors because they guarantee a revenue stream, helping them recover costs and secure financing for power plants.
MPs voted by acclamation on Wednesday evening, November 12, to approve a proposal from the Parliamentary Committee on Energy to end the freeze, which had restricted new agreements between private power producers and the national utility.
Speaking on Thursday, Cabinet Secretary for Investments, Trade, and Industry Lee Kinyanjui said the move is a major step in transforming Kenya’s energy sector.
“The lifting of the moratorium on Power Purchase Agreements marks a significant shift in Kenya’s energy landscape,” he said.
“With wholesale prices now at $0.07 (Sh9.04) per kWh, the move is expected to boost generation capacity, reduce outages, and stabilise tariffs, a welcome development for businesses and Kenya’s investment competitiveness.”
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Rising demand for power
In September 2025, Energy Principal Secretary Alex Wachira explained that electricity demand in Kenya had been steadily increasing, reaching a peak of 2,362MW on July 25, 2025.
Over the past three years, demand has risen by 250MW, driven by industrial growth, urbanization, and increased household consumption.
To meet this growing demand, the government plans to onboard more geothermal projects and has also been importing electricity from neighboring Ethiopia, which currently supplies 200MW. Wachira said the motion to lift the moratorium was prepared to encourage new generation projects.
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Push for investment
In August 2025, Investment Promotion Principal Secretary Abubakar Hassan said that President William Ruto had lifted the moratorium, allowing both industrial and captive power projects to proceed without relying solely on the national utility (KPLC).
“In the energy space, the president has lifted the issue of power purchase agreements. You can now generate power for your own use or for industrial parks,” Hassan said, highlighting that the move is designed to attract more investment into the energy sector.
PPAs typically include capacity and output charges as the two pricing components. Capacity charges are paid to the producer for making the plant’s capacity available, even if electricity isn’t fully used, while output charges are paid based on the actual electricity delivered, covering operational costs.
This structure strikes a balance between the government and private investors, ensuring long-term stability for energy projects.
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