Kenya’s electricity reserve margin-the extra power generation capacity available above peak demand-was wiped out in the year to June 2026, heightening risks of widespread power rationing and blackouts.
Kenya Power revealed that electricity reserve margins shrunk to negative 1.5 percent in the 12 months to June, a development that could mean inconvenience and extra operating costs for businesses seeking alternative power sources.
‘As a result of growing energy demand, the system peak increased by 8.6 percent, from 2,316 MW (megawatts) to 2,514 MW, which tightened the system’s reserve margin to approximately negative 1.5 percent,’ Kenya Power says.
‘The margin is below the level required to absorb an unexpected plant outage, hydrology shock or demand surge.’
Whether this situation has changed between June 2026 and now is unclear. Kenya Power Managing Director Joseph Siror did not respond to a request by Business Daily for an update on the matter.
The utility has attributed the dismal reserves to lack of fresh electricity generation on the national grid despite fast-growing consumption. Kenya Power did not reveal the reserve margins for the year ended June 2025.
The negative reserve margin is significantly low when compared to the recommended range of 20-35 percent. This situation puts Kenya on the edge of a potential crisis in the event that major disruptions occurred at the hydro plants of Ethiopia, which is now the country’s biggest source of power imports.
Reserve margins are critical to a country’s ability to withstand any sudden surge in electricity demand or outage from a major generation plant.
Kenya Power has on several occasions been forced to ration supplies to some regions when demand peaks in the evening, a scenario that could worsen if there are not significant increments in the reserve margins.
‘I can confirm that there are many instances when we have been forced to load-shed the country when the wind generation is low, and this is because when you sum all other generation sources without wind, they cannot serve the peak demand,’ Dr Siror said recently.
Kenya Power was in 2018 barred from signing new Power Purchase Agreements (PPAs) with the government, saying the freeze would allow for scrutiny of the existing PPAs amid concerns over costly power burdening homes and businesses.
The freeze was lifted in December 2024, but the utility is yet to ink any new PPAs, further derailing efforts to boost local generation of electricity.
Local generation of electricity rose six percent to 13,779.15Gigawatt-hours (GWh) in the year to June 2026 compared to 13,021.49GWh a year earlier, but Kenya Power was forced to import more electricity to meet the rising demand and avert outages.
Kenya Power has stepped up electricity imports from Ethiopia and Uganda to help boost supplies and meet rising consumption that saw Kenya record four peak demands since July last year.
Kenya Power will take on an extra 200 MW of power in December 2026 under a power purchase agreement (PPA) with Ethiopia to plug a supply gap.
Kenya Power currently has a 20-year PPA with the Ethiopian Electric Power (EEP), signed in 2022, allowing the supply of 200MW of electricity priced at $0.65 per kilowatt-hour (kWh), or approximately sh84.03 per kWh.
This means that Kenya Power will, from December 2026, tap a total of 400MW of electricity under the PPA with EEP. Under the deal, Kenya will, from December, take up 400MW at peak times but cut uptake to 150MW during off-peak times. In the present PPA, Kenya Power takes up 200MW at peak times and 65MW off-peak.
The increased power shipments have made Ethiopia the third biggest source of electricity to Kenya Power with a share of 9.88 percent last year, behind Lake Turkana Wind Power at 9.97 percent and KenGen at 57.49 percent.
Cheap hydro power from Ethiopia has helped Kenya meet the fast-growing demand, without burdening consumers with steep bills in the past three years. Central to that transformation is the Grand Ethiopian Renaissance Dam, which has more than doubled the country’s installed electricity generation capacity over the past seven years, from 4,462MW to 9,752MW.