Electricity bill savings have hit Sh8billion in five years as more industrial and business consumers shifted production to off-peak hours, lured by a discounted consumer tariff.
An analysis of official data shows firms saved Sh1.87 billion on their electricity bills in the year ended June 2026 through the off-peak preferential tariffs, adding to the Sh6.26 billion they slashed between July 2021 and June 2025.
The preferential tariff, technically referred to as Time of Use (ToU), provides eligible commercial, industrial, and e-mobility customers with a 50 percent discount on energy charges during off-peak hours.
The ToU covers weekdays from 10 pm to 6 am, Saturdays from 2 pm through midnight to Sunday at 6 am, and the whole day on Sundays and public holidays.
More firms have increasingly turned to the preferential tariff in a bid to keep a lid on their electricity bills, with 2,614 businesses benefiting from the tariff in the year to June 2026 compared to 2,339 a year earlier and 1,2482 firms in the year to June 2022.
ToU allows firms to get discounts on their base electricity tariffs once they meet consumption targets, significantly lowering their power bills despite increased electricity use.
Costly electricity is a major headache for businesses in Kenya, with the World Bank estimating the average cost of a kilowatt-hour (kWh) at $0.23 (Sh29.8), which is significantly higher than in neighbouring economies.
Steep power prices have ballooned production costs for businesses and ultimately led to pricey goods and services as the firms pass these high costs to consumers.
‘Kenya’s electricity prices are among the highest in the region, materially increasing production costs for formal, quality-compliant producers,’ the World Bank said in a review of Kenya’s private sector last month.
‘Industrial tariffs average US$0.18-US$0.23 per kilowatt-hour, compared with about US$0.03-US$0.05 per kilowatt-hour in regional comparators such as the Arab Republic of Egypt, Ethiopia, and Morocco,’ the Bretton Woods institution added in the review.
Businesses continue to grapple with costly electricity, a scenario that led to the introduction of ToU in December 2017 to encourage increased electricity consumption by commercial and industrial customers during off-peak hours.
The preferential tariff was later extended to small commercial and electric mobility customers in April 2023. ToU allows industries and big consumers of the national grid to use more electricity, especially when demand is low, at cheaper rates and in turn boost their production, besides driving Kenya Power’s electricity sales.
The tariff aims to flatten the demand curve, thereby enhancing grid stability and optimising the utilisation of available generation capacity.
The base tariff has been reducing year on year since 2023 in line with gazetted prices, but the marginal drops have done little to ease pressure on Kenya Power’s commercial and industrial clients.
Commercial and industrial clients are charged between Sh12.28-Sh18 per kWh in the base tariff compared to a range of Sh12.28-Sh20.18 in 2023. Base tariff, also referred to as consumption charge, is the single component of a power bill, with the others being fuel surcharge, Value Added Tax of 16 percent, forex adjustment, and energy regulatory levy.
The components of an electricity bill are the Rural Electrification Programme levy, Water Resources Management Authority levy, and a levy for the energy sector.