Utility company Kenya Power is expected to cancel out losses from the end of its monopoly in electricity sales with the lease of its infrastructure as analysts see a structural shift in the company’s business model.
Analysts at Standard Investment Bank (SIB) expect the utility to transform into an infrastructure firm, leasing out its over 160,000 kilometres network of high and low voltage lines to producers seeking to sell electricity directly to customers.
The dismantling of the legacy single buyer model is expected to shakeup Kenya Power’s business model as it faces competition to mostly retain its large-scale power consumers such as industries.
Already, electricity generating firm KenGen has sought an electric power transmission and distribution license for its Green Energy Park SEZ in Olkaria while Centum is seeking to wheel power from its Akira Geothermal facility in Naivasha to its special economic zone in Vipingo.
Producers are likely to leverage Kenya Power’s transmission network to sell power directly to customers instead of putting up their own infrastructure.
‘Kenya Power’s business model is set to transition from being an exclusive electricity retailer to an infrastructure landlord. While they face the risk of losing direct retail revenue from their top commercial clients to competitors, their survival will now depend on collecting ‘wheeling fees’ from private players and cleaning up the 21 percent power leaks across their network,’ Standard Investment Bank said in a valuation report.
‘To this end, Kenya Power’s future profitability will heavily depend on its ability to run a highly reliable, low-loss transmission network that private energy companies are willing to pay to use.’
Kenya’s Energy (Electricity Market, Bulk Supply, and Open Access) Regulations 2026 have sought to establish a competitive, transparent, and multi-supplier electricity market which is designed to stimulate broader economic growth.
The framework is centred on catalysing private capital, enhancing grid reliability and industrial productivity and deepening regional energy integration.
Kenya Power’s revenue has been premised largely on growing demand for power from customers, a driver likely to be tapered if the utility loses some of its largest consumers to producers turned suppliers.
Large power consumers who are mostly industries contributed to 54 percent of Kenya Power sales in the 12-months period to June 2025 while households consuming less than 100 kilowatt-hours (units) of electricity only made-up 17 percent of sales with the balance of 29 percent covering other consumer segments.
The data from the utility company underlines the importance of large-power consumers who will likely be the target of producers seeking to transform into direct sellers.
Kenya Power increased its dividend payout by 42.85 percent to Sh1 per share for the year ended June 2025 despite an 18.66 percent decline in profitability on lower revenues and higher finance costs.
The reduction in net income to Sh24.46 billion emerged as a lower tariff offset the impact of increased electricity unit sales as the cost of a unit of electricity for most customers fell in line with a three-year tariff gazette in 2023 by the Energy and Petroleum Regulatory Authority (Epra).
The utility returned to profit growth for the six months’ period to December 2025 with net earnings rising to Sh10.4 billion from Sh9.9 billion, helping the firm raise its interim dividend from Sh0.20 to Sh0.30 per share.
Standard Investment Bank (SIB) has noted that while Kenya Power has the opportunity to diversify into infrastructure leasing, its earnings momentum is likely to be slowed down by the tariff review freeze by its parent ministry besides system losses and bad debt from defaulting customers.