The Treasury is racing to update a feasibility study on a planned 90 megawatt (MW) hydropower plant in Karura within the Tana River cascade, and pave the way for private investment into the project.
The Public Private Partnership (PPP) Unit of the National Treasury is currently recruiting an expert to, among other things, review a feasibility study on the project, assess the resultant tariff, and design an appropriate model for implementing the project under a PPP model.
‘The Karura hydropower project is a strategic energy initiative situated within the Tana River cascade, specifically located between the Kindaruma and Kiambere hydroelectric power stations,’ the Treasury said.
‘The main features of this project include a hydropower plant designed to harness the residual hydraulic head of Tana River, a diversion weir and reservoir system optimised for grid stability, and associated power evacuation infrastructure to integrate clean energy into the national grid,’ it said.
Kenya is under pressure to boost electricity generation amid thinning reserves.
For instance, the country recorded six peak demands for electricity in 2025 alone, underlining the fast-growing demand from economic activities and increased home connections as customers crossed 10 million last year. The current peak is 2,439MW, which was recorded on December 4, 2025.
A recent freeze on new power purchase deals exacerbated Kenya’s power generation shortfall, forcing the country to increasingly rely on Ethiopia to shore up supply and avert outages. Ethiopia is now the third biggest source of electricity to Kenya Power.
Kenya imported 1,274.42 gigawatt-hours (GWh) in the year ended June 2025.
The supplies from Ethiopia have helped to limit power rationing in Kenya, especially in the evening when demand is at its highest. Kenya pays Ethiopia $0.065 (Sh8.39) per kilowatt-hour of electricity, making power from Addis Ababa the second cheapest after locally produced hydro, which retails at Sh3.27 per unit.
Apart from Ethiopia, Kenya also has a power exchange deal with Uganda and Tanzania, whereby the net-importer pays the other country.
Irked by expensive electricity, many customers in Kenya– including corporates and households– have increasingly resorted to alternative sources of power, particularly solar photovoltaic (PV) to take advantage of the falling prices of solar components such as panels, inverters, and batteries.