Kenya's reliance on Ethiopian electricity grows with peak imports set to double

Kenya plans to double peak electricity imports from Ethiopia to 400 megawatts (MW) in December 2026 to ease pressure on its power system, even as Ethiopia faces major gaps in domestic electricity access.

A 2025 World Bank-backed assessment found that 56% of Ethiopians lacked electricity meeting the minimum Tier 1 service standard, reflecting persistent distribution and connection constraints despite expanding generation capacity.

Kenya Power (NSE: KPLC) signed a 25-year electricity-purchase agreement with state-owned Ethiopian Electric Power (EEP) in 2022, providing for an initial 200 MW and a subsequent increase to 400 MW. Full commercial operations began in December 2023.

Kenya Power said in July 2026 that the additional supplies were expected from December, while EEP confirmed technical preparations in September. The expansion would also raise off-peak deliveries from 65 MW to 150 MW, subject to technical testing.

The arrangement is separate from a July 2026 electricity-supply agreement involving Kenya Power and Ethiopian Electric Utility (EEU), which has different reported pricing terms. The two agreements should not be treated as interchangeable.

Kenya's electricity system is under growing pressure. Peak demand reached 2,514 MW in the financial year ended June 2026, while the reserve margin fell to minus 1.5%, according to Kenya Power.

Kenya imported 1,913.66 gigawatt-hours (GWh) of electricity during the year, up 24.8% from 1,533.85 GWh a year earlier, according to the Energy and Petroleum Regulatory Authority (EPRA). Ethiopia supplied 1,577.66 GWh through the main EEP interconnection, accounting for 82.45% of imports and approximately 10% of Kenya's total electricity supply.

Kenya Power's general manager for network management, David Syengo, said in July that the additional 200 MW would be purchased at the existing tariff under the main import arrangement to bridge the gap between domestic generation and demand.

The import strategy has raised questions in Kenya about its impact on domestic generation, particularly geothermal power. In May 2025, EPRA defended the policy before a parliamentary committee, arguing that Ethiopian supplies supplemented rather than displaced domestic generation.

“We don’t buy power from Ethiopia to replace Kenyan geothermal power but to supplement what we have already,” acting EPRA chief executive Cyprian Nyakundi said at the time.

Ethiopian generation rises despite hydropower risks

Ethiopia's electricity exports are supported by expanding generation capacity, although hydropower dependence exposes the system to rainfall variability.

EEP generated approximately 35.7 terawatt-hours (TWh) in the 2025/26 fiscal year, up 21% from the previous year. The Grand Ethiopian Renaissance Dam (GERD), with an installed capacity of 5,150 MW, accounted for approximately 51.5% of national electricity generation.

However, EEP's generation plan for 2026/27 projects output of approximately 32.1 TWh, nearly 10% below the previous year's level, reflecting reduced water inflows at hydropower facilities.

The lower figure is a planning forecast rather than an observed decline. It highlights a potential risk to Ethiopia's electricity-export ambitions but does not establish that contracted deliveries to Kenya will be reduced.

Ethiopia's National Energy Compact identifies climate variability and hydropower dependence as threats to supply reliability. It targets an increase in non-hydropower renewables from approximately 5.6% to at least 15% of installed generation capacity by 2030.

See IntelliNews: Albania, Nepal, Ethiopia lead a growing club of countries running on renewable power

Domestic electricity access remains constrained

Ethiopia's growing generation and export capacity contrasts with inadequate domestic distribution networks, limited household connections and unreliable electricity supplies.

The gap reflects differences between electricity generation, high-voltage transmission and last-mile distribution. Expanding power production and cross-border sales does not automatically provide reliable service to households without adequate connections or functioning off-grid systems.

According to Ethiopia's 2025 Energy Access Survey, 65% of households had some form of electricity as of January 2025: 29.3% were connected to the national grid and 35.7% relied on off-grid solar systems.

However, only 44% of the population received electricity meeting the World Bank's minimum Tier 1 standard for basic lighting and phone charging.

The figures use different measures and denominators. Household access counts electricity sources regardless of service quality, while Tier 1 measures whether individuals receive a minimum level of service. The remaining 56% of the population therefore either lacked electricity altogether or received supplies below that threshold.

The data do not establish that Ethiopia's electricity exports are responsible for its domestic access deficit, which reflects wider infrastructure, connection and financing constraints.

To expand access, Ethiopia plans to increase its distribution network from 179,000 kilometres in 2025 to 456,000 kilometres by 2030 and reduce distribution losses from 22% to 13%.

Its National Energy Compact identifies approximately $9.65bn in energy-sector funding requirements for 2026–2030, including $4.9bn for distribution networks, last-mile connections and off-grid systems, alongside $1bn for clean cooking.

The government aims to attract at least $3.06bn in private investment by 2030 and achieve full cost recovery for state-owned electricity utilities by 2028. It targets Tier 1 or higher electricity access for 75% of the population by 2030.

Regional electricity trade expands despite infrastructure constraints

Ethiopia has completed a six-month trial of 100 MW electricity supplies to Tanzania through Kenya, but a permanent commercial agreement remains under negotiation.

EEP chief executive Ashebir Balcha said on September 19 that purchase volumes, tariffs and technical arrangements had yet to be finalised.

The World Bank approved a $1.6bn regional electricity-integration programme in June. The 10-year Regional Energy Transmission, Trade and Decarbonization Programme for Eastern Africa (RETRADE-EA) will support transmission infrastructure and electricity-market reforms.

Its initial phase focuses on the Uganda–Tanzania interconnector and institutional support for regional electricity trading. The $1.6bn represents a regional financing programme rather than an immediate disbursement to individual countries.

See IntelliNews: World Bank backs Eastern Africa power grid integration with $1.6bn programme

Regional integration nevertheless faces institutional obstacles. The Eastern Africa Power Pool's (EAPP) planned Day-Ahead Market remains delayed by governance and technical disagreements, leaving bilateral agreements and existing interconnections as the principal mechanisms for cross-border electricity trading.

Ethiopia exported an estimated 7% of EEP's reported 35,671 GWh generation in 2025/26, equivalent to roughly 2,500 GWh, according to figures reported by Ethiopian Business Review.

However, export-volume disclosures from EEP and EEU have not been reconciled with destination-market statistics, including Kenya's regulatory data. The estimate should therefore not be treated as a definitive national export total.

Cross-border electricity sales generated approximately $140mn in foreign-currency earnings for EEP in 2025/26, according to Ethiopian Business Review. The utility reportedly earned a further $335.5mn from domestic electricity sales to data-mining and technology companies paying in dollars, bringing combined foreign-currency revenue to approximately $475.7mn.

The domestic sales are separate from electricity exports, and the reported export-revenue breakdown has not been independently reconciled with the utility's published financial disclosures.

Ethiopia's National Energy Compact targets annual electricity exports exceeding 5,000 GWh by 2030, more than twice the approximate volume reported for 2025/26, although the baseline remains subject to the reporting discrepancies.