Electricity bill savings in Kenya have reached Sh8 billion over the past five years as more industrial and business consumers have shifted their production to off-peak hours. This shift has been driven by a discounted consumer tariff known as Time of Use (ToU), which provides eligible commercial, industrial, and e-mobility customers with a 50 percent discount on energy charges during off-peak hours. The ToU tariff has been in place since December 2017 and was extended to small commercial and electric mobility customers in April 2023.
According to official data, firms saved Sh1.87 billion on their electricity bills in the year ended June 2026 through the off-peak preferential tariffs. This adds to the Sh6.26 billion they slashed between July 2021 and June 2025. The increasing adoption of the ToU tariff has led to more firms benefiting from the scheme, with 2,614 businesses taking advantage of it in the year to June 2026, compared to 2,339 a year earlier and 1,248 firms in the year to June 2022.
The ToU tariff applies to 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. This allows firms to get discounts on their base electricity tariffs once they meet consumption targets, significantly lowering their power bills despite increased electricity use. The scheme aims to flatten the demand curve, enhancing grid stability and optimising the utilisation of available generation capacity.
Despite the savings, costly electricity remains a major headache for businesses in Kenya. The World Bank estimates the average cost of a kilowatt-hour (kWh) at $0.23 (Sh29.8), which is significantly higher than in neighbouring economies. Industrial tariffs in Kenya 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 Egypt, Ethiopia, and Morocco.
The high cost of electricity has ballooned production costs for businesses, ultimately leading to pricey goods and services as firms pass these high costs to consumers. To mitigate this, the introduction of ToU in December 2017 aimed to encourage increased electricity consumption by commercial and industrial customers during off-peak hours. The preferential tariff has been successful in driving Kenya Power’s electricity sales and boosting production.
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 currently charged between Sh12.28-Sh18 per kWh in the base tariff, compared to a range of Sh12.28-Sh20.18 in 2023. The base tariff is a single component of a power bill, with other components including fuel surcharge, Value Added Tax of 16 percent, forex adjustment, and energy regulatory levy.
As the demand for electricity continues to grow, Kenya Power is exploring ways to manage the increasing demand and reduce costs for consumers. The company is eyeing Sh2 billion savings on solar, and Kenyans will soon be able to sell extra electricity in new metering rules. The ToU tariff has been a step in the right direction, providing relief to businesses and encouraging efficient use of electricity during off-peak hours.
Key points
- Kenyan firms have saved Sh8 billion in five years by shifting production to off-peak hours.
- The Time of Use tariff has been extended to small commercial and electric mobility customers.
- Kenya's electricity prices are among the highest in the region, materially increasing production costs for formal, quality-compliant producers.
