Some of East Africa’s most ambitious energy infrastructure projects are facing delays that threaten to undermine the economic gains the region has built over the past decade. Hydropower plants are operating below capacity due to declining water levels. Geothermal expansion is progressing more slowly than anticipated. And the window of opportunity to lock in the investment needed to meet rising electricity demand is narrowing with each passing quarter.
The story of East Africa’s energy transition was supposed to be one of the continent’s great development successes. Kenya positioned itself early as a leader in geothermal energy, leveraging the Rift Valley’s tectonic geology to build a power sector that, at its best, supplies a significant portion of the national grid with clean, baseload electricity at competitive cost. Ethiopia built the Grand Ethiopian Renaissance Dam — a project that, despite years of controversy over Nile water rights, represented a transformative bet on the country’s industrial future. Tanzania invested in new transmission infrastructure and opened the door to independent power producers.
What has emerged from that optimism is more complicated.
The Water Problem
East Africa’s hydrological cycle has been behaving unpredictably. Multi-year droughts have reduced the flow in rivers that feed key hydroelectric facilities. In Kenya, the share of power generated from hydro has fluctuated sharply — and when rainfall is poor, the country has had to fall back on thermal generation, which is more expensive and more polluting. That fallback has created a dilemma for the country’s energy planners: how to manage the risk of dry years without locking in the kind of fossil-fuel infrastructure that will become increasingly costly as global carbon pricing tightens.
The problem is not unique to Kenya. Tanzania’s hydroelectric output has been volatile. Uganda, which relies heavily on the Victoria Nile for its own generation, has faced intermittent shortfalls. The cumulative effect is that East Africa’s energy planners are spending more time managing crises than building the forward capacity the region needs.
Geothermal: The Strategic Bet That Is Paying Off, Slowly
The bright spot in the regional energy picture remains geothermal. Kenya’s Olkaria complex — one of the largest geothermal power facilities in the world — continues to expand, and the country’s state-owned electricity company, KenGen, has been adding generation capacity at a pace that is genuinely impressive by continental standards. Kenya’s stated ambition to become a net exporter of electricity — leveraging its geothermal advantage to supply neighbours through the Eastern Africa Power Pool — is no longer a fantasy, though it remains conditional on transmission infrastructure being built.
The challenge is that geothermal development is capital-intensive, slow, and technically complex. The sites that offer the greatest potential require deep drilling, and the upfront costs are substantial enough that private investment alone cannot fund the pace of expansion the region needs. Government subsidy and multilateral development finance remain essential — and in a climate where fiscal space is constrained by debt service obligations and competing demands on public budgets, keeping the funding flowing to geothermal projects is not guaranteed.
The Transmission Gap
Even where generation capacity is being added, the grid infrastructure needed to deliver that power to end users remains a serious bottleneck. East Africa’s transmission networks were built largely for a different era — to connect a handful of large generators to major population centres, not to handle the distributed, bidirectional flows that a modern energy system requires. Connecting new renewable generation to the grid, and moving power between countries that have different standards and different regulatory frameworks, demands investment that has been slow in coming.
The African Development Bank has estimated that closing East Africa’s transmission gap requires several billion dollars in investment over the next decade. Some of that money is being mobilised through the Africa’s Power Pools initiative and bilateral development finance from countries including China, France, and Germany. But the pipeline of projects is shorter than the need, and the implementation timelines are longer than the region can comfortably afford.
The Industrial Stakes
Why does this matter beyond the energy sector? Because the pace of East Africa’s industrial development — and the competitiveness of its manufacturers, its data centres, its mining operations, and its emerging tech sector — depends on having reliable, affordable electricity. Countries that cannot guarantee supply will lose investment to competitors that can. The irony is that East Africa has the resources — geothermal heat, solar irradiation, wind, hydro potential — to be the continent’s most power-surplus region. The gap between potential and reality is one of execution, finance, and institutional capacity.
For the governments involved, the message from energy analysts is consistent: the window for locking in the investment needed to transform the region’s energy future is not closed, but it is narrowing. The projects that get approved in the next two to three years will determine whether East Africa becomes a model for continental energy transition or another case study in the gap between ambition and delivery.