Unilever has invested Sh70 million in an 800kW solar power system at its Nairobi factory, joining a growing number of Kenyan manufacturers turning to renewable energy to manage electricity costs and strengthen operational resilience.

The installation is expected to supply about 30 per cent of the factory’s electricity requirements and save the consumer goods manufacturer approximately Sh30 million ($230,000) annually in energy costs.

The investment comes as Kenyan manufacturers contend with some of the highest industrial electricity costs in the region, encouraging companies to generate more of their own power and reduce dependence on the national grid.

Unilever has also reduced its reliance on fossil fuels by switching its boilers from heavy fuel oil (HFO) to biomass.

The company estimates that the combined measures have lowered carbon emissions at the factory by about 40 per cent from the 2023 baseline.

“Investments like this make our operations more resilient and more competitive while reducing our reliance on conventional energy,” said João Ribeiro, Unilever’s 1UL supply chain head, who unveiled the plant at a ceremony at the factory, on Tuesday.

“The Nairobi factory is an important part of our manufacturing footprint, and this project shows how local action can contribute to our wider climate ambitions.”

The investment comes as manufacturers grapple with rising production costs, with energy accounting for a significant share of factory operating expenses.

Unilever’s Nairobi plant currently spends about Sh12 million each month on electricity. Following the solar investment, the company expects its monthly electricity bill to fall to between Sh7 million and Sh8 million, representing savings of more than 30 per cent.

The company also spends approximately Sh8 million monthly on heavy fuel oil.

“This investment demonstrates that sustainability and strong business performance can advance together,” said Elodie Kouassi, head of supply chain, East Africa excluding Ethiopia.

Unilever’s move reflects a broader shift among Kenyan manufacturers and commercial enterprises towards captive power generation.

Businesses are increasingly installing solar systems to reduce exposure to high grid electricity prices, protect production against disruptions and make energy costs more predictable.

Bamburi Cement, Mabati Rolling, Unilever Tea Kenya, Bidco Africa, British American Tobacco and Carbacid Investments are among the firms that have integrated solar power solutions into their operations.

“By increasing renewable energy use, we are reducing operational emissions, managing energy costs and strengthening the resilience of our supply chain, benefits which we can pass to consumers including cheaper products,” said Luck Ochieng, managing directo, Unilever East Africa.

However, the expansion of captive power generation is creating a challenge for Kenya Power as large commercial and industrial customers reduce the amount of electricity they purchase from the national grid.

New customer electricity sales declined by Sh1.07 billion in the year to June 2026, while consumption by new users fell by 20 per cent to 161.7 gigawatt-hours (GWh).

Official data also showed that revenue from new connections dropped by 26.41 per cent to Sh4.05 billion.

Meanwhile, businesses added 72.8MW of solar capacity during the first half of 2026, taking total commercial and industrial self-generation capacity to 676.6MW.

The development presents a growing dilemma for Kenya’s power sector. While increased solar investment supports the country’s clean-energy transition, it could also reduce electricity demand from some of Kenya Power’s most valuable customers.

Kenyan manufacturers have for years raised concerns that high electricity prices are weakening their competitiveness against producers in neighbouring countries and emerging manufacturing markets.

Industrial electricity tariffs in Kenya are estimated at between $0.18 and $0.23 per kilowatt-hour, equivalent to approximately Sh23.3 and Sh29.8 per kWh.

By comparison, electricity costs about $0.125 (Sh16.2) per kWh in Uganda, $0.08-$0.09 (Sh10.4-Sh11.7) in Tanzania, $0.01-$0.05 (Sh1.3-Sh6.5) in Ethiopia, $0.02-$0.03 (Sh2.6-Sh3.9) in Egypt and approximately $0.03-$0.085 (Sh3.9-Sh11.0) in South Africa.

The difference in electricity costs has raised concerns about the competitiveness of Kenyan manufacturers, particularly companies competing with imported goods or producers operating in markets with lower energy costs.

Electricity bills for manufacturers include several components, including energy charges, taxes and levies, transmission and distribution costs and fuel-related adjustments.

High electricity costs have also become an important consideration in investment decisions, with businesses looking for locations that offer both affordable and reliable power.

At the same time, multinational companies face increasing pressure to reduce carbon emissions across their operations and supply chains as international markets introduce stricter environmental standards.

For Kenyan manufacturers supplying global brands, reducing emissions is therefore becoming both an environmental objective and a commercial requirement.

Source: breakingkenyanews