Africa stands at a critical juncture in its energy development. With a rapidly growing population and economy, the demand for electricity is surging. However, the continent faces a dual challenge: extending energy access to the 600 million people who still lack it, while simultaneously transitioning to a cleaner, more sustainable energy future.
For decades, the centralized grid has been the backbone of Africa's energy infrastructure. However, many of these grids are now struggling to keep up with the demands of the 21st century. A recent report by the Rocky Mountain Institute (RMI) highlights the dire state of many African utilities, which are often operating manually with outdated, analog systems [1]. This leads to significant inefficiencies, with many utilities having limited knowledge of their customer base or even the location of their own assets.
The financial health of these utilities is also a major concern. Only 16 out of 70 utilities in sub-Saharan Africa generate enough revenue to cover their costs [1]. This is exacerbated by high technical, commercial, and collection (ATC&C) losses. In Nigeria, for example, ATC&C losses are as high as 49.5%, meaning that for every 100 kWh of electricity generated, only about 50 kWh are actually billed and paid for [1]. If these losses could be eliminated, and the full installed capacity of the grid utilized, Nigerian utilities could generate eight times more revenue without building a single new power plant [1].
In response to the shortcomings of traditional grids, a market-driven transformation is underway across Africa, led by the rapid proliferation of off-grid solar solutions. As noted by Corporate Knights, off-grid solar is "redefining energy in Africa" by doing what national grids have failed to do: deliver reliable and affordable electricity to millions of people [2].
The World Bank and the African Development Bank have recognized the immense potential of off-grid solutions, launching the Mission 300 initiative to connect 300 million people in Sub-Saharan Africa to electricity by 2030, with off-grid solar expected to provide about half of this new access [3]. The impact of this revolution is already being felt. Over 560 million people globally are now benefiting from off-grid solar, the majority of whom are in sub-Saharan Africa [3]. This has not only improved living standards but has also created significant economic opportunities, with the off-grid solar industry already employing over 65,000 people on the continent [3].
Kenya provides a compelling case study of the energy transition unfolding across Africa. The country is simultaneously grappling with the challenges of its aging grid infrastructure while also emerging as a global leader in the off-grid solar market.
Kenya Power, the national utility, is facing significant grid management problems. According to a report from African Energy, the utility's losses and outages increased in the second half of 2024 [4]. These challenges are not new. A 2018 report by the Energy for Growth Hub highlighted the "seven major threats to Kenya's power sector," including the challenges of integrating intermittent renewable energy sources into an inflexible grid [5].
In stark contrast to its on-grid struggles, Kenya has become a beacon of success for the off-grid solar industry. The country's supportive policy environment, including tax exemptions for solar products, has been pivotal in developing a thriving market that now supplies over 10% of the population with electricity [3]. This has led to a burgeoning market for a wide range of off-grid solar applications, from agricultural equipment to ICT solutions.
Mini-grids are emerging as a crucial third pillar in Kenya's energy strategy, bridging the gap between the centralized grid and standalone solar home systems. However, the development of commercially viable mini-grid projects has been challenging, with firms facing significant investment and regulatory uncertainty [8]. Despite these hurdles, a number of private mini-grid companies are finding success in Kenya, demonstrating the potential of this technology to bring reliable power to underserved communities.
A supportive policy environment is essential for attracting the private sector investment needed to achieve universal energy access in Africa. Kenya's National Energy Policy 2025-2034 and National Energy Compact 2025-2030 provide a clear roadmap for the country's energy future, with a strong emphasis on decentralized energy solutions, including mini-grids and micro-grids [9, 10].
At a continental level, there is a growing recognition of the need to improve grid infrastructure, simplify regulations, and foster regional collaboration to unlock Africa's vast renewable energy potential [11].
The future of energy in Africa will be defined by a more integrated and intelligent energy system. The RMI report outlines a three-phase approach for utilities to modernize their grids, moving from stabilizing system performance to modernizing grid function and ultimately transforming the electricity system to enable new business models like virtual power plants [1].
Grid-Enhancing Technologies (GETs) will play a crucial role in this transformation. These technologies, which include dynamic line ratings, advanced power flow controls, and digital twin technology, can expand the capacity of existing grids faster and more cheaply than traditional infrastructure upgrades [1].
Africa's energy landscape is in the midst of a profound transformation. The traditional model of a centralized grid is being challenged by the rise of decentralized, off-grid solutions. Kenya's experience demonstrates that a hybrid approach, combining the strengths of both on-grid and off-grid systems, is the most effective path to achieving universal energy access. By embracing innovation, fostering private sector investment, and creating a supportive policy environment, African nations can not only solve their energy dilemma but also leapfrog to a cleaner, more resilient, and more equitable energy future.
[1] RMI. (2025, October 1). The Opportunity for Grid Connectivity, Intelligence, and Flexibility in Africa. https://rmi.org/the-opportunity-for-grid-connectivity-intelligence-and-flexibility-in-africa/
[2] Corporate Knights. (2025, March 13). Off-grid solar is redefining energy in Africa. https://www.corporateknights.com/energy/off-grid-solar-africa-energy/
[3] World Bank. (2025, April 8). Mission 300: Unlocking capital for off-grid solutions in Africa. https://blogs.worldbank.org/en/energy/mission-300--unlocking-capital-for-off-grid-solutions-in-africa
[4] African Energy. (2025, April 22). Kenya Power’s grid management problems worsen. https://www.africa-energy.com/news-centre/article/kenya-powers-grid-management-problems-worsen
[5] Energy for Growth Hub. (2018, October). The Seven Major Threats to Kenya's Power Sector. https://energyforgrowth.org/wp-content/uploads/2018/10/Kenya-Power-Sector-Priorities-1.pdf
[6] APRI – Africa Policy Research Institute. (2025, June 30). Energising Africa: enabling private sector development in renewable energy. https://www.africaportal.org/publications/energising-africa-enabling-private-sector-development-renewable-energy/
[7] IEA. (2025, April 14). Kenya's energy sector is making strides toward universal electricity access, clean cooking solutions and renewable energy development. https://www.iea.org/news/kenyas-energy-sector-is-making-strides-toward-universal-electricity-access-clean-cooking-solutions-and-renewable-energy-development
[8] Stockholm Environment Institute. (2025, June 11). Grid expectations: how mini-grid firms are managing investment and regulatory uncertainty in Kenya. https://www.sei.org/perspectives/mini-grid-firms-investment-regulatory-uncertainty-kenya/
[9] Ministry of Energy & Petroleum, Kenya. (2025, February 18). National Energy Policy 2025 – 2034. https://www.energy.go.ke/sites/default/files/Final%20Draft%20%20National%20Energy%20Policy%2018022025.pdf
[10] Ministry of Energy & Petroleum, Kenya. (2025, August 22). Kenya National Energy Compact 2025 – 2030. https://www.energy.go.ke/sites/default/files/Kenya%20National%20Energy%20Compact%2022AUG2025%20(1).pdf
[11] Tech In Africa. (2025, January 19). Comparing Renewable Energy Policies in Africa. https://www.techinafrica.com/comparing-renewable-energy-policies-in-africa/