UNILEVER has invested Sh70 million in an 800kW solar power system at its Nairobi factory, joining a growing number of manufacturers turning to renewable energy to cut electricity costs.
The solar installation is expected to provide about 30 per cent of the factory’s electricity needs and save the consumer goods manufacturer approximately Sh30 million ($230,000) annually in energy costs, as more Kenyan industries seek to improve the resilience of their operations.
This investment comes as manufacturers face some of the highest industrial electricity costs in the region, prompting companies to increasingly generate their own power and reduce their dependence on the national grid.
Unilever has also cut reliance on fossil fuels after switching its boilers from heavy fuel oil (HFO) to biomass.
The company estimates that the combined measures have reduced 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 is significant for manufacturers battling rising production costs, with energy accounting for a substantial portion of factory operating expenses.
Unilever’s Nairobi plant currently spends about Sh12 million a month on electricity. The company expects the solar investment to help reduce its monthly power bill to between Sh7 million and Sh8 million, representing savings of more than 30 per cent.
The company also spends approximately Sh8 million a month 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 investment reflects a wider shift among Kenyan manufacturers and commercial enterprises towards captive power generation.
Businesses are increasingly installing solar systems to reduce their exposure to high grid electricity prices, protect production from disruptions and improve the predictability of energy costs.
Bamburi Cement, Mabati Rolling, Unilever Tea Kenya, Bidco Africa, British American Tobacco and Carbacid Investments are some of the firms that have integrated solar power solutions into their industries.
“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.
The growth of captive generation, however, is creating a new challenge for Kenya Power as large commercial and industrial consumers reduce their purchases from the national grid.
New customer electricity sales dropped by Sh1.07 billion in the year to June 2026, while consumption by new users declined by 20 per cent to 161.7 gigawatt-hours (GWh).
Revenue from new connections fell by 26.41 per cent to Sh4.05 billion, according to official data.
At the same time, businesses added 72.8MW of solar capacity in the first half of 2026, pushing total commercial and industrial self-generation capacity to 676.6MW.
The trend presents a growing dilemma for the power sector, where while investments in solar support Kenya’s clean-energy transition, they could reduce demand from some of Kenya Power’s most valuable customers.
Kenyan manufacturers have for years complained that high electricity prices are undermining their competitiveness against producers in neighbouring 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.
This compares with 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 cost differential has raised concerns over the competitiveness of Kenyan manufacturers, particularly those competing with imported products or producers operating in lower-cost markets.
Manufacturers face several components in their electricity bills, including energy charges, taxes and levies, transmission and distribution costs and fuel-related adjustments.
High power costs have also become an important factor in investment decisions, with businesses seeking locations where electricity is both affordable and reliable.
Multinational companies are also under growing pressure to reduce carbon emissions across their operations and supply chains as international markets introduce stricter environmental standards.
For Kenyan manufacturers supplying global brands, lowering emissions is therefore becoming not only an environmental objective but also a commercial requirement.
