Ideas & Debate

What changing energy strategy means for Kenya


It is no longer a surprise to hear major oil companies announce significant investments in renewable energy projects, guided mainly by need to align their future business models with the ongoing global transition from fossil fuels (coal, oil, gas ) to renewable energy (mainly wind and solar). Renewables is a fast-growing investment sector with full support from multilateral and commercial banks and equity capital.

It is also common news these days for oil majors to announce major budgetary cuts on new oil and gas projects. Also ongoing are balance sheet write-offs of marginal oil and gas reserves, which are deemed as already overtaken by the ongoing fossil to renewable energy transition. These are the hard boardroom decisions being taken by oil majors these days.

Global oil companies are no longer engaged in green tokenism (like planting trees!) but preparing their companies to transition to mixed energy companies which will also include electricity utilities.

Increasing electrification of global economies is fast replacing fossil fuels. Electrification, justified on renewable energy, is facilitated by ever evolving technologies which are fast driving unit costs down while enhancing applicability. Oil and gas are an ongoing casualty of electrification especially in areas of transportation and mobile machinery.

The European oil companies (Total, BP, Shell, Equinor) are far ahead in renewable energy investments, while their American counterparts including ExxonMobil and Chevron are much slower, explained mainly by lukewarm government energy and climate change policies which over the past four years have emphasized more oil and gas production. Will the November US elections result in a change of these policies?


Total, the French oil major recently announced major investment commitments to manufacture high performance electric vehicle (EV) batteries in Europe. By partnering with auto manufacturers, Total is planning to perpetuate its participation in motoring industry which is gradually shifting from petrol and diesel to electricity.

Earlier this year Total committed to several solar power investments in Spain and a wind farm off Scotland. The company also bought an electric and natural gas utility in Spain and is joining Shell and BP in expanding its electric vehicle charging business.

Total is also investing in energy storage systems which will enhance distribution of intermittent solar and wind generated electricity. Shell will build a vast offshore wind farm off Netherlands, while BP is investing in solar power generation on UK waters using floating solar panels.

What the oil majors are doing is to transfer vast research, engineering, production and distribution skills and experience gained in oil and gas projects and business to the renewable energy sector. A winning strategy indeed as this excellence will ensure their dominance in the wider energy sector.

Further, the weakening oil demand and price since 2014 and which was accentuated by the Covid-19 pandemic , is a wake-up call for multinational oil firms that sustainably of shareholder values cannot be guaranteed in an oil and gas sector full of volatility and uncertainty.

The European Union (EU) is a major motivator of transition to green energy through effective regulatory and fiscal policies, and this has kept the European oil majors ahead in the renewable energy game. A win-win formula for climate change goals. And China, as always, is matching every success point achieved by Europe. Yes EU, oil majors, and China are emerging as the “unlikely team” driving renewables and climate change goals.

What does all the above mean for Kenya? There will be reduced appetite for global oil majors to invest in new or existing oil and gas exploration projects in Kenya, and even harder for banks to provide capital for oil projects. Recently we saw African Development Bank refuse to participate in funding the Uganda/Tanzania crude oil pipeline, arguing it is not a renewable energy project.

Kenya will see increased competition by renewable energy investors, especially in the quick-win wind and solar. It should not surprise us to see a major oil company investing in solar or wind energy projects in Kenya, to indirectly (via KPLC) supply renewable energy for their “EV charging service stations “to service electric vehicles. Yes, I bet this will be happening in five to ten years.