Since the establishment of diplomatic relations between China and Kenya, the bilateral relations have been steadily improved. In May 2017, China-Kenya relations were upgraded to a comprehensive strategic cooperative partnership, laying a solid political foundation for economic and trade cooperation. On April 24, 2025, witnessed by President Xi Jinping and Kenyan President William Ruto who paid a state visit to China, Minister of Commerce of China Wang Wentao respectively signed the Framework Agreement on Economic Partnership for Common Development Between the Government of the People's Republic of China and the Government of the Republic of Kenya and the Memorandum of Understanding on E-commerce Cooperation Between the Ministry of Commerce of the People's Republic of China and the Ministry of Information, Communications and Digital Economy of the Republic of Kenya in Beijing with Musalia Mudavadi, Kenya's Cabinet Secretary for Foreign and Diaspora Affairs, and William Kabogo Gitau, Kenya's Cabinet Secretary for Information, Communications and the Digital Economy. The signing of the Framework Agreement is an important measure to implement the outcomes of the Beijing Summit of the Forum on China-Africa Cooperation, providing long-term, stable and predictable institutional guarantee for China-Kenya trade and investment cooperation. After the Memorandum comes into force, Kenya will be invited to participate in themed activities such as "Silk Road E-commerce Day" and "African Good Products Online Shopping Season" in the 2025 "Silk Road E-commerce Benefits the World" initiative, injecting new momentum into the high-quality joint construction of the Belt and Road economic and trade cooperation between China and Kenya, and making new contributions to promoting the unity and cooperation of the Global South.[1]

Kenya has put forward the vision of promoting renewable energy development by 2030 in its national long-term development plan, and proposed the National Energy Policy 2025-2034 (Draft) to promote the development of renewable energy — geothermal, solar, wind and hydropower, so as to achieve the goal of universal access to electricity by 2030. Therefore, investing in renewable energy in Kenya is in a golden stage.

I. Current Policy Status of Renewable Energy Investment in Kenya

1. Renewable Energy Policy

Kenya introduced the Feed-in Tariff (FiT) policy in 2008 to drive the development of the renewable energy industry, with a subsidy of 0.12 US dollars per kilowatt-hour for solar photovoltaic projects, applicable to projects of 0.5-40MW. However, there were subsequent proposals to shift solar and wind projects from FiT subsidies to energy auctions, aiming to use the declining technology costs to promote more sustainable power procurement and development methods. In 2022, the Kenyan government announced the cancellation of fixed FiT subsidies for mature energy technologies (such as photovoltaic, wind power, geothermal) and switched to an auction system. Biomass energy and small hydropower can still enjoy FiT, but the installed capacity shall not exceed 20MW[2]. Kenya exempts value-added tax on solar products and equipment imported into the country. In addition, enterprises in special economic zones do not need to register for value-added tax (VAT), and can enjoy zero tax rate for supplying goods or taxable services to special economic zones. Imported goods used in the geothermal industry are also exempted from customs duties in Kenya.

Renewable energy projects in Kenya can also obtain loans from other international organizations, assistance from other countries and government investment for financing. For example, the Kenya Climate Innovation Center established under the infoDev initiative of the World Bank, funded by the UK Department for International Development and the Danish International Development Agency, provides incubation and other services for relevant enterprises; the Africa Sustainable Energy Fund under the African Development Bank supports renewable energy and energy efficiency enterprises through grants and equity.

2. Foreign Investment Access Policy

Kenya does not stipulate the mandatory equity ratio of foreign capital in its foreign investment access policy. In the field of renewable energy, such as solar energy and wind energy, there is no upper limit on foreign shareholding, and foreign capital is allowed to wholly control projects. However, it should be noted that the Mining Act and the Local Goods and Services Utilization Regulations require applicants to submit an "approved local goods and services procurement plan" as one of the evaluation conditions for issuing mining licenses, and shall "give priority to Kenyan-made goods and services to the greatest extent possible, submit a procurement plan and report the procurement situation on schedule".

Foreign investment entering Kenya needs to go through a dual approval mechanism, requiring both industry license from the Ministry of Energy / EPRA and foreign investment certificate from KenInvest. For example, large-scale wind power projects need to go through the REAP auction process. After winning the bid, sign a Power Purchase Agreement (PPA) with Kenya Power and Lighting Company (KPLC) and complete the Environmental Impact Assessment (EIA). At the same time, foreign investors need to set up a project company or branch in Kenya, appoint a local representative and submit a local content plan, give priority to purchasing local services and hiring local employees. Kenya promotes local economic and employment development through this measure.

Overall, Kenya's foreign investment access policy for renewable energy presents the characteristics of "open market + standardized guidance", balancing foreign interests and national development goals through auction mechanisms, tax incentives and localization requirements. Despite challenges such as land ownership and policy continuity, its rich renewable energy resources, clear regulatory framework and willingness for international cooperation still make it one of the most attractive renewable energy investment destinations in East Africa.

II. Chinese-funded Renewable Energy Projects and Investment Opportunities in Kenya

In Kenya's energy landscape, Chinese-funded renewable energy projects are playing an increasingly important role, injecting strong impetus into the local energy transition and economic development.

Among many Chinese-funded projects, the Menengai Geothermal Development Project Phase I Orpower 22 Geothermal Power Station, invested, constructed and operated by Kaishan Group, has attracted much attention. On October 24, 2024, the groundbreaking ceremony of the power station was held in Nakuru County, Kenya. It is the first geothermal power station invested, constructed and operated by a Chinese enterprise in Africa. Kenyan President William Ruto attended the groundbreaking ceremony in person, saying that the groundbreaking is a milestone, marking a historic step for Kenya towards the goal of 100% clean energy power generation by 2030[3]. Today, PowerChina and Kaishan Group have built the 35MW Sosian Menengai Geothermal Power Plant in Nakuru County. According to Tang Yan, General Manager of Kaishan Group, Kaishan Group hopes to cooperate with local governments and communities to create more employment opportunities for local people and achieve greater economic benefits.

The Garissa Solar Power Station, with an installed capacity of 55MW, is financed by the Export-Import Bank of China (with an investment of 136 million US dollars) and constructed by Jiangxi International Economic and Technical Cooperation Corporation. It is the largest grid-connected solar power station in East and Central Africa. The completion of the photovoltaic power station has further increased the proportion of renewable energy power generation in Kenya, thus promoting the further reduction of electricity prices.

On February 19, 2025, China Power International Technology Co., Ltd. and Kenya Power and Lighting Company (KPLC) held a signing ceremony for the Wajir County solar project at STIMA CLUB in Nairobi, the capital of Kenya. Kenyan President William Samoei Ruto attended the signing ceremony in person to witness this important moment. The project is an important livelihood project implemented by the Kenyan government to achieve the goal of universal access to electricity, aiming to promote the electrification services of families, enterprises, community facilities and water pumps through supporting the application of solar technology. After the completion of the project, it is expected that 30% of Kenya's administrative regions will benefit from it, providing clean electricity for 1.2 million households without electricity, which is of great significance to local people's livelihood improvement and economic development[4].

These Chinese-funded renewable energy projects not only provide clean and stable electricity for Kenya and promote its steady progress towards the goal of clean energy, but also create a large number of employment opportunities for local people, drive the development of related industries, and promote the in-depth cooperation and common development of China and Kenya in the energy field with advanced technology, efficient management and cost advantages during the construction and operation.

Chinese enterprises investing and developing in Kenya can focus on the following industries:

1. Geothermal development: Menengai Geothermal Field (465MW planned in three phases): drilling and power station EPC contractors are needed.

2. Small modular geothermal: suitable for remote areas (<10MW), with low cost and short development cycle.

3. Off-grid and micro-grid: Solar Home Systems (SHS): market penetration rate is only 25%, with more than 6 million potential users.

4. Commercial micro-grid: power supply for agricultural processing (coffee drying) and mining, with an annual market size of 200 million US dollars.

5. Transmission infrastructure: High-voltage DC lines: connecting geothermal fields and cities (such as Nakuru-Nairobi line).

6. Smart meters: The government plans to deploy 3 million units by 2030 to replace manual meter reading[5].

III. Challenges Faced by Investors

1. Limited grid infrastructure in rural and remote areas of Kenya restricts the expansion of energy projects and market access. Although East Africa is not the region with the lowest population density in Africa, the cost of expanding the power grid to rural and remote areas is still too high, making decentralized energy systems (off-grid and micro-grid) the only economically feasible power supply solution for most rural communities[6].

2. Land expropriation and compensation disputes, especially in areas with unclear land ownership or collective land rights. Although most countries have a formal legal framework providing statutory land rights, its coverage often fails to reach all rural communities, and forced implementation of land regularization is likely to trigger ownership disputes. In recent years, land litigation cases caused by external capital construction of large-scale energy infrastructure in Kenya, Uganda and other places have surged, bringing great difficulties for governments to achieve energy goals. Therefore, establishing an efficient land dispute mediation mechanism and ensuring legal and stable land use right for more than 20 years (the life cycle of photovoltaic projects) at the project initiation stage will be an important guarantee for the smooth implementation of the project[7].

3. Inefficient administration among different government agencies leads to slow coordination and project implementation progress. It can accelerate approval through KenInvest's "one-stop service" and hire a legal team to handle compliance affairs.

IV. Legal Services Related to Renewable Energy Investment Projects in Kenya

Tiandiren Law Firm will cooperate with the Kenya office in an integrated manner to jointly provide the following legal services for Chinese enterprise clients investing in renewable energy in Kenya:

1. Legal Due Diligence

Including credit investigation of the target company and product investigation.

2. Investment Structure Design

According to the latest revised Companies Act of Kenya and the actual needs of clients, combined with the characteristics of different types of companies in Kenya, select the most suitable type of company for clients; then draft, review and modify relevant documents; assist clients in designing a compliant equity structure and shareholder agreement.

3. Approval and Filing of Outbound Direct Investment

We will assist enterprises in completing all Chinese government approval or filing procedures involved in investing in renewable energy in Kenya in accordance with relevant Chinese laws and regulations on overseas investment, communicate with all relevant government departments on specific approval or filing requirements and documents to be submitted, and perform such government approval or filing procedures.

4. Tax Planning

Sort out the taxes applicable to different types of enterprises, analyze industry-specific tax policies, assist clients in identifying available tax incentives, and formulate compliant tax declaration strategies; combined with international tax treaties, optimize the cross-border shareholding mode to reduce the overall tax burden of cross-border capital flows such as dividends and capital gains; at the same time, ensure compliance with Kenya's foreign investment registration and foreign exchange management requirements. At the same time, assist clients in planning the profit repatriation path, avoid tax disputes, while using treaty preferences to reduce the withholding tax burden, balance business goals and compliance requirements, cope with possible tax inspections or policy change risks, and provide legal support for tax compliance review and dispute response.

5. Renewable Energy Infrastructure Construction

(1) Bidding legal services: conduct legality review on bidding documents, identify potential legal risks; assist clients in handling bidding disputes; provide bidding legal training and international engineering bidding practices.
(2) Contract review and drafting: draft or review cooperation contracts, equipment procurement contracts, subcontracts, etc.
(3) Construction performance stage management: evaluate possible legal risks for clients during the performance stage, send early warning information in a timely manner, and provide solutions and remedial measures in the face of illegal breach of contract risks. Timely monitor the contract performance of partners, and take preservation or litigation arbitration measures when necessary.

6. Cross-border Labor and Human Resources Compliance

(1) Labor Law Research
Provide a comprehensive legal research on Kenya's labor legal environment; analyze the legal status of trade union organizations and employees' collective bargaining rights, and remind the compliance risks of trade union intervention in projects; investigate the foreign employee work permit system; verify the special qualification requirements of the renewable energy industry (such as the certification procedure of practicing certificates for engineers and skilled workers).

(2) Labor Contract and Compliance Review
Draft labor contracts to ensure compliance with Kenyan law; provide compliance review for the employment of foreign employees; design localized employee management plans and provide legal compliance suggestions.

7. Dispute Resolution

(1) Mediation: assist clients to formulate dispute resolution solutions through local mediation institutions in Kenya or international mediation procedures, facilitate the two parties to reach an agreement, efficiently resolve disputes, and reduce confrontation and dispute resolution costs.
(2) Arbitration: ensure that the arbitration agreement clearly defines the dispute matters and procedural rules in written form, represent the initiation of arbitration procedures and submit applications or statements of defense, assist in the selection of arbitrators and handle disputes related to the formation of the arbitral tribunal, guide evidence sorting and hearing participation, follow up the award-making process and review its legality, and represent the application to the court for compulsory enforcement or cross-border recognition if the other party fails to perform the award.
(3) Litigation: represent clients in court litigation procedures, handle jurisdiction disputes, evidence submission and court defense, provide litigation strategies for complex disputes, and pay attention to the legal path for the recognition and enforcement of foreign judgments in Kenya.

8. Training on Renewable Energy Investment in Kenya

Design a training system of "Practical Compliance Training for Renewable Energy Investment in Kenya", covering core fields such as labor law, environmental protection law and dispute resolution; combined with typical cases, provide scenario-based legal practice training such as EPC contract risk prevention and control and labor dispute response strategies. Special training (such as tax compliance, foreign exchange management) can be customized according to customer needs to improve the team's localized operation ability.

References

[1] China and Kenya Signed Economic and Trade Cooperation Documents, China Service Trade Guide Network, Ministry of Commerce of the People's Republic of China.
[2] Changed to Auction System! Kenya Cancels Photovoltaic Feed-in Tariff Subsidies. https://news.solarbe.com/202208/01/357753.html
[3] Geothermal Power Station Invested, Constructed and Operated by Chinese Enterprise Starts Construction in Kenya, China Belt and Road Portal.
[4] China Power International and Kenya Power and Lighting Company Signed Wajir County Solar Project. https://www.chinca.org/sjtcoc/info/25022608560911
[5] 83% Green Electricity + 0.07 USD Cost: Kenya — The Only Investment Blue Ocean of 'Renewable Energy Freedom' in Africa, Kaiju Exhibition Official Account.
[6] Liu Bingcai, Shen Wei. Analysis and Development Suggestions on the Potential Application of Photovoltaic Agriculture in East Africa, IIGF Views.
[7] Liu Bingcai, Shen Wei. Analysis and Development Suggestions on the Potential Application of Photovoltaic Agriculture in East Africa, IIGF Views.