Steel giant Abyssinia expands solar portfolio

From the newsletter

Norway-based renewable energy impact investor Empower New Energy has signed a $2.5 million agreement to develop a 4 MWp solar plant for Abyssinia Group of Industries (AGI), East Africa’s largest steel producer. The deal adds to three existing solar projects (5 MWp) already powering AGI’s Awasi steel plant, increasing the total capacity to 9 MWp.

• Commercial and industrial customers are increasingly turning to self-generation as grid power becomes more expensive, already cutting at least 15% of demand from Kenya’s national grid. 

• The Electricity Sector Association of Kenya (ESAK) projects this trend will continue, with captive power capacity expected to reach 1 GW by 2030, threatening Kenya’s utility with the loss of its most reliable and profitable customers.

More details

• Once operational, the combined plants will generate 14 GWh of clean energy annually, reducing reliance on both the national grid and costly diesel power. The ground-mounted facility will be built and operated by Spenomatic, a Nairobi-based solar engineering firm, under a 25-year power supply contract.

• Kenya’s commercial and industrial (C&I) sector has increasingly turned to self-generation as grid tariffs rise and reliability declines. In 2023, the country endured its worst year of outages, with at least three nationwide blackouts. These prolonged disruptions forced industries to depend on expensive diesel generators, and those without had to simply shut down operations.

• This crisis served as a wake-up call. Since early 2023, more than 200 MW of captive capacity has been installed. By December 2024, Kenya’s total captive capacity reached 574.6 MW, accounting for 15% of the national installed capacity. Captive power continues to attract C&I players because it is cost-effective, relatively quick to set up, and supported by government policy.

• At the same time, there is mounting pressure to decarbonise heavy industries, including mining and steel manufacturing. The Abyssinia Group of Industries (AGI), East Africa’s largest steel producer with nearly 1 million metric tons annual capacity across Kenya, Uganda, Ethiopia, and Rwanda, has now joined peers like Apex Steel and Devki Steel in adopting solar. For AGI, renewables are not only key to cutting costs but also to aligning with global climate goals.

• Jateen Patel, CEO of Abyssinia Group of Industries, said that “This fourth investment by Empower New Energy reflects the trust and results we have built together over time. Reliable and affordable energy is critical for steel production, and by expanding our renewable power portfolio, we are reducing costs, cutting carbon, and showing that heavy industry in Africa can lead the way toward a cleaner future.”

• Many African countries, such as Egypt, South Africa, and Morocco, export a large share of their products to Europe and are now grappling with how to avoid carbon taxes on their goods entering the EU market. For others focused on domestic markets, the pressure to adopt sustainable production is also rising. Ghana, for instance, introduced an emissions levy, though it was repealed by parliament earlier this year, while Kenya is considering a carbon tax on vehicles and industries, a measure supported by the World Bank.

Our take

• As more C&I players defect from the grid, Kenya Power risks losing its most reliable customers. This calls for urgent reforms in tariff design and service quality if the utility is to remain financially sustainable.

• As global buyers increasingly demand low-carbon steel, companies that adopt it will gain an edge over competitors and could capture premium export markets, particularly in Europe.

• With growing pressure from EU carbon taxes and domestic policies, renewable energy will increasingly become a requirement, pushing other heavy industries such as cement, mining, and chemicals to adopt it on a large scale.