Q&A: Kenya’s phased approach to green hydrogen regulation

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As Kenya pursues its green hydrogen ambitions, Eng. Mungai Kihara of EPRA says the country is taking a strategic phased approach to regulation as it seeks to balance market development within the evolving green hydrogen sector. He argues that because the industry is still developing, the focus is on creating a regulatory environment that encourages investment without imposing overly stringent measures too early. 

• Eng Kihara is the Deputy Director of Renewable Energy at Kenya’s Energy and Petroleum Regulatory Authority (EPRA), the body responsible for green hydrogen policies and regulations.  

• “Our thinking is that we are not yet at the stage of having full green hydrogen regulations. Regulations are usually developed when you already have a very large market. Right now, we do not yet have many players in the sector. So, we felt guidelines would be a better starting point,” he says.

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One issue that consistently came up during the 4th Green Hydrogen Symposium was the policy and regulatory environment for green hydrogen in Kenya. From EPRA’s perspective, how would you assess the country’s current regulatory readiness for green hydrogen development? 

Eng. Mungai Kihara: We are not yet there but as one of the people involved in developing this framework, I would say we have done quite a lot. We started in 2021 with a baseline study that helped us understand the value chains, the policy needs, and what we needed to do to develop green hydrogen in Kenya. From that baseline study, we developed the Kenya Green Hydrogen Strategy and Roadmap. That gave us a roadmap that we are currently following. 

One of the key things for us was developing green hydrogen guidelines as a starting point for future regulations, while also integrating green hydrogen into the national energy policy. Our thinking is that we are not yet at the stage of having full green hydrogen regulations. Regulations are usually developed when you already have a very large market. Right now, we do not yet have many players in the sector. So, we felt guidelines would be a better starting point. That also helps people come in without having to deal with overly stringent measures at this stage.  

Within the guidelines, we still require developers to follow standards set by the Kenya Bureau of Standards, although the framework is not yet as enforceable as formal regulations. The idea is to encourage more people to come in, develop and invest in green energy.  So, I can say we are not yet there, but we are on the right path.  Another important step is that green hydrogen has now been incorporated into the national energy policy, which was approved by the Cabinet last year. Of course, some players will say we are not yet there, and at the same time, we also need to move faster. 

From EPRA’s perspective, what do you see as some of the biggest challenges or missing pieces that still need to be addressed for Kenya’s green hydrogen ambitions to scale successfully? 

Eng. Mungai Kihara: There may be some gaps, especially around financing. One of the biggest challenges is that the sector is still evolving, and there is still uncertainty around what to fully expect. It becomes difficult to attract financing when technology is still advancing and the risks are not yet fully understood. And when risks are unclear, investor appetite also becomes limited. That is one reason progress remains slow, because it becomes difficult to attract enough investors into the sector.  

The other thing I see is demand. Remember, hydrogen is hydrogen. The main difference is how it is produced. Conventional hydrogen, which is cheaper and already widely used in fertilizer production, is still readily available in the market. A farmer in Eldoret or Central Kenya does not necessarily care whether the fertilizer is green or not green. So, demand for green hydrogen and its derivatives is still low largely because prices remain high. If we can bring down the price — and this is a global issue, not just a Kenyan one — then demand will start growing. At the end of the day, you cannot invest in production if there is no market for what you are selling. You set up production because there is already demand for the product. So even the early movers are actually taking a very big risk when they start doing this, but there will always be someone willing to take the first step.

Those are the gaps I have seen. The challenge now is how we work through these issues. I believe together with the National Treasury, we need to develop innovative financing mechanisms through public-private partnerships. The government can take on part of the risk while the private sector takes another portion. That way we can support hydrogen development while also lowering costs.  Even investors willing to put in capital will demand higher returns because of the risks involved. That ultimately pushes prices higher because the overall cost of projects remains high.  All the costs are quite high. So that is something we are actively trying to figure out. 

Green hydrogen development also raises important questions around safety, certification and standards, especially for future export markets. How is EPRA approaching these emerging requirements?

 Eng. Mungai Kihara: Safety is always the first thing we focus on. With green hydrogen, we have made it clear that the infrastructure and processes must adhere to safety standards and renewable energy standards set by the Kenya Bureau of Standards. On that, we are very keen. We cannot develop technology by losing people or injuring people. That is key. Safety standards have to be adhered to. In fact, if a project does not meet those standards, we will not approve it.

 On standards, I can also add certification. Certification is still a work in progress, especially when you look at the export market. Currently, our strategy is more focused on the domestic market, which is why we talk about fertiliser as one of the low-hanging fruits. But once you move into export markets, standards and certification become extremely important. Someone in Germany or America must be able to verify that what is being exported is actually green hydrogen. As I said, conventional hydrogen and green hydrogen have the same chemical composition. The only difference is how the hydrogen is produced. Green hydrogen is mainly produced using renewable energy or low-carbon technologies such as solar, wind and geothermal.  

So we have to ensure, as a government, that hydrogen labelled as green hydrogen is genuinely produced from renewable energy sources. That is very important for export markets, and it is part of the certification work we are currently undertaking. EPRA has also been approved as an issuer of International Renewable Energy Certificates, and we want to build on that certification framework for green hydrogen. 

One concern emerging across Africa’s green hydrogen sector is whether hydrogen production could compete with domestic electricity access, especially in countries still working toward universal electrification. From a policy perspective, how is Kenya approaching that balance 

Eng. Mungai Kihara: When we were developing the green hydrogen derivative guidelines, which are a precursor to future regulations, we included a chapter on sustainability and what needs to be adhered to for the sustainable development of green hydrogen derivatives. One key thing about sustainability is that we are looking at three areas: electricity, water and the local community. On electricity, our position is that people must first have access to electricity before power is used for green hydrogen production. So in terms of priority, access to electricity for people comes first before industrial hydrogen production. And this mainly applies to projects drawing electricity from the national grid.

But if a developer decides to establish its own captive power generation, then it becomes a different case because they are managing their own electricity supply. For projects using electricity from the national grid, we prioritise public access to electricity before industrial hydrogen production. It is very important for us to ensure communities get electricity. Remember, we are yet to achieve universal electricity access. We are currently at around 75% to 80%, and that remaining 20% to 25% is the difficult part. Many of these communities are more dispersed and harder to connect compared to areas already electrified. Some are even pastoral communities that keep moving from one place to another.

So, it is very important to make sure these communities get electricity first. That means if you are using electricity from the grid, then there has to be proper balancing to ensure hydrogen production mainly happens during periods of lower demand so that people are not negatively affected. 

Through EPRA’s engagements with industry players and developers, what would you say are some of the biggest concerns investors currently have about developing green hydrogen projects in Kenya?  

Eng. Mungai Kihara: The big one has been how do we incentivize demand? We are saying on the supply side, we are good. But how do we work together as the public and private sector to incentivize demand? And one key area of concern for us is the cost of electricity from the national grid. Even many industrial players argue that electricity costs from the national grid remain quite high. And it's from it that we say that if the electricity from the grid is that high, then as a government, we allow you to do a captive power plant for private use. Some are doing even 2 gigawatts, that's really big for their own production. 

The idea is to ensure investors interested in green hydrogen projects can still access reliable electricity. If you develop a captive power plant, then you are in control of your own electricity costs. You are also able to manage the financing costs, EPC costs and overall project costs more directly. That gives developers greater control over the electricity costs that feed into production. 

In your opinion, what is the single most important intervention needed right now to accelerate Kenya’s green hydrogen sector? 

Eng. Mungai Kihara: Financing and risk mitigation remain major issues. If we are able to address those issues and lower production costs, then demand will also begin to grow because green hydrogen will be able to enter the market at a more competitive price. So innovative financing mechanisms, where different sources of capital can be brought together would be a good focus. There are already some resources available, but we need to create the right environment to attract more innovative financing from additional sources. In fact, one of the next roundtables we want to organise is focused specifically on financing. So, in this, bring the private sector, bring the banks, commercial banks, banks, government, and have a discussion about what we really need to work on together. 

Policy doesn’t come from one person. It comes from a conversation that’s held by people and the government also has a role to play in opening up sectors such as green hydrogen. The financing roundtable could help significantly, particularly by allowing financial institutions to explain the barriers preventing them from financing green hydrogen projects. From those discussions, we can then develop a stronger policy framework that supports financing. The projects exist, but many are still struggling to move forward because of financing challenges.

And as was mentioned by Catherine Irura of the Green Hydrogen Association of Kenya (GHAK) in her speech during the symposium, financing remains one of the key issues facing the sector. 

 What message would EPRA like to send to developers and investors considering opportunities in Kenya’s green hydrogen sector? 

Eng. Mungai Kihara: We have come from far, although we are not there yet. There is still more to work on. But this cannot be worked on by the government alone. But I believe the government and the private sector can work together to develop green hydrogen. We will need to work together and I'm a big believer of collaboration and partnership. No one has a monopoly of knowledge or information. But when we work together, we can go far.