Will Kenya’s geothermal push spark a hydrogen shift in Africa?

From the newsletter

Kenya's state-owned electricity generator, KenGen, has announced that its 63 MW Olkaria 1 geothermal plant is 70% complete, with the first turbine expected to be operational by June 2026. Officials say geothermal’s high reliability gives Kenya a unique edge in building a cost-competitive and scalable green hydrogen economy.

• The East African Rift System holds vast geothermal potential across Kenya, Ethiopia, Tanzania, Uganda, Djibouti and Eritrea, yet most have yet to harness it, potentially missing a strategic opportunity to pair it with green hydrogen.

• Kenya may offer a roadmap for other African countries to de-risk investment, localise technology and scale clean hydrogen using untapped geothermal resources.

More details

• Speaking at the recent Africa Energy Forum in Cape Town, South Africa, KenGen's Managing Director and CEO, Engineer Peter Njenga, announced that essential equipment for the 63 MW Olkaria 1 project, including steam turbines and generators, has been successfully delivered to the site.

• On the sidelines of last week’s Green Hydrogen Summit in Cape Town, KenGen Investment Manager Paul Wambugu highlighted how Kenya’s geothermal expertise is shaping its green hydrogen ambitions.

• “Kenya has a unique position in this discussion,” said Wambugu. “One of the key energy sources for green hydrogen is geothermal alongside wind and solar but unlike solar, geothermal provides 98% availability.” He noted that this reliability is crucial to lowering the long-term cost of green hydrogen production.

• Mr. Wambugu explained that Kenya is now applying its successful geothermal production model to green hydrogen, aiming to replicate the same cost curve benefits. Both technologies are capital intensive upfront, particularly for infrastructure and specialised equipment like electrolysers, but become more affordable with scale, experience and localised supply chains.

• “Geothermal and green hydrogen share similarities in cost structure,” he said. “Initial investment is high but with consistent development and localisation of technology the costs reduce. This is the journey we are on now with green hydrogen.”

• This aligns with the African Green Hydrogen Report, which identifies Kenya’s access to dispatchable geothermal energy as a key advantage, contributing a significant portion of its total power generation mix. According to the Kenya Green Hydrogen Strategy, while geothermal carries inherent risks, particularly high upfront costs for scientific studies, exploration and appraisal drilling, it remains the most favourable option for green hydrogen production. The strategy estimates a levelised cost of hydrogen (LCOH) at $4–5/kg using geothermal, thanks to its high load factor (above 90%).

• However, to reach cost parity with fossil hydrogen (around $2/kg), the cost of geothermal electricity would need to drop to $25–30/MWh, assuming no financial support mechanisms. Optimisation of the development cycle, such as shortening drilling timelines, is expected to help further lower geothermal power costs in Kenya.

• Kenya’s strategy to pair geothermal with green hydrogen is grounded not just in ambition but in a proven and exportable model. Geothermal already accounts for about 40% of Kenya’s electricity mix and KenGen delivers some of the lowest-cost electricity on the continent. At KSh8 per kWh, its geothermal power is significantly cheaper than electricity from independent producers, KSh17 for geothermal and KSh15 for wind, offering a major advantage especially since electricity is the dominant input cost for green hydrogen production.

• This cost competitiveness is a key reason Kenya’s geothermal is seen as a strategic enabler of its hydrogen future. With 98% availability, geothermal provides the steady, reliable baseload power that electrolysis requires, unlike intermittent sources such as wind and solar.

• KenGen officials argue that this reliability, combined with falling geothermal technology costs, could make Kenya’s hydrogen economy both bankable and scalable. Global studies suggest geothermal costs could decline by as much as 80% by 2035, making it one of the most affordable dispatchable and low-emission energy sources.

• Kenya is also exporting its geothermal expertise. In Ethiopia, KenGen is drilling wells for a 150 MW geothermal project in the Oromia region, demonstrating its growing regional influence. The East African Rift System, which spans Kenya, Ethiopia, Tanzania, Uganda, Djibouti and Eritrea, remains largely untapped, with only Kenya and Ethiopia making significant progress. Tanzania targets 200 MW and Uganda 1,500 MW by 2030 but both remain behind schedule.

• If Kenya’s model is replicated across the Rift, geothermal could shift from an underutilised asset to a cornerstone of Africa’s green hydrogen development. Both geothermal and hydrogen share capital intensive upfront costs but offer long-term affordability through scale and localisation. Aligning the two can help de-risk infrastructure, localise value chains and build capacity in electrolysis, transport and storage.

Our take

• Kenya is setting a precedent for clean hydrogen development anchored in local energy strength, a model that could help other African countries build affordable, scalable hydrogen economies with greater self-reliance.

• Hydrogen planning must align with existing energy strengths, as Kenya’s success with geothermal shows that matching strategy to local context, particularly in Rift Valley countries, can reduce risk, lower costs and accelerate industrial decarbonisation.

• Kenya’s expanding geothermal footprint, both at home and in Ethiopia, signals potential for regional hydrogen hubs. With coordination, shared infrastructure and financing tools, East Africa could transform its geothermal belt into a backbone for clean fuels and industrial competitiveness.