Why cities must take charge of their energy future

At the Energy Investor Roundtable during the forum, city leaders voiced frustration over high energy costs and the slow pace of transition. Investors tend to prioritise large-scale projects, yet cities can achieve immediate impact through smaller, modular interventions. Donors are increasingly willing to support models that minimise upfront costs while delivering long-term infrastructure resilience.

One promising approach is Energy-as-a-Service. Under this model, a private investor finances and maintains solar installations, ensuring optimal system performance. Instead of shouldering high initial costs, cities pay for energy as a service. In essence, the cities avoid the risk of paying for nonfunctional panels and instead, only pay for the electricity generated under the service agreement. Over time, they can choose to take ownership of the system or renegotiate terms for continued service. Throughout the service duration, cities can gradually build operational expertise while mitigating financial risks.

However, for most investors, cities must still address the risks associated with this kind of investment to guarantee that their capital will be repaid. De-risking instruments such as city investment corporations provide a pathway to mitigate these risks. This requires creating an independent investment vehicle subject to corporate law shielding it from political transitions and immunity from rash decisions. This will also help extend the sunset for county projects beyond the medium term into the long term range with a 10 or 15-year cycle.

Mombasa is already adopting this approach through the Mombasa Investment Corporation, which serves as a financial entity that can de-risk energy projects by ensuring that payments to energy service providers are secured. These city service companies operate under corporate law and can enter contracts with energy service providers to pay for energy supplied. They can be funded directly by the city or leverage innovative financing models such as city green bonds, which allow municipalities to crowdsource public and private funding for energy projects.

Mombasa is already setting the pace with a 1MWp solar photovoltaic and energy efficiency transition at Coast General Hospital. The project, presented to investors at the Energy Investors Roundtable, proves this concept. Instead of the county shouldering the upfront cost of around Sh179 million, a private investor can fund and manage the project. This means the city avoids a heavy financial burden while still benefiting from reliable, clean energy. The investor will see positive cash flows within the first year, the hospital will save 15 per cent on energy costs while cutting CO2 emissions by 755 tonnes annually.

City leaders must take control of their energy future. The solutions exist, the funding is available, and the impact on cost savings and climate resilience is undeniable. How quickly cities make the shift will determine the speed at which quality and reliable energy services are attained in the counties. This will define the future of public services and urban sustainability. As we head to the middle of the second decade of devolution, it is important that counties explore possibilities of venturing into long-term projects with more complex technical and financial requirements.