Manufacturers Turn to Biomass as Diesel Costs and Forex Pressure Bite
By Chemtai Kirui
Nairobi, Feb 13 — Unga Farm Care (EA) Ltd, a subsidiary of Unga Group Plc that produces animal feeds and agricultural inputs, has replaced diesel-fired steam generation at its Nairobi manufacturing plant with a biomass boiler, a move the company says could cut thermal energy costs by about 45 per cent and reduce annual foreign exchange outflows by roughly KES 129 million.
The system, installed by Lean Energy Solutions under a 10-year build-and-operate agreement, will displace an estimated 1.08 million liters of diesel each year, according to the company. Under the arrangement, Lean Energy finances and operates the plant, while Unga purchases steam rather than investing upfront capital.
Diesel used in industrial steam production is imported and priced in U.S. dollars, exposing manufacturers to exchange-rate movements and global fuel price volatility.
Speaking at the launch held at the Unga offices in the Industrial Area, the Founder and Managing Director of Lean Energy Solutions, Dinesh Tembhekar, described the project as a renewable thermal energy partnership model designed to lower capital barriers for manufacturers seeking cleaner alternatives.
“Industrial thermal energy is one of the biggest cost centers in manufacturing, yet it is rarely treated as a strategic lever,” said Tembhekar. “This project proves that manufacturers can cut costs, reduce forex exposure, and decarbonize at the same time.”
Analysts and industry reports note that while industrial biomass adoption offers cost and carbon benefits, its success depends on sustainable feedstock sourcing and stable supply chains.
The electricity grid is often cited as one of Africa’s cleanest, with geothermal and hydro accounting for the bulk of generation. Industrial heat, however, remains more carbon- and import-intensive.
Steam used in feed processing, agro-manufacturing and food production is frequently generated through diesel or heavy fuel oil systems, fuels that are both imported and dollar-denominated. For firms reliant on such systems, part of their cost base is effectively tied to global fuel markets and currency movements.
“Managing input costs and exposure to foreign exchange volatility has become critical to manufacturing,” said Eng. Fredrick Kinge, Plant Manager at Unga Farm Care.
The company did not disclose the capital cost of the installation.
Energy-as-a-service models, in which a provider finances and operates infrastructure under long-term contracts, are gaining attention in emerging markets where capital constraints can slow industrial decarbonization.
Representatives from the Ministry of Energy, the Kenya Association of Manufacturers (KAM) and the Kenya Renewable Energy Association (KEREA) attended the commissioning, signaling policy and industry interest in renewable thermal alternatives.
Biomass boilers typically use agricultural residues and other locally sourced organic materials as fuel, reducing reliance on imported petroleum products. The project will rely on a mix of locally sourced wood shavings and agricultural residues, according to the companies.
Unga Farm Care (EA) Ltd estimates the installation will avoid approximately 4,800 tones of carbon dioxide emissions annually.
While the emissions reduction is measurable, the economic impact may prove more immediate. Diesel for steam generation is both imported and dollar-priced, meaning fuel costs move with exchange rates and global oil markets. Substituting locally sourced biomass alters that exposure.
Energy has long been cited by industry groups as a competitiveness constraint, particularly for firms dependent on imported inputs. Reducing diesel consumption does not eliminate currency risk, but it narrows one channel through which external price shocks feed into production costs.
The durability of such savings will depend on consistent biomass supply and stable feedstock pricing. Industrial-scale adoption requires reliable sourcing chains and transport logistics that can match the predictability of conventional fuels.
A single facility’s fuel switch represents a marginal share of national diesel demand. Yet broader replication across manufacturing plants could incrementally reduce industrial reliance on imported thermal fuels.
The country’s energy transition narrative has largely centered on electricity generation, where renewables dominate. Industrial heat has received less policy focus, despite being a core component of manufacturing.
In that context, fuel choice is becoming as much a financial decision as an environmental one.
