Will Fiscal Decentralization Stimulate Energy Demand? Evidence From Kenya

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This study set out to estimate empirically the effects of fiscal decentralization on energy demand in Kenyan counties, 2013-2017. The finding of this study has established the critical role of decentralization in positively influencing electricity demand at the sub-national level through improved energy efficiency, rises in energy innovation and involving local actors in energy planning processes. This has been qualified by the ability of decentralization to provide necessary economic and financial resources, and able to bring energy resources closure to the end user, and increase efficiency in resource use. However, policymakers may need to obtain the optimal level of
decentralization that fosters energy efficiency and demand. Excessive fiscal decentralization through tax increases will harm public support for sustainable energy programmes and policies. This study has further identified the importance of income growth in explaining the increase of energy demand as attributed to an increase in population disposable income.

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