Renewable Energy Transmission and Distribution Losses and Manufacturing Growth: Evidence from Kenya

This study examines the impact of renewable energy losses on manufacturing sector growth in Kenya, with emphasis on the role of energy efficiency in enhancing industrial productivity and supporting sustainable industrialization. The study is motivated by the persistent inefficiencies in energy transmission and distribution, which continue to constrain manufacturing performance in developing economies despite increasing policy attention to industrial growth. The objective of the study is to assess how renewable energy losses influence manufacturing output over time and to establish both the short-run and long-run dynamics of this relationship. The study employs the Autoregressive Distributed Lag (ARDL) and Error Correction Mechanism (ECM) models using time series data covering the period 1980–2024. The F-Bounds test (F = 8.041) confirms a stable long-run relationship among the variables. The findings reveal that renewable energy losses exert a significant negative effect on manufacturing growth in both the short run (β = -25.498, p < 0.05) and long run. The error correction coefficient (ECT = -0.852, p < 0.001) indicates that approximately 85.2% of short-run disequilibrium is corrected within one period, reflecting rapid adjustment toward long-run equilibrium. The study concludes that reducing renewable energy losses through improved grid infrastructure, modern transmission systems and renewable energy efficiency technologies is essential for enhancing manufacturing productivity. The findings provide important policy implications for Kenya's industrialization agenda and align with Kenya Vision 2030, Sustainable Development Goal and international energy efficiency guidelines.