The Nairobi off-grid cluster: From an energy failure to social and industrial innovation diffusion

Access to energy is one of the most significant challenge in Sub-Saharan Africa. Despite recent economic growth, a large share of the population still lacks access to electricity, particularly in rural areas where centralized grids are often economically and technically difficult. In this context, decentralized energy solutions, especially off-grid solar systems, have emerged as an alternative solution to expand energy access. This thesis analyses the role of energy clusters as a mechanism that can facilitate the development and diffusion of decentralized energy technologies. Building on cluster theory and its evolution toward knowledge-based and innovation-driven systems, the study examines how geographical concentration of firms, institutions and supporting organizations can generate externalities, knowledge spillovers and collective learning processes that support technological development and market expansion. The analysis focuses on the off-grid solar cluster that has developed in Nairobi, Kenya, which has become a key innovation ecosystem for decentralized energy solutions in Sub-Saharan Africa. By examining the interactions between firms, investors, institutions and international actors, the thesis explores how cluster dynamics can contribute to the growth of new energy markets in developing economies. The findings suggest that energy clusters can play a crucial role in accelerating energy transitions by fostering innovation, reducing coordination costs and enabling the scaling of decentralized energy technologies.