Providing development inputs like electrical energy is a formidable task in many parts of the developing world. The generally rural nature of developing countries makes it necessary to devise innovative ways of getting electricity to the non-urban majority. It is also imperative that adequate and productive electrical power is made available, for sustainable development to be achieved by rural communities and by extension the national economies. Therefore, institutional and other innovations are being continuously mooted to meet the challenges; and it is in this context that rural electricity co-operatives have been introduced to developing countries. The co-operatives are promoted largely because of their social strengthening characteristics. However, questions arise as to whether social capital upon which the co-operatives are based is a facilitator or an impediment to the co-operatives, and the sustainable development that is ultimately targeted. It is argued in this paper that rather overstretched virtues of social capital mask undesirable elements of the capital. Importantly, organizations like co-operatives that depend on it can fail because of the neglected dark aspects. Empirical evidence from Kenya is used to support the contention. It is concluded that electricity co-operatives could remain a far-fetched possibility, unless desirable and undesirable characteristics of social capital are carefully taken into account.