Kenya Market Update
Kenya is endowed with high solar insulation averaging at 4.5kWh/m2/day. Generally, being in the equator, Kenya has a higher potential of solar PV than many other nations.
As a means of promoting private sector involvement in solar PV, the government has provided for an opportunity for local and international investors under Feed in Tarif (FiT) regulation.
The move seeks to enhance national energy security as well as the promotion of entrepreneurship and clean energy connectivity. Immense opportunities exist in the of-grid solar market and solar lighting products as the demand rises sparked by devolution, international energy access programme, and urbanization .
Stand-alone and of grid solar PVs have dominated institutional alternative lighting solutions mainly supported by government and donors as lantern widely used in households. Two decades ago institutional solar PV market segment accounted for approximately two-thirds of installed capacity, however, recently there is an observed increase in the market for standalone SHS, and solar lighting products (SLP). The falling global price of PV from USD 5 per watt in 2000 to USD 0.5 per watt in 2014, has led to the national solar market increase by more than 100 percent.
In Northern Kenya. Moreover, international NGOs such as SNV, GVEP, and Lighting Africa have contributed immensely to the creation of solar PV market value chain through SACCO, social enterprise approaches in the dissemination of pico-solar PV for increasing adoption of alternative energy sources in rural areas.
The rural electrifcation programme by the Rural Electrifcation Authority (REA) of Kenya for example targeted schools and health centres with over 4000 schools installed and commissioned as at July 2015
Barriers to Solar
The Government policy does not specify a role of solar PV for Solar Home Systems in “pre-electrification” of areas proximate to the grid (where >300 kWp/year demand for SHS is located). Unlike Tanzania or Uganda, Kenya does not provide incentives or subsidies for household solar PV systems. This has led to the following:
• It limits PV implementation to public sector procurement in remote areas where there is little commercial interest (when most PV business in Kenya is currently in the private sector in high potential cash crop area).
• It does not provide a role for PV in support of grid electrification in high potential areas. Given that there are 4 million un-electrified off-grid rural households, mostly located in high potential farming areas, and grid-based rural electrification is only completing (at most) 100,000 connections per year, there is a largely suppressed demand for electricity.
Economic barriers are usually related to the high cost of solar PV modules. Since these products are distributed by retail networks, the additional cost is added by middlemen, and this is felt by the end-user. As such, this creates an economic burden to BoP households. Moreover, other economic burdens including regional competition, difficulty to access finance, the low purchasing power of consumers and rising counterfeit products build on the already strained market.
Growth Potential of Solar PV Market in Kenya
The market potential for PV is excellent in Kenya for a number of reasons that echo across East Africa. The study listed the following opportunities in the growth of the solar market sector: –
I. Reducing trend of solar PV products such as panels and batteries and continuing to increase the affordability of the product to more middle-income Kenyan.
II. Tax exception to solar PV products has similarly reduced product costing III. The growing credit financing of solar PV product has enabled gradual payment of solar product hence reduced shock on the high upfront cost that has led to low adoption of the technology for decades.
Source: Kenya Climate Innovation Centre