By Felix Ochieng
Bioenergy dominates the Kenyan energy mix at 65% of the total on-the-grid energy. Other energy sources are oil at 17%, renewable energy sources such as solar and wind at 15%, and hydropower and coal at 2%. The country spends nearly half of its annual foreign exchange on imported fossil fuels such as oil and petroleum that are used to meet the basic energy requirements.
On the electricity front, renewable energy currently constitutes 90% of the country’s energy sources, primarily hydropower and geothermal power. Geothermal power, wind, and solar energy have a high potential in Kenya due to the country’s geology, coastal breezes, and robust and readily available solar outputs. These energy sources have been integrated into the national distribution line run by Kenya Power and Lighting Company (KPLC).
I am certain that solar energy is one of the most beneficial and economical power solutions that enable families to protect the environment and save money on household power consumption bills. Kenyan individuals and businesses install over 35,000 solar photovoltaic energy systems annually. Consequently, solar energy has attracted the interest of local and international corporations such as Ubbink, which is constructing a 250 million solar panel factory in Naivasha. Well, the impact of solar energy on households is linked to its advantages over the mainstream power distributor, KPLC. But why is that the case?
First, solar panels can charge battery cells that store power for usage whenever it’s not sunny. That ensures that households have minimal power fluctuations and stable grid-quality output.
Secondly, these systems help users to save time, money, and effort since they require minimal maintenance costs due to the lack of constantly moving parts.
Third, solar energy solutions are economical since they use free solar energy – the energy produced by the solar panels becomes available for free once the required installations are done.
Finally, solar tends to be more friendly to the environment. They are not environmental pollutants compared to electricity production, thus enabling a better and greener environment.
Several categories of people and enterprises benefit immensely from solar energy.
It is also important to note that solar energy has various associated benefits in rural areas, such as higher household incomes for families that use solar for business, increased study times, and reduced expenditure on kerosene.
The use of simple solar kits that support a mobile phone charger, radio, lighting, and television has reduced the cost of energy, enhanced efficiencies, and improved productivity in households.
There is also the aspect of increased availability of products and services especially in rural areas, hence better incomes and returns of investments for business owners. Women have financially benefited from the extended working hours on their premises.
Further, the long working hours and available lighting increase security in rural areas. The higher demand for solar energy is driven by high availability, cheaper installation costs, and limited maintenance costs.
Access to solar home systems leads to around 25 minutes of average daily light usage due to a 3-hour rise in the usage of electric bulbs, along with the reduced unclean lamps powered by kerosene. The increase in electric energy use and the reduced cost of charging mobile phones produces an effect of reduced total monthly expenses. Users are satisfied due to higher quality lighting systems, increased times that they watch television, and the possible environmental benefits.
Over ten years of sustained and concerted efforts to grow the use and the quality of alternative energy sources such as solar panels in rural areas in Kenya have paid off. Most consumers are satisfied with the quality of solar systems across multiple dimensions, such as durability and price. That conflicts with the rampant power interruptions, illegal and dangerous power connections, irregular electricity bills, and the slow complaint resolution mechanisms associated with Kenya Power.
In June 2021, The Finance Act was signed into law. The Act reinstated exemptions of value-added taxes on renewable energy products such as wind and solar generation materials and clean-energy cooking equipment. The exemptions provide relief for many Kenyans and the government, especially rural communities that earn low incomes and live beyond the reach of the Kenya Power grids. The reinstatement was expected to encourage the growth of the solar mini-grid market and scale renewable energy sector investments.
Installed solar capacity in Kenya ranges from 29 MW to 50 MW and could reach 550 MW by 2025. The market is virtually unsubsidized and highly competitive, and most commercial and industrial investments in the country offer 15-35% savings in the first year compared to the Kenya Power charges. Kenya’s power has significantly suffered losses and is currently under these fundamental threats to its financial model.
The company faces a reduction in net income per customer from the low-consumption users’ campaigns. Approximately 700 anchor commercial and industrial customers are showing a significant drop in their power purchases. These customers are increasingly shifting to more cost-effective and reliable energy solutions like solar panels. Low electricity demand growth, estimated at 2.3% in 2019, is far below the forecasted expectations.
The solar energy sector is taking advantage of the failures in the mainstream grids to grow. Kenya power must be flexible and borrow lessons from other markets that will drive its growth.
The writer is co-founder and chief executive officer at The Trading Room.