As Kenya makes great strides in developing alternative energy sources, the market stakeholders continue to hunt for optimal solutions that will help them keep the lights on at home, and power businesses like manufacturing plants and farms in a reliable manner and at prices competitive with grid power.
There is growing recognition from industrialists and manufacturers for the potential afforded to them by solar power as a source of cheap energy which, though in its infancy in Kenya, may become a main source of power among other leagues soon. Indeed, solar is already booming in the more mature industries – Germany generated over half the country’s electricity demand from solar last summer.
In recent times, Nairobi has hosted a number of forums to discuss responsible, efficient and sustainable renewable energy where the captive solar market has largely been represented. This is a remarkable fete for a sector largely unknown in Kenya three years ago.
The energy mix has been heavily reliant on hydro power which constitutes about 36 per cent of the 2,154MW market. Yet a series of weather vagaries has persistently underscored the reliability of this source and as the dams fall during low rain periods, the cost of grid power increases as more fuel oil is burned for power.
Large scale manufacturers and industries, who consume over 80 per cent of Kenyan’s power, have resorted to costly strategies to keep businesses running, such as diesel-powered generators when the grid goes down. Already a number of them have closed their factories, citing high cost of doing business locally, as energy spend eats into company profits.
So why the cautious uptake of solar technology in Kenya, especially when it’s already proving itself as a viable technology in global markets, with the International Energy Association (IEA) forecasting that solar could be the top source of electricity by 2050?
In Kenya, the solar photovoltaic (PV) market is still frustratingly riddled in misunderstanding and suspicion among potential consumers. This is despite the fact that Kenya enjoys a favourable location (at the equator) which allows it lengthy daylight hours throughout the year. Relatively quick and easy to deploy, it also offers Kenya the perfect opportunity to diversify Kenya’s energy mix.
Still, pertinent issues arise in the country’s solar sector. Why, in contrast to well-marketed renewable sectors like wind and geothermal, the solar industry and its policy has been mired in confusion? I will touch on three.
The government’s ambitious plan to inject 5,000MW into the grid by 2017, and constant promises of cutting the cost of electricity as a result, has led stakeholders to take a wait-and-see approach before committing investments in other sources of energy.
Also outdated evidences showing that some sources are more cost competitive than solar had been fronted in the market. However there are signs of change, as analysts, with access to up-to-date market intelligence, have started lobbying properly for the development of solar projects in the country.
Positively, the government through its 2009 Rural Electrification Master Plan has stimulated the adoption of off-grid solar production in the country. The adoption of solar could be driven further if the same focus was directed to educating stakeholders about the benefits of grid tied solar systems too.
Secondly, investors are apprehensive on the quality and history of suppliers pitching solar proposals. While reliable solar companies have been working on the global stage for years, Kenya has been plagued by small-scale operators whose inexperience has at times tarnished the reputation of solar. With highly reputable solar players establishing themselves in Kenya, there is no longer any need for solar customers to tolerate inflated prices, mediocre workmanship and average maintenance post-construction.
At minimum, it is key that Engineering, Procurement and Construction (EPC) contractors have three relevant licenses from the Energy Regulatory Commission (ERC) to operate and install commercial scale solar in Kenya. Non-compliant companies need to be identified and the government put policies in place to deal with such rogue traders.
Customers should focus on working with bankable companies who can provide a warranty for the solar system and its performance. The longer the warranty, the more reputable the supplier. It is also advisable to take out an Operation and Maintenance (O&M) contract so that in the event something goes wrong, the problem gets sorted, and quickly.
Lastly, there is also the issue of finance. There is a gross misconception that choosing solar is a costly affair.
According to a recent report by Bloomberg New Energy Finance, advancement of renewable energy in Africa reflects a combination of a rapidly growing local demand for power to support burgeoning economic expansion, and the awareness that the cost per MWh of clean energy such as solar has declined sharply, opening up new perspectives for using solar energy as a major source of electricity in the coming years and decades.
While cost is always going to be big factor, going for the cheapest options and disregarding the credit rating of the system provider makes the consumer vulnerable to any problems that may arise in the future. The good news is that there are now financiers and other institutions willing to offer workable solutions for projects that clients are willing to undertake.
Encouragingly, plenty of indicators show that the solar PV sector is looking healthier and there is reason to be optimistic.
Kenya Power, the electricity distributor, not only understands solar but has been far quicker to adapt than its Western counterparts when it started taking roots in respective countries. Also, the ERC has been fantastic in helping create frameworks for expanding the rollout of solar.
Secondly, Kenya’s economy continues to grow. More and more rural areas are getting grid connected. If the rate of connection matches or supersedes the rate of power generation capacity, it could push up the cost of grid energy, inhibiting economic growth and putting small entrepreneurs out of business.
Lastly, the price of solar technology is set to keep falling, making it ever more affordable.
As more factors in Kenya start to align in favour of this source of energy, it becomes evident that solar power will have its time in the sun. As awareness grows for the potential of solar to provide a stable source of cheap, clean energy for the lifespan of a technology system, some 30-odd years, Kenya’s solar customers will look to join the party, and become part of the global energy revolution.
The author, Guy Lawrence, is the Business Development Director of Solarcentury, East Africa