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Solar Energy in Kenya Challenges and Opportunities

Paper type: Essay
Pages: 12 (2899 words)
Categories: Energy And Environment, Energy Sources
Downloads: 12
Views: 230

Climate change is one of the key global concerns as of today and different perspectives have been envisioned to reduce its causes of which adoption of renewable energy sources is anticipated to reduce it significantly. Kenya as a developing country seeks to increase its share of renewables in terms of use of Solar, wind, geothermal, hydro and biomass in its overall energy mix. The solar industry in particular is reckoned as one of the fastest growing sectors which serves as the aim of this paper to look at the different challenges and opportunities that characterize it in Kenya.

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Introduction

With over 1.28 billion people in Africa, 600 million people still leave without access to electricity even though the electrification rates have increased by 43% according to the World Energy Outlook (2018). Provision of electricity will necessitate a combined effort of investment in both renewable off grid an on-grid solutions to speed the electrification process as non- renewable sources tend to have adverse effects on the environment.

WOO (2016) Kenya has become the leader of non-hydro renewable energy which accounts to over 40% which include geothermal, wind and solar which realized a percentage rise to 55% from about 27% in 2013 and connected an extra 1.3 Million people. Lily (2017). The country nonetheless, is committed to its development program of becoming a middle-income economy by 2030 which will necessitate the integration of various strategies so as to increase the overall electricity capacity so as to meet the ever-growing demand through its National Energy strategy. SREP (2011)The growth of the Solar industry in Africa continued to take a slow growth rate from 2203MW in 2015 to 4155MW in the year 2017 irrespective of having the most sunshine hours throughout the day than any other continent and contributing only 1 % to the global solar energy production. This is mainly because of a number of factors that have not only led to the slow rate of industrial growth but of the small-scale industries too majorly because energy is a key driver to economic development. Renewables (2018)Kenya in particular is experiencing a considerable growth rate by the adoption of this technology in order to power small homesteads, communal facilities and large malls which has been achieved by highly subsidizing the import of solar equipment and the necessity created by the level of awareness which reached 28MW by 2017. IRENA (2018)

Overview of Solar Energy in Kenya

Kenya is one of the countries in the East African region located geographically at the equator and experiences 5-7 sunshine hours on average daily with the capability to harness close to 5-7kWh/m2/day with average temperatures of 18-200C which vary basing on different locations. The solar industry dates way back in the 1970 which was largely financed by donors in electrification of public entities like schools and hospitals and has continued to grow to date with little government support. Ondraczek (2013).However, Tobias (2013) argues that the government has played a significant role in electrification access through installations in schools and health Centre’s by use of mini-grids with over 450 schools powered by solar PV.Overtime, Kenya has become one of the leading countries in the promotion of Solar Home Systems (SHS) with over 450,000 connected homes which has benefited close to 2 Million livelihoods as of 2015 which is mainly due to the growth of the private sector. IREK (2015)While the governments’ Vision 2030 anticipates the over 300MW of solar PV will be installed then, there has been a steady growth rate of the sector ever since to now about 20MWp due to a number of enhancing factors though it still faces some challenges as discussed herein.

Challenges to Growth

Access to technical support. The lack of technical expertise to design, install and maintain the solar systems has become an outstanding limiting factor and worse still for the rural areas where most of the population suffers from not being connected to the grid which serves as a major hindrance to the vast population there because one might require to even transport the technician for a small installment. In respect to this, the different solar companies require to set up small regional center’s to see to it that they are in reach to do the installation, repair and maintenance of the equipment. A number of technicians need to be trained to perform these tasks.

Today, due to the negative global competition by numerous companies some of them desire to keep their installation designs secret and not involve locals due to fears of emergence of other small companies that could later on outcompete them in the market hence resort to vertical expansion rather than the horizontal. Felix (2010).In addition, the technical courses do not address the technical expertise that is needed to operate, repair and maintain different upcoming solar technologies as they have limited knowledge which requires further training by qualified professionals to better their skills of which upon qualification, for one to design and install a solar PV system they need to be licensed by ERC. Energy Act (2006)Awareness. To majority of the rural customers, solar technology is bought for trial and its reported that when they get small issues that required attention, they would abandon them because they didn’t know the right people to consult and two, they did not work for the time they anticipated which kills their interest and they would rather stick to their conventional energy sources.

The level of awareness has of recent been enhanced by the promotion of after sale services and the decentralization of service center’s to even remote localities. Some communities are resistant to change from the use of conventional sources due to ignorance or affordability. Steigenberger (2018). This has also continually led to the influx of poor-quality materials such as batteries which are the major storage systems being sold to consumers as they have largely flooded the market which when coupled with poor installation and maintenance slows positive market growth while promoting markets for suppliers.

Energy Act (2006)High investment costs. Being that most of the equipment is durable, the initial overall costs are high compared to the costs of using electricity which has been used by quite a number of people for quite some time. The government on the other hand has capitalized on wind energy production with the ongoing 300MW Lake Turkana Wind Project and more still underway where the government seeks to attain 100MW, 90MW, and 61MW in the Kipeto Wind Projects in the Rift Valley Province, Lamu and Kinangop wind farm project in Central Kenya. Sherelle (2014).

More to that, taxes are levied by Government which later set the overall cost of electricity generated and also determine the payback period. In 2013, it was reported by Tobias that the Balance of System (BoS) in Kenya was twice that in Europe which was mainly due to the revenue enhancement. They are used as a tool to discourage imports of a certain material into the country hence affecting their supply. The level of investment on the other side, dictates on the level of profits anticipated which is accompanied with more risk such as in equity financing however when investors want to reduce the risk associated with the costs of investment, they employ debt financing.

Financing associated risk. Kenya being a developing country is suffering from the inability of foreign investors to finance upcoming solar projects due to the risk associated to it them being that they are long term investments with high initial incomes due to several factors which could be environmental, social, political and economic.The Feed in Tariff schemes majorly attract foreign investment in renewables yet they sometimes destabilize wholesale electricity markets, overtime they could prove to be more expensive and they have no adjustments for supply due to increase in demand. Couture (2010)Financing small projects is also hampered by having no recourse on investment and sometimes having small project implementors who are at times perceived to be less knowledgeable and not in position to take up big funding. Renewables, (2018) Land requirement.

Being that the land tenure system in Kenya is such that most land belongs to individual and specific groups and not by the government, it becomes difficult to implement large projects that would necessitate the requirement of acquisition of land from communities that are not willing to give it up. This physical factor later inhibits the use of most land that is either arid or semiarid productively as most of it can’t even be used for farming.Policy and regulatory frameworks.

Government policies are key in controlling different resources in the best way possible in order to create employment, generate incomes while promoting resource development and diversification of which renewables are part. With concerns to facilitate renewables, solar energy had to be embedded in the Feed in Tariff (FiT) policy as it had been exempted in the first draft of Ministry of Energy (2008) with emphasis placed on geothermal, wind, biomass and biogas.The FiT costs are nevertheless still low in terms of grid and off grid power generation which stand at 0.12 and 0.2 US$/KWH in order to attract foreign funding but they may not be limited in cases where the generated capacity is higher than 10MW of installed capacity. Ministry of Energy (2008)Being that most of these Institutional frameworks are Government owned, the Government creates a monopoly over the population in terms of the clauses in the PPAs to their benefit of which makes the overall cost of electricity high as some politicians are the proprietors and beneficiaries of them. Jacobson, (2004)

Opportunities Towards Development

The reduction of the cost per watt: like all other renewable technologies, as the production increases, the manufacturers enjoy economies of scale which later on lead to reduced overall costs of different technologies. For instance, the cost of wind turbines has reduced by over 50% from 2010 to 2017 as the sizes of the turbines also increase while the cost of solar PV has reduced by 80% from 2009, IRENA (2018) which will see bigger projects have shorter payback periods like that of Strathmore University which is only 11years. The scaling up of different projects facilitates the generation of more power with the basic equipment costs being standardized as the major ones vary in capacity for greater power generation which varies inversely as the cost per watt in the long run.

This has also increased the uptake of solar technologies and led to power capacities of up to 16MWp by 2012 as reported by Ondraczek (2013) which increased the rate of rural electrification by the adoption of various SHS and solar lanterns through different financing models which has improved livelihoods and also saved on the costs of energy for the rural population. On the other hand, this has led to a reduction on the household pollution levels which are mainly due to lighting and cooking.Localized energy supply.

Utility providers have failed to meet and always find it both difficult and expensive to extend grid lines to remote locations which requires a lot of transmission lines and equipment which later on conduce losses in power to which a cost of production has already been affiliated. The cost of rural electrification per individual is estimated at about Ksh 180,000 which is more than ten times that of installing a SHS. Mwakubo et. Al (2007)Solar technology serves as a better solution to all the above limiting factors at a lower cost which is more opportune to accelerate rural electrification in conjunction with other renewable options.

Currently with 13 micro ” grids, the country stands a better opportunity to power remote locations with more in construction that counter the problems of intermittency,sustainability and efficiency with the ability to function as the national grid while making use of the localized natural energy available in a particular area.Increased number of uses/applications: Today, numerous uses of energy at household level include lighting, charging of appliances and cooking. Other uses like powering communal facilities like schools, hospitals, refrigerators, remote generators call for the increase of the uptake of the solar technology.

The most commonly used solar PV systems are Solar Home Systems (SHS) and solar lanterns which are mainly used in different households with the former comprising of a PV module, charge controller, battery and wiring which are used to power different appliances and are basic for increased rural electrification even with little government intervention which are leading to rural development and social change. Jacobson (2004)This market continues to grow annually majorly in the upper- middle class in partnership with NGOs with different financing models like hire purchase and different financing schemes which at the end of the day lead to increased productivity whilst providing necessary communal requirements like cold drinks, saloon services, health services, phone charging not withstanding the need to listen to radio and watch television.

And for the lower class, the solar lantern emerged suitable due to its cost and ease of use as it consists of a small PV module, lantern and battery which is charged during the day under sunlight and used at night for lighting purposes.Whereas for the upper class, the use of solar water heaters became a requirement for all premises that utilize more than one hundred liters of hot water everyday to be installed.

Energy Act (2006)Reduced government subsidy. With the increment on government subsidy, the level of imports of solar technology keep increasing that does not only favor the big players but also the small players in the market. The Kenyan Government in 2012 through the Ministry of Energy offered to give incentives to different Institutions that would invest in Renewable energy.In 2013, Kenya introduced new VAT of 16% of all imports in the country of which solar products where inclusive which really impacted the final consumer due to increased prices however when the taxes where waived in 2015, the solar products became more affordable to more so the low-income population.

Presence of longer sunshine hours. China is one of the leading solar power producers with nearly 53.1GW yet it is located further away from the equator yet Kenya, a country that receives close to 7 sunshine hours with a capacity to generate at least 4KW/m2/day only generates 28MW. IRENA (2018). The ability to receive sunshine for that time is one of the motivators of this growing industry. Kenya also has insolation rates averaging to 7 sunshine hours where the solar irradiance averages 1000 W/m2 which enhances the uses of solar for various applications like solar drying, water heating, solar thermal and solar PV where only a small amount of it is put to use.

Access to finance

With the advent of small house systems being provided by different Companies with options of hire purchase and remote control to automatically shut down the system once the payments have not been made will increase the number of consumers of the systems. Different financing models are being developed depending of the population to ease and counter the problem of high initial costs seen costly.Kenya was able to receive USD 150 million for an Off-grid Solar Access project facilitate in electrification for about 1.3Million people in the underserved 14 counties with over 277,000 households. World Bank (2017) The presence of Institutional frameworks: The Government of Kenya has a number of agencies that act as key players in the Energy space which include the Ministry of Energy (MoE), Ministry of Finance (MoF), Kenya Electricity Transmission Co. Ltd (KETRACO), KenGEN, Kenya Power and Lighting Company (KPLC), Electricity Regulatory Commission (ERC), Rural Electrification Authority (REA).

These players are responsible in the creating of a good political environment for the development, sustainability, increasing cost competitiveness and supervision of set policies. Tatjana (2009). ERC that constitutes KPLC and KenGen is in charge of setting tariffs, issuance of licenses and has protection rights for both the energy providers and the consumers. This provides certainty of the future to project developers and investors.The set policies provide comprehensive financial and regulatory measures which usually include the net metering and FIT systems which set guide lines for future power development plans.

Net metering: This is an organized arrangement where commercial and individual power producers are able to sell the excess of their generated power to the grid at a price that is lower than the retail price of electricity which in turn pays up some of the equipment costs. Renewables (2018). The inclusion of attractive options such as net metering in the energy policy lures big players into the sector due to the ability to receive credit for the excess of their energy generated on site. This is seen as an opportunity to investors to consider investing in big projects if proper Power Purchase Agreements (PPA) are made with attractiveness. With the commencement of projects like the SOS children’s village which is a 60KW solar plant in Mombasa as the first net metered Photovoltaic project, many more projects of this nature have been adopted after being stimulated by the possibility to sell power to the grid hence reducing the costs of energy. IREK (2015)

Conclusion

The paper reveals a number of challenges that are affecting the fast growth of the solar industry though irrespective of them, the industry continues to expand due to its being commercially available and reliable with vast prospects of growth not only in Kenya but in the world at large as anticipated by IEA to provide 5% and 11% electricity consumption by 2030 and 2050 respectively. IEA (2010).

Cite this essay

Solar Energy in Kenya Challenges and Opportunities. (2019, Aug 20). Retrieved from https://studymoose.com/solar-energy-in-kenya-challenges-and-opportunities-essay

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