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Investing In Solar Energy In Kenya

  Mar 12, 2014

Did you know that though the sun’s energy is most prevalent in most of Africa, European countries, those with very little sunlight exposure like Ireland have invested more in the sun as a source of renewable energy? Among the various renewable energy sources, solar energy technologies such as solar photovoltaic (PV) and concentrated solar power (CSP) have seen the most dynamic growth rates (and improvements in costs) in recent years in countries ranging from Japan, China and India through Germany, Spain and Italy, to the United States and Canada. However, the remarkable rise of solar PV, specifically, has not yet left its mark on most of sub-Saharan Africa. Here, the use of solar energy technologies remains mostly limited to small, off-grid applications in rural areas, rather than the large commercial- or industrial-scale projects seen in the more advanced solar energy markets. (Ondraczek, 2014)

Solar energy has been reduced to a commodity of the rural areas in Kenya, areas that are not connected to the National Power Grid. Unlike other countries, solar energy investment in Kenya is mostly in the form of Solar Household Systems. Only the middle class families, those that cannot afford to install electricity from the power grid but can afford to install Solar Household units invest in the commodity.

In his presentation in the Strathmore Business School (SBS), JanoschOndraczek, a Ph.D. student in the Department of Economics and guest researcher at the Research Unit Sustainability and Global Change, University of Hamburg presented a very interesting statistical analysis on solar PV in Kenya.

Middle class families in rural Kenya invest in Solar Household Systems (SHS) as a complimentary source of energy to the other traditional sources rather than a supplementary source. The systems are used alongside firewood and charcoal to provide mostly electric energy to do that which the traditional sources cannot, e.g. charging mobile phones. His statistics showed that rural families still use firewood as the main energy source for cooking and kerosene for lighting.

The assumption that electricity would be the most used energy source for lighting in urban Kenya is also statistically wrong. Most households in urbanised areas in Kenya still use kerosene as the main source of lighting, attributed mostly to the lower class households. This is due to the expense of connecting to the national power grid. Most of the lower class households cannot afford to connect to the national power grid.

Research shows that solar home system adoption among Kenyan households was largest among middle-class households in rural areas. These households move through what development experts call the ‘energy ladder’, which means that households switch, for example, relatively quickly to kerosene for their lighting needs as their incomes rise.In a fairly extended income range, households keep using kerosene, and only start using modern energy sources, i.e. electricity and solar energy, at relatively high levels of income.
Mr Ondraczek, who is also a project manager at PricewaterhouseCoopers (PwC), found that his study proved that solar energy is a great investment opportunity that hasn’t yet been tapped into. Its advantages, not only to investors but also to the betterment of people’s lives and the fight against global warming are barely being exploited. But why?

The east of Africa is among the regions with a solar energy resource that is generally considered to be large enough to be technically and economically feasible.However, the factors influencing the cost of PV, and the subsidies required to sustain its construction, include more than just the strength of the sun. The growth in PV has come at an unnecessarily high price, with unnecessarily high subsidies.Companies investing in other sources of energy that would be phased out by solar energy are fighting the spread of alternative energy sources in a bid to maintain their market base. Proper standardisation of application costs and revision of policies would go a long way to promote solar PV application. If this happens, ample business opportunities for ‘solar entrepreneurs’, as Mr Ondraczek would put it, might also result in arise in East Africa’s solar energy market, much as they have already done so elsewhere.

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