Government should urgently address challenges in the solar energy sector
Players in the solar energy sector are raising challenges in the industry that needs to be addressed urgently by the government.
While the focus currently is on establishing new and improving existing infrastructure to expand access to solar by many Kenyans, investors are concerned about the regulations in the industry related to acquiring operating conditions and approvals, frustrations in joining the national power grid thus expand their market and government controls in the pricing of their products.
There is need for the Government to design clearer mini-grid policy that incorporates more favorable terms to private mini-grid operators including lower tariffs and longer operating agreements and requested subsidies on capital expenses for intensive improvements that help Kenya achieve its energy goals.
They noted that Mini-grids and installation of high-quality equipment comes with these prohibitive expenses: High capital investment costs to build the mini-grid systems, negotiation for land/rights/terms that appeal to the local community leaders, and cost to modify, deliver and maintain equipment, then connect with or build lenders and more.
In a country where the cost of energy, especially for the most vulnerable and rural dwellers is out of reach, because they are not connected to the national power grid, solar energy is promising to light up their lives, enable them access social services that can be powered by solar and above all, enhance the country’s manufacturing sector by small scale traders through clean energy. A number of investors through public-private partnerships or support from lending institutions are heavily investing with focus on the low income earners through credit schemes or social marketing approaches to expand access to clean energy to Kenyans. It is urgent that the business environment and operating processes are streamlined.
The current policy framework is guided by the Energy Act 2017 that is progressive, the Energy (Solar Water Heating) Regulations 2012 and The Energy (Solar Photovoltaic) Regulations 2012 need to be improved. The Government has initiated the process of putting in place new green mini-grid regulations, which the private sector investors want hastened as it is making business tricky; they are missing out on the environment that would allow them to maximize their returns while at the same time make meaningful contribution to the big four agenda, where energy is listed as an enabler.
The Government Master Plan for the energy sector notes that given its position on the Equator- (4.5° South and 5° North), Kenya is endowed with very high solar resources, among the highest 10 of Sub-Saharan African countries. Given the challenges with conventional energy sources, and poverty levels in Kenya, solar has a high potential, and the government through the Energy regulatory framework is working to ensure the tapping into this resource.
Electricity consumption is forecasted to grow in the medium term by an annual average of 7.2% per year to reach more than 140% of 2015 level in 2020. For this reason, the Government is keen on the development and use of renewable energy sources including solar, which are vastly available for power generation in Kenya, in addition to being socially, economically and environmentally friendly.
In Busia for example, a private investor, KUDURA Power East Africa which is implementing a Sh300m project in the County on off-grid power targeting 50 sites and has already dug in substantial amounts of funds, is raring to go, but bureaucracy seems to be standing in its way.
While people using stand alone equipment for simple accessories like mobile phone charging, solar bulbs and related are already enjoying the benefits of access to clean energy, off grid players targeting heavy equipment seem frustrated, given that this is largely a business opportunity for both the suppliers and the users, who would want to use the energy to do production investments.
Companies like One Acre are using solar energy for irrigation farming while a number of health facilities using solar-powered equipment have managed to extend their services to more hours because of consistent energy supply.