Harnessing The Sun’s Potential: Key Insights into Kenya’s Promising Solar Market Outlook for 2023

Kenya has been one of the leading countries in Africa when it comes to renewable energy, particularly in the solar sector. The Kenyan government has set ambitious renewable energy targets and implemented policies to promote solar power development. The country has favorable solar resources due to its location near the equator, with an average of 5-7 peak sun hours per day.

Here are some key points about the solar market outlook in Kenya:

1. Government Support: The Kenyan government has implemented various policies and incentives to attract investment in the solar sector. These include feed-in tariffs, tax incentives, and streamlined regulatory processes. The government aims to achieve universal electricity access by 2022, with a significant focus on renewable energy sources like solar.
2. Off-Grid Solar: Kenya has a large off-grid population, especially in rural areas. Off-grid solar solutions, such as solar home systems and mini-grids, have gained significant traction in providing electricity access to remote communities. The government’s initiatives, such as the Kenya Off-Grid Solar Access Project (KOSAP), have helped accelerate the adoption of off-grid solar solutions.
3. Utility-Scale Solar: Kenya has also seen growth in utility-scale solar projects. The country has several solar power plants in operation, and more are under development. These projects are typically connected to the national grid and contribute to the overall energy mix, reducing reliance on fossil fuels.
4. Innovative Financing Models: To address the affordability challenges associated with solar adoption, Kenya has seen the emergence of innovative financing models. Pay-as-you-go (PAYG) systems and mobile money platforms have made solar products more accessible by allowing customers to pay in installments.
5. Job Creation and Economic Opportunities: The growth of the solar sector in Kenya has created job opportunities, both in manufacturing and installation of solar systems. Additionally, the local production of solar components has the potential to stimulate economic growth and reduce import dependency.

Here are a few notable investments in the Kenyan solar sector:

1. Scaling Solar Program: The World Bank’s “Scaling Solar” program has facilitated the development of large-scale solar projects in Kenya. Under this program, competitive tenders have been held, attracting private investment for the construction of solar power plants. The program aims to streamline the process of project development and attract private sector participation.
2. Lake Turkana Wind Power Project: Although not solely focused on solar energy, the Lake Turkana Wind Power Project in northern Kenya includes a solar component. The project, one of the largest wind farms in Africa, has installed solar panels to complement the wind power generation. The initiative received significant investment from both public and private sources.
3. World Bank Financing: The World Bank has provided financial support to Kenya’s renewable energy sector, including solar projects. For example, the Kenya Off-Grid Solar Access Project (KOSAP) has received funding from the World Bank, which aims to increase electricity access in rural and underserved areas through off-grid solar solutions.
4. Private Sector Investments: Private companies have also invested in the Kenyan solar sector. Numerous solar developers and investors have entered the market, building solar power plants and providing off-grid solar solutions. These investments often take advantage of government incentives and power purchase agreements with utility companies.

In Kenya, the government has implemented several regulatory policies to promote and regulate the solar sector. These policies aim to create an enabling environment for solar energy development, attract investment, and ensure the efficient and sustainable growth of the industry.

Here are some major regulatory policies in the Kenyan solar sector:

1. Energy Act: The Energy Act provides the legal framework for the regulation of the energy sector in Kenya, including solar energy. It establishes the roles and responsibilities of various institutions, such as the Energy and Petroleum Regulatory Authority (EPRA), in overseeing the sector.
2. Feed-in Tariff (FiT): The government has implemented a feed-in tariff policy to encourage investment in renewable energy, including solar. The FiT sets a predetermined price at which renewable energy producers can sell their electricity to the national grid, providing long-term revenue certainty for solar power projects.

3. Net Metering: Kenya has introduced net metering regulations, allowing electricity consumers who generate surplus solar power to feed it back into the grid. Net metering enables consumers to offset their electricity bills by exporting excess solar energy, promoting self-consumption and reducing reliance on the grid.
4. Standardized Power Purchase Agreements (PPAs): The government has developed standardized power purchase agreements for renewable energy projects, including solar. These agreements outline the terms and conditions for the sale of electricity generated from solar projects to the national grid or distribution companies, ensuring transparency and consistency in contract negotiations.
5. Tax Incentives: Kenya provides tax incentives to encourage investment in the solar sector. These incentives may include exemptions or reduced tax rates on imported solar equipment, such as solar panels and inverters, to lower the upfront costs of solar installations.
6. Simplified Licensing and Permitting: Efforts have been made to streamline the licensing and permitting processes for solar projects. The government aims to reduce administrative barriers and expedite the approval process, making it easier for developers to establish solar power plants and other solar installations.

According to Mr.Andrew Amadi, CEO of Kenya Renewable Energy Association (KREA), off-grid solar power growing to be greater than  the total grid peak demand, as captive power , electric mobility, solar water pumping and refrigeration increase exponentially. According to him, off grid total installed load is estimated at 400-500 MW and this will get to over 3,000 MW by 2028. KEREA will soon be rolling out a pilot project to provide rooftop solar for healthcare facilities with optimized and efficient use of electricity through remote real time energy management to decarbonize healthcare. KEREA will  support developing  and install solar electricity for 1700 healthcare facilities in Kenya by 31st December 2029 in a pilot project under DESIREE.