Special Report Africa: Kenya

pv magazine: What is driving solar PV development in Kenya?

Cossen: Solar PV development in Kenya was driven in the past by the efforts of the government of Kenya to increase rural electrification. Kenya has made significant progress in increasing access to electricity for its population in recent years. Projects driven by the government are installations for rural health centers and schools, but most recently also PV-diesel-hybrid systems for isolated mini-grids.

In recent years, grid-connected solar PV has become more and more attractive in Kenya due to falling PV prices and rising electricity prices. In some market segments, grid parity seems to be reached and private investment is starting, e.g. 72 kWp installed at the flower farm Uhuru Flowers.

Utility-scale projects have not yet been installed. Market experts attribute this to the relatively low Feed-in-Tariff of US$0.12 per kilowatt hour.

pv magazine: What kinds of incentives are available and are utilities playing a role?

Feed-in tariffs (FiTs) for power from renewable energies were firstly introduced in March 2008. The last review took place in December 2012. The scheme is technology-specific. The tariff for solar is fixed at US$0.12 per kilowatt hour. The main principle, which underlies the calculation of the FiT, is that the tariffs reflect the generation costs plus a reasonable investor return. Furthermore, the tariffs shall not exceed the generation long run marginal costs (LRMC), which are US$0.12 per kilowatt hour, according to the Least Cost Power Development Plan for Kenya.

The FiT comes with a priority purchase. The costs of interconnection, including the costs of construction, upgrading of transmission and distribution lines, substations and associated equipment are to be borne by the project developer. For reducing the transaction costs associated with negotiating and signing a PPA [power purchase agreement], a technology-neutral standardized PPA was introduced for projects up to 10 MW in December 2012.

Besides the FiT, net metering was introduced by law by the end of 2012, but the implementation regulation is still under preparation. Net metering would allow commercial and industrial consumers in Kenya to install solar systems to reduce their electricity bill, feed-in the surplus to the grid and get a credit on their electricity bill for the supplied electricity. At least a dozen projects that want to make use of this scheme are currently in development. Once the net metering regulations are in place, these are likely to grow into a sector that is larger than the off-grid sector in the mid term.

pv magazine: Who are the major international solar players currently doing business in Kenya?

Cossen: German companies have a good reputation in Kenya. Out of three grid-connected PV plants, two have been installed by German companies, Energiebau and Asantys. Inverters from SMA are often used in larger installations.

The largest player in the solar sector is a Kenyan company called Chloride Exide with subsidiaries in Tanzania, Rwanda and Uganda. Chloride Exide is owned by the battery manufacturer Associated Battery Manufacturers. The core business is lead acid batteries for automobiles, with solar PV contributing a significant portion to the overall business. The idea of the company was to sell PV in order to push the sale for their batteries.

The company Ubbink (a Dutch subsidiary of the German group Centrotec) set up the first solar module manufacturing company in East Africa, located in Naivasha, Kenya. Solar modules, mainly in the range between 3.6 W to 80 W, are manufactured based on reworked broken high quality solar cells. The modules are suitable for use in private homes, village plants and solar power plants serving schools, hospitals, water supply infrastructure and telecommunications systems.

pv magazine: How does the solar market in Kenya compare to other African markets?

Cossen: Compared to most other African markets where solar is only known for off-grid electrification, there is a significant pipeline of grid-connected solar systems in Kenya in the range of up to several megawatts, some of them have just recently been installed.

pv magazine: What are the current solar projections for the country in terms of planned installations?

Cossen: Current cumulative installed capacity is likely to be over 20 MW, spread between solar home systems, installations for rural health centers and schools, three grid-connected systems (60 kW, 515 kW and 72 kW) and government-procured systems.

The Vision 2030 from the government of Kenya targets solar PV installation of 300 MW. However, it is expected that the efforts from the Kenyan industry and commercial sector will drive the total capacity of solar installations much higher. According to market experts, business opportunities in the future will largely be over 90% in the private sector, up to the 500 kW range, for which no license will be required. Projections published by the Delegation of German Industry and Commerce in Kenya expect an installed capacity of 20 MW per year in 2016 and around 65 MW per year in 2020.

pv magazine: What are the major problems and obstacles facing solar development in the region?

Cossen: In general, there are few competitive markets with on-grid energy prices reflecting their true costs. Many countries subsidize electricity (and other energies such as fuel or natural gas) in order to provide a cheap service to the population, which makes it hard for solar to compete. This is different in Kenya, which makes Kenya an attractive market in the region. Transaction and in general BoS [balance of system] costs are often twice (or even triple) those in Europe due to e.g. high administrative barriers or import taxes. Additionally, classic thermal power generation (especially diesel) has a long lasting business history in the region and its ties, grown and nourished over the last 60 plus years, are hard to break with "new" approaches and solutions, even if they are cost competitive.

Tobias Cossen will discuss Kenya’s solar market at the 14th Forum Solarpraxis on Nov. 22 at the Hilton Hotel Berlin. The Forum Solarpraxis runs Nov. 21-22.