Kenya has long been a continental leader in renewable energy use for electricity production, with the use of hydropower dating back a century. As a result of climate change impacts – such as higher temperatures, erratic rainfall patterns and droughts – water levels in various hydropower sites have been greatly reduced, leading to a major decline in electricity generation capacity. To meet this electricity deficit, Kenya uses thermal power production, a process that uses a significant amount of fossil fuels. These fossil fuels are both expensive to import – a cost which is passed on to the end user – and also contribute to greenhouse gas (GHG) emissions, which cause global warming.
To reduce its dependence on thermal power, the country has been making great strides in renewable energy generation from sources such as geothermal, solar and wind, in line with its national development blueprint, Vision 2030, which seeks to promote the development of renewable energy. To accelerate this process, Kenya’s President, Uhuru Kenyatta in 2018 made a commitment to generate 100% of electricity from renewable energy sources by 2020(link is external). As at 2019, 86.8% of the country’s energy mix came from renewable energy sources, with 45% coming from geothermal energy. The use of thermal power for electricity generation also declined to 11.9% in 2019. These achievements have contributed towards Kenya’s target of reducing greenhouse gas emissions by 30% below business as usual by 2030, as outlined in its Nationally Determined Contribution, which forms part of the international Paris Agreement on climate change.(link is external).
To make such progress, the government of Kenya has been proactive in creating an enabling environment for private sector investments in the renewable energy sector. In January 2013, Kenya enacted the Public Private Partnership Act to regulate private sector investments, hence increasing investor confidence. The government also provided investment incentives such as the Feed in Tariff (FiT) policies, which allow independent power producers to sell electricity generated from renewable energy sources to the national off-taker at a pre-determined fixed rate over 20 years. These tariffs have so far been revised twice to address investor challenges, which is a demonstration of the government’s responsiveness to the needs of the private sector.
The off-grid solar and improved cookstoves (ICS) sectors in Kenya showed initial signs of commercialisation around 2013. The necessity for support became increasingly apparent to boost the sectors towards further market maturity.
However, various challenges were hampering market development that included, but were not limited to, high upfront cost of good quality solar products, slow uptake of solar and ICS entrepreneurship in rural areas, lack of access to finance, distribution challenges, inadequate consumer awareness, and inadequate, or lack of, after sales services.
The rationale for a results-based financing (RBF) mechanism for both off-grid solar and ICS markets was driven by the need to further catalyse these markets towards full commercialisation through fostering private sector investments. To address this need, the Energising Development (EnDev) programme designed two RBF projects to provide financial incentives to off-grid solar and ICS private sector players. The projects were implemented in Kenya between 2016 and 2019 by local fund managers, SNV Kenya and Micro Enterprises Support Programme Trust.
As a result of the two projects, 1.6 million people were able to access cleaner energy solutions and 4,678 new jobs were created along the solar and cookstoves value chains, with at least 40% of these jobs going to women. The projects also facilitated avoidance of 97,900 tonnes of C02 equivalent. Moreover, the projects supported market transformation through enabling the expansion and diversification of quality products, enhanced business operations and credit management, growth and expansion of distribution networks, and provision of end user credits for solar products.
For more details, read the report on experiences and lessons learned from the Pico PV and Cookstoves RBF projects with an overview of the RBF model, activities, results and lessons learnt and key recommendations.
Residents of off-grid areas in Kenya are poised to benefit from the sale of quality solar and clean cooking products following the release of Sh500 million from the Kenya Off-Grid Solar Access Project (KOSAP) to 19 companies to facilitate the sale of their products in these counties.
The release of funds has provided the companies with the necessary facilitation to move into the counties to set up sales and after-sales infrastructure for standalone solar systems and modern cookstoves, under the Sh15 billion Kenya Off-Grid Solar Access Project (KOSAP). A total of 10 vendors have been selected for standalone solar systems and 9 for clean cooking component, after a competitive evaluation process.
The companies are contracted under the second component of KOSAP, where Results Based Financing (RBF) and Debt Facilities have been established, aimed at spurring private sector actors to invest in modern solar solutions and providing clean cooking solutions in counties that are not served by the national electricity grid. KOSAP is extending financing to the selected companies as part of the government efforts to achieve universal access to electricity by 2022 and universal access to clean cooking by 2028, as per the Kenya National Electrification Strategy and the Kenya Sustainable Energy for Action Agenda respectively.
840 million people worldwide still lack access to energy, the majority of whom live in sub-Saharan Africa. Off-grid solar is playing a key role in helping to lower this number — by end 2019, 280 million people had enjoyed an improved electricity access thanks to an off-grid solar source
To do this, we commissioned Altai Consulting to conduct more than 1,000 interviews with customers of solar provider Green Light Planet (GLP) in Kenya. We have supported GLP since 2016 with co-funding from the UK Government and USAID. The off-grid solar industry has been widely covered by research efforts from international organisations and academics alike. However, we wanted to see in depth the broad socio-economic impacts of solar home systems on low-income populations, beyond simply access to energy (SDG7).
Almost half of customers interviewed live on less than $3.20 per day, the World Bank poverty line for lower middle-income countries. The majority of households rely on agriculture for their livelihood. They use the SHS at home for lighting and phone charging.