Solar PV Market in Kenya: Status and Opportunities BSW-Solar Special Exhibit Rural Electrification Intersolar 2013, Munich, Germany Charles Muchunku Chairman, Kenya Renewable Energy Association

Wednesday, 19th June 2013

Electrification Statistics Population Density Map

Electricity Grid Map

Electrification Statistics Total number of households is 8,7 million; 61% - rural and 39% - urban (2009 census) 22% of households have access to electricity; 5% rural and 50% urban (2009 census) Total Number of off-grid households – 6.7 million 80% of off-grid households are within 5km of the grid Off-grid lighting options: 48% - kerosene tin lamps (1$), 34% - kerosene lanterns (7.5$) and 2% ( ~150,000) - use solar PV (>25$ for solar LED lanterns & >160$ for solar home systems)

Policy and Regulatory Framework Mid-term Rural Electrification target - provide electricity to public facilities (trading centers, schools, polytechnics, health centers, community water works and admin offices) Rural Electrification approaches: grid extension, isolated mini-grids or stand-alone solar PV systems Capital Expenditure funded through the Rural Electrification Fund Levy - 5% levy imposed on electricity consumed Operational Expenditure for mini-grids funded through cross-subsidy i.e. uniform tariff policy & fuel adjustment cost Import Duty and VAT exemptions for Specialised Solar powered equipment and accessories (VAT exemption to be repealed) FiT policy for solar PV: grid - 12US¢/kWh, isolated mini-grid – 20US ¢/kWh Energy Policy under review and introduction of net-metering and wheeling policies are proposed in the draft

Rural Electrification Program Total 382,631 customers connected as at June 2012 (of which 304,298 are households) > 1,000 public facilities (secondary schools, health facilities) electrified through stand-alone solar PV systems 12 operational isolated mini-grids with installed diesel based generation capacity of 7.7MW; 7 of the existing diesel mini-grids have been hybridized with 6 – solar; 510kW capacity and 2 – wind; 550kW capacity An additional 15 isolated mini-grids with diesel capacity of 5.2MW For the 15 new sites MoE estimates a solar PV hybrid capacity of 2MW A further 44 isolated mini-grids are also under consideration

Isolated Power Stations

Solar PV Regulations Solar PV regulations gazetted in 2012. Developed with the intention of improving the delivery of products and services within the solar PV sector. Regulations shall require that only licensed technicians are allowed to design and install solar PV systems; To be licensed, technicians shall be required to have undertaken a solar PV training course allowing them to practice within the following parameters: Class T1 - Installation work for single PV module or single battery DC system of up to 100Wp. Class T2 - Installation work for medium size PV systems i.e. multiple modules of up to 300Wp or multiple batteries which may include an inverter. Class T3 - Installation work for advanced, including grid connected and hybrid solar PV systems.

Overview of the Market Players

Market Players Number Importers 20 Battery Manufacturers 3 Solar Module Assemblers 1 Retailers 500 Installers 2,000

Types of Outlets Specialized PV shops Electronic shops Hire purchase Hardware Battery and Automotive stores Electrical Supplies Supermarkets

Potential Market Segments a) Low cost off-grid lighting market (solar lanterns): Introduction of 10-50$ solar powered LED based lanterns promoted through the IFC/WB Lighting Africa program 2008-2013. Targeting the bottom of the pyramid i.e. a replacement for kerosene based lighting and phone charging services Annual sales figures estimated at 80,000 lanterns Very competitive > 20 distributors of these types of products b) Solar Home System market Active since the 80’s with Television being the main driver. Income generation e.g. off-grid phone charging business a growing driver Well established distribution network although few dedicated businesses Technical capacity of vendors and technicians in system design, installation and maintenance/troubleshooting is lacking Annual sales estimated at 10,000 – 15,000 systems per year Installed system cost 11-13$/Wp

Potential Market Segments c) Institutional System Tender market driven by government and civil society to provide electricity to public facilities and communities System sustainability is a challenge. Capex is grant based with little consideration for how future maintenance and battery replacement costs will be covered d) Grid-tie systems With consumer electricity tariffs in the range of 20US¢/kWh, grid tie solar PV is increasingly seen as an economically viable option. To date about 5 trial systems 20-500kW have been installed Although viable, the high upfront system cost and the cost of capital remain a barrier The proposed net metering policy coupled with an attractive tariff could further stimulate this market segment

Potential Market Segments e) Solar PV hybrids for off-grid isolated systems Six systems (totalling 510kWp) financed by government and tendered Typical cost based on installed systems 6US$/Wp An additional 4MWp estimated (average system size per installation 150kWp) f)

Solar PV hybrids for off-grid Hotels and Lodges e.g. in National Parks, Game reserves The Kenya Association of Hotel Keepers and Caterers (KAHC), the main hotel industry body, has 180 members 44% of whom are offgrid Safari Hotels. Primarily run from diesel generators with monthly consumption ranging from 4,000 – 20,000 liters of diesel per month