Lessons from Kenya: what’s holding back solar technology in Africa
The spread of solar and other modern energy technologies in African countries is considerably low. Despite the global viability and growth in the solar energy market, African countries continue to lag behind. They represent less than 1% of the market demand for solar energy.
The region accounts for only 9% of the global installed capacity of photo-voltaics (PV) which convert light into electricity using semi-conducting materials. The solar PV technology power generation rate rose from 1% in 2010 to just between 3% and 4% in 2013.
This is despite the fact that Africa has the best solar resource in the world. Most countries on the African continent receive between 4 – 6 kWh/m2/day in most months of the year. This means that in a day, a square metre of solar panel can generate 4 to 6 kilowatt units of electricity. In simple terms, it could power 400 - 600 10-watt light bulbs for one hour.
In the past, the poor diffusion of modern energy technologies in developing countries, especially in rural areas, was attributed to poverty and ignorance. But recent market dynamics challenge this theory. Mobile telephony technologies, for example, have had huge success in market penetration in the same environments and under even tougher conditions.
So what is holding the solar energy sector back?
There is a range of factors that affect players at every level of the value chain - from the investors to the end user.
A study carried out in Kenya sheds light on what is holding solar back. It looked at the choice of lighting fuel in households, education levels and the household heads' income brackets. It also examined the average household expenditure, ownership of the dwelling, potential grid access, rural/urban setting of the household and the prevalence of solar home systems in the area.
The findings of theat study, corroborated by others, identifies four categories that can be seen to affect the growth of the solar energy industry in Africa. These are: an enabling environment, access to finance, awareness and access to technical support services.
An enabling environment refers to the conditions in a country or region that support the growth of a particular industry. It is mostly a function of the national government and regulatory bodies which can either be a hindrance or be helpful.
The “Kenya Least Cost Power Development Plan” provides a good example of how a regulatory body can fail to be of assistance. In its latest plan the country’s energy commission makes no provision for the generation of electricity from solar energy resources at any point in the projected 20-year period. The decision to omit solar PV was based on previous assumptions that labelled this technology as too expensive, which is not the case today.
This plan limits solar energy applications to solar home systems, solar water heating and other off-grid uses in rural areas. These are far from the opportunities that large PV systems could provide when connected to the grid, generating cheaper electricity.
On the other hand, a positive example is the Kenyan government’s VAT exemption which applies to all solar PV equipment such as solar panels, batteries and controllers. This reduces the cost of PV systems by 16% and increases the chances that they’ll be adopted.
Access to finance and affordability
Access to finance has been identified as the most significant challenge to the penetration of solar energy technology in Africa. The effects of limited financing options are felt by all players from manufacturers to importers, distributors, dealers and end users.
Basically, local banks have high interest loans – between 15%-25% – making it very expensive to buy a solar system. All the savings obtained in not paying the utility are effectively “eaten” by the banks.
Meanwhile foreign investors, who could bring in more affordable interest rates, are wary of entering the market because of the perceived high risk of investing in developing countries.
Consumer education is another key challenge, particularly in rural areas. Awareness about available energy options and their benefits needs to be increased. In addition, the hazards involved with using fossil fuels such as diesel and paraffin also need to be brought to people’s attention.
The marketing of solar products and other modern energy technologies to end users has also been limited. This is partly because there is a shortage of entrepreneurial capacity in the energy sector, particularly in rural areas.
Finally there is the issue of substandard products in the market which result in users not trusting the technology. A study on LED torches in East Africa found that 90% of the users experienced quality related problems during the six-month study period.
Access to technical support services
End users having easy access to technical assistance is another key factor. The presence of technicians well versed in troubleshooting, repair and maintenance would increase consumers' trust. But the fact that consumers live far apart, coupled with their low buying power, makes the notion of setting up service centres in the distribution regions unsustainable.
There are a few interventions that could mitigate some of these challenges. These include:
Green credit lines - The French government, for example, provides loans to Kenya, with affordable interest rates, which can be obtained to install solar systems. Strathmore University in Nairobi is another case in point. It became the first zero-carbon footprint university in Africa by installing a 600 kW roof-mounted solar system. The loan to achieve this will be paid back in 11 years' time at 4% annual interest.
Tax exemption - This includes VAT exemption on solar PV equipment and the introduction of concepts such as Feed In Tariff and net metering. In both concepts private individuals are allowed to produce electricity for themselves and feed the excess into the grid, so becoming independent power producers. This has been made possible in Kenya since 2012.
Training of technicians - This is rather obvious: would you buy a car if the closest mechanic was 200km away from you? Such is the case of most of Kenya’s rural population with regards to solar PV technicians. More are needed, within reach. USAID has partnered with Strathmore Energy Research Centre to get 1000 technicians trained in different parts of Kenya. This is ongoing.
School campaigns - These are vital in helping to increase photo-voltaic penetration. This was done in Uganda where PV technology and other renewable energy resources were inserted into the primary and secondary school syllabus.
To close on a very positive note: all indicators point towards a massive adoption of solar technology in the developing world. All the above mentioned difficulties can be overcome as awareness increases, training is made more available, real and perceived financial risks decrease and the cost of solar technology becomes affordable. In a poetic manner we can say: you may pluck one flower, two flowers and three but you can never stop the coming of Spring.
Izael Pereira Da Silva received funding from USAID, GIZ and Africa-EU energy partnership. He is affiliated with the association of energy professionals eastern Africa.