Only about 30% of Kenyans are connected to the national electricity grid, with the number being much lower (only 5%) in rural areas. That alone makes a good case for microgrids and home-based solar power alternatives. Not so long ago, the term "under grid" was coined by the National Bureau of Economic Research to describe the type of Kenyan homes that are located close to the national electricity grid but for one reason or another cannot get connected. The high price of connectivity remains the biggest reason why these homes don't connect to the national grid, followed by the dispersed nature of populations in many rural parts of the country. Kenya will be counting on additional home solar kits to power more rural homes, following a recent commitment by SkyPower to distribute 2 million kits in partnership with the government. This was announced during the just concluded 6th annual Global Entrepreneurship Summit.
There are several aggressive plans on the ground to help extend the grid to the "last mile" of unconnected homes, including a recent directive by President Uhuru Kenyatta to lower the initial cost of connecting to the grid to Ksh. 15, 000. KPLC, the country's public power utility has also received massive funding to improve and increase connectivity even in slums. However, the dispersed nature of populations in many rural areas is bad news for conventional grid power as it means that the public utility must invest in expensive equipment to connect these remote and impoverished areas to the national grid - this sometimes makes little economic sense. That alone necessitates the change of strategy with regard to long-term provision of power to rural homes.
It is easy to see how opportunities for home-based solar power emerge, given the two barriers preventing effective extension of the grid to rural communities. In fact, the lack of affordability to connect to the national grid has led to the recent popularity of "pay-as-you-go" stand-alone solar alternatives such as M-KOPA III - a successful program based in the East Africa region. MKOPA announced this month that it had already connected a total 225, 000 homes with its home solar product. However, the issue with their popularity is more than just affordability - these systems are good news to many people in rural areas due to their acceptable aggressive financing options. The financing option for the solar kits has been popular because the model allows for a small payment of the total cost over a long duration. After a small initial down payment, owners make small daily payments for a year before finally owning the system and breaking free from making such payments in the future. Together with this, M-KOPA also works with the already popular MPESA mobile money platform - the most successful of the kind in the region.
Image: Mkopa III Home Solar Kit
Ownership of home solar kits presents a viable option for low-income communities since unlike for connection to the national grid, no fixed monthly payments are necessary after total ownership. Similar to the MKOPA Home Solar Kit, the recently announced SkyPower Home Solar Kit is a self-contained power unit but with additional accessories. It has an inverter, radio, LED bulb, a fan and USB charging ports. The company recently stated that the initiative to supply Kenyans with 2,000,000 of the units would cost US $2.2 billion. The announcement was made during the Global Entrepreneurship Summit that took place in Nairobi and which was attended by U.S. President Barrack Obama.
Without a doubt, energy remains the most important factor in driving economic development in Kenya and the whole of sub-Saharan Africa. Entry of SkyPower into the home solar power market is expected to help more people in rural areas to access power and engage in economic development activities. Not only does cheaper power help low-income rural communities to engage in more income-generating activities and power their small business, but communities are also able to save the amount spent on charging mobile phones and running other devices. Besides, households spend about 2% of their income in expensive kerosene lighting. About 70% of the population still live in rural areas, a trend expected to persist according to 2025 projections. Therefore, their contribution remains vital.
Solar energy joins wind power as one of the best global strategies for lowering carbon emissions and helping Africa to move away from harmful energy sources like coal and charcoal. It is also likely that entry of more players in the sector will help lower the cost of solar power products, making them more affordable for low-income groups.
Programs such as Light up Africa by the World Bank have also had a role in ensuring alternative power systems became popular, given the health concerns of lighting alternatives such as harmful coal and charcoal. As I wrote earlier this year, these alternatives kill 1.5 million people annually. Two thirds of these deaths take place in sub-Saharan Africa and South-East Asia, with women and children making up the largest proportion of victims.
Africa, which requires an additional 250 GW of capacity between now and 2030 to meet demand from expanding economic growth has witnessed large-scale investments in clean renewable energy from many private firms and through projects such as Power Africa. Home-based solar alternatives also fit very well in this agenda by capturing low-income groups especially in rural areas.