As of April 2018, approximately 26.6 percent of Kenyans had no access to electricity, the majority of whom live in rural areas.
Homes in rural areas rely on kerosene and other biofuels as their easily accessible source of energy for lighting and cooking despite being expensive and harmful to the environment.
Investment in clean energy has accelerated in the last few years, as focus shifts from fossil fuels towards clean energy. The Sustainable Development Goal (SDG) 7- “Affordable and Clean Energy” has provided for environment-linked targets that will ensure access, use of renewable energy and increased investment in renewable energy.
It is estimated that for African governments to meet SDG-7 goal by 2030, 40% of new power connections will need to be provided by mini-grids, the focus of this report. This large power gap creates a huge yet untapped investment for green investors.
In line with Kenya’s Vision 2030 objective to transform Kenya into, “a newly-industrializing, middle-income country providing a high quality of life to all its citizens in a clean and secure environment”, the country is moving towards meeting some of its energy needs through renewable energy.
RENEWABLE / GREEN ENERGY IN KENYA
Current generation:
Renewable energy sources in Kenya include solar, wind, biological waste, hydro, geothermal, ocean, and tidal energy.
Currently, over 74 percent of the energy produced in Kenya is renewable- Geothermal energy. However, we note that 100 percent of the energy produced in Kenya can be harnessed from renewable sources and most remain untapped.
Factors driving investment in renewable energy:
The global need for a cleaner environment by reducing global warming effect is the main driver for investment in renewable energy. Cost of energy is another driver; generation of purely renewable energy is relatively cheaper and would offer a reprieve to consumers.
Challenges to adoption of renewable energy:
Building renewable energy plants is expensive due to the upfront funding needed. These projects are mainly done by private investors who mostly face funding challenges from the local banks but this is currently being mitigated by the many funds coming up to ensure financing of renewable energy projects. Additionally, lack of consumer education to the masses who should be using renewable energy is prevalent.
Solar mini-grids:
This is the focus of this report, outlining the state of mini-grid solar power investments and opportunities that abound, the key of which will be solar mini-grids solutions. We delve into the regulations, opportunities, challenges in the development of mini-grids as well as available ways of obtaining finance for the project developers.
Investment Case
Due to this large opportunity gap created by power access rate, availability of financiers for green power projects and an upcoming favorable legal framework, we are of the view that the mini-grid system is the most effective and efficient way in meeting universal connectivity goals and lighting up green ecosystems. Among all other green investments, we believe that mini-grids offer the best balance between a return on investment and offering a sustainable way for communities to flourish.