Spate of new investments in East Africa’s solar energy

Every day, at her stall where she makes and sells French fries in Kawangware, a low-income estate west of Nairobi, Jane Mmbone charges her solar panel using the sun’s rays.

The panel is connected to a battery which transmits energy to light bulbs via one of four ports. Two ports on the other side of the battery help in charging the panel and gadgets such as phones and torches.

Thanks to the system, Mmbone has discarded kerosene as an energy source for lighting, saving her about $15 a month. This is significant for a woman who makes just about Ksh7,000 ($67.8) per month.

Many low income earners in Kenya like Mmbone cannot afford the cost electricity which requires a one-off payment of Ksh15,000 ($145.3) for a connection to the national grid plus monthly payments based on usage. 

The situation is the same for other low income earners across East Africa, making the region a lucrative market for investments in alternative sources of power. Regional and international firms as well as governments are shifting focus to clean, renewable energy.

Jesse Moore, M-Kopa Solar founder and managing director for example, estimates that the market for solar energy in the three countries is 20 million people.

So far, the company has connected more than 250,000 homes in Tanzania, Uganda and Kenya, with the hope of reaching one million customers by 2018.

Two weeks ago, Solar Green Renewable Energy of London and Questworks, a consultancy firm in Kenya signed an agreement to develop small-scale solar panel electricity systems — photovoltaics (PV) — of an average 5MW. The systems can light up houses and buildings and charge electronic appliances.

“Since May 2011, Solar Green has been analysing the market trends for renewable energy and other projects in Kenya. Signature projects are in the pipeline in Western and Rift Valley,” said Solar Green officials in an e-mail.

Questworks on the other hand constructed the largest solar PV roof project in Africa at Strathmore University Nairobi at a cost of $1.3 million last year, supplying 75 per cent of the school’s energy needs.

Solar field

Last month, American energy company SkyPower also announced that it would double the $2.2 billion it agreed to invest in Kenya to develop solar power.

In Rwanda, Gigawatt Global Company is establishing a $23.7 million solar field, the first of its kind in the region. The field is made up of 28,360 PV panels on a 20-hectare (50 acres) piece of land.

The field is now supplying 6 per cent of Rwanda’s power needs, and will be harnessing the sun’s light for 25 years according to the power purchase agreement. Gigawatt Global also plans to establish a 7.5 MW plant in Burundi.

In Uganda, solar energy projects generating 20MW of electricity are in the offing. A consortium of Access Power MEA, of the United Arab Emirates, and Spain’s TSK Electronica have plans to invest $17 million while another consortium of Italian firms Building Energy Spa and Uganda’s Simba Telecom Ltd. plan to invest $15.5 million in a separate plant.

The US Power Africa Off-Grid Energy Challenge has announced new funding totalling $2.2 million. Entrepreneurs in Tanzania, Rwanda, Uganda, Ethiopia, Ghana, Kenya, Nigeria, and Zambia are among the beneficiaries.

“The support will attract more entrepreneurs into the solar business and the cost will drastically come down as governments promote more partnerships and trade between grid and off grid connections,” said Einstine Kihanda, chief investment officer at ICEA Asset Management.

This implies that institutions producing solar power can sell redundant power during sunny days and buy electricity from the grid during rainy days.

Shift to clean energy

Companies are also shifting from electricity to clean energy.

Safaricom, a Kenyan telecommunication firm is using renewable energy on its sites.

“We have deployed solar or wind energy solutions in 77 Sites over the year, 79 sites fitted with Power cubes (efficient hybrid energy systems), 127 sites with free cooling units. Low voltage auto phase selectors and deep cycle batteries are other initiatives, “said Stephen Chege, Safaricom’s director of corporate affairs.

Across Africa, the demand for electricity is projected to triple by 2030, offering huge potential for renewable energy sources.

The power sector requires investments of $70 billion per year on average between now and 2030. This can be split into about $45 billion per year for generation capacity and $25 billion for transmission and distribution.

“Renewable energy sources could account for two-thirds of the total investments in generation capacity, or up to $32 billion per year,” according to a new report by International Renewable Energy Agency (IRENA). “Realising this opportunity will create significant business activity in Africa.”

A World Bank report notes that only 23 per cent of Kenyans, 10.8 per cent of Rwandans and 14.8 per cent of Tanzanians have access to an electricity supply. In Uganda, only 17 per cent have access to electricity according to the Ministry for Energy and Mineral Development.

With such populations locked out of the national grid, IRENA director-general Adnan Z Amin said investors see the continent as the next big market for renewable energy, even as demand for power in Europe declines.

“We really believe the business case for renewable energy is here. It’s a question of aligning policy frameworks, de-risking financing, having markets that bring investors, and it is doable,” said Mr Amin.