The time to invest in solar energy is now

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BY ANTONY MUTUNGA

The African economy has surpassed all expectations to be among the fastest growing regions in the world for almost a decade now with a GDP of between 3% and 6.6%. However, the continent suffers greatly in terms of reliable energy, for instance more than 600 million of the people living in sub Saharan Africa lack access to electricity.

This has got an adverse effect on development of these countries, as energy is a key requirement. Apart from making it near impossible for most people to better their lives, this lack of access to affordable electricity also causes businesses and investors to shy away as they identify them to have high-energy costs.

Kenya, which is part of sub-Saharan Africa, has not escaped this fate either. As of mid 2016, the number of people who lacked access to electricity in the country stood at 35 million according to a report by the World Resources Institute. This however has been slowly changing as the country focuses more on affordable energy as a means of reducing the high costs in energy. Kenya moved to renewable energy like most of Africa, believing it is the way forward to grow the economy. The country’s renewable energy in early 2017 is already making up 87% of the energy mix.

Solar energy has been one of the major sources of affordable energy, playing a major role in providing energy to rural areas in the country. This has mainly been through pay-as-you-go (PAYG) solar companies that offer this reliable and affordable energy to the people.

Even though the government is trying to add the power capacity in the country, it could take quite a long time before it reaches some regions. Pay-as-you-go solar companies are bridging this gap by offering users some system that gives them access to electricity using solar. The solar home systems mostly include a battery, a charge controller, a solar panel, LED bulbs and a mobile charger.

People usually pay for the solar home systems by first paying a small upfront payment as well as regular top-ups- either on a daily, weekly or monthly basis- usually through mobile money services. For example, M-Kopa Solar, which is one of the pay as you go solar companies in Kenya, offers such a package whereby one has to pay a deposit of Sh3, 000 as well as pay Sh50 per day. Due to the rising number of mobile phones in the country and the low costs of mobile money, PAYG have decided on picking it as the medium of payment in East Africa. Today 96% of households outside Nairobi have at least one mobile money account.

The solar home systems have enabled people, mostly those living in rural areas, to be able to afford having electricity instead of taking up loans in order to be connected to the national grid. The pay-as-you-go companies have helped light up more than 200,000 people in Kenya enabling them to better their lives. Businesses have also adapted the use of solar technology in order to avoid the soaring price of energy, an example is the recently opened Two Rivers mall that has solar technology expected to produce up to 2MW.

However, the PAYG companies are too small in number to be able to provide affordable energy to the millions that lack access to electricity. For the already existing PAYG companies, foreign investors are the majority shareholders, whereby they manage them and acquire finances for them as well. Most of the local entrepreneurs tend to shy away from investing and creating start-ups in the sector because it needs a lot of funding.

Different private organizations from overseas have been the biggest investors in the model in Kenya. However, local financial institutions, for example commercial banks, have been reluctant to invest in the same sector, citing it as a risk. The local banks identify the PAYG model as being new in the market thus the uncertainty of whether it is a worthy and credible investment. As a result, local business people have lacked the funds needed to venture in the business models.

The investing of the local financial institutions in the PAYG business models would not only cause the rate of unemployment to drop, but it would see a larger part of the population living without access to electricity, finally have affordable energy. This would eventually make the lives of the people better and thus increase productivity, which in turn would increase the growing rate of the economy.

The same case our country faces today, Bangladesh faced it as well over 10 years ago whereby most of its people had no access to electricity. However, because of the inclusion of national institutions, the country was able to pump in millions from development finance institutions and provide about 3million solar home systems to remote locations all over the country. This helped to provide affordable energy to 13million citizens thus giving them an opportunity to better their lives. It is time to emulate the same in other developing countries especially now when solar energy is more affordable than ever.

The Kenyan government is also investing in solar energy, it is currently building a 55MW solar plant in Garissa, which is to connect to the national grid and produce enough power to light up more than 600,000 houses. This is going to be the largest solar farm in East and Central Africa. As more people start using solar energy, the carbon emissions in the country will also reduce in numbers, as solar is clean energy.

The demand for electricity is high and there is need for more investment in the PAYG sector. I hope that it is only a matter of time before the local financial institutions start giving credit to local entrepreneurs in order to increase the percentage of clean energy in the country. This way, we can ensure that every person in Kenya has access to electricity.