In March 2023, the Energy and Petroleum Regulation Authority (EPRA) released newly approved electricity tariffs following the submission of a Retail Tariff Application (RTA) for the fourth Tariff Control Period by Kenya Power in accordance with Section 165 (3) of the Energy Act, 2019.
In this review, the country's e-mobility sector got a shot in the arm after a special tariff for charging electric vehicles was approved to boost the efforts to tackle climate change and sustainability.
However, while this bold step to promote e-mobility in Kenya is commendable, the adoption of EVs in Kenya will remain at a nascent stage if other measures are not deployed and then merged with this new tariff.
This approach, we believe, is set to bear more fruit considering that the uptake of Electric Vehicles (EVs) in Kenya is still low and under the projected numbers.
According to the National Transport and Safety Authority (NTSA), Kenya has approximately 350 electric vehicles on its roads, a small percentage (0.0001162 per cent) of the total number of cars (three million) being driven by Kenyans. Data from Roam - a technology-enabled electric mobility company focused on electrifying Kenya's public transport sector - indicates that Kenya has approximately 700 electric motorcycles and 20 charging stations.
These numbers are relatively low for a nation that aims to expand its EV ownership to 5 per cent of all registered vehicles by 2025. Against this backdrop and considering the newly approved power tariffs, several approaches call for urgent action in view of promoting e-mobility in Kenya.
First, a famous adage says you can't reap what you did not sow. As a result, investments in EVs should be an area that should be lobbied for starting now. Already, the country has placed some favourable tax incentives on EVs. In 2019, the National Treasury reduced the excise duty on 100 per cent of electric motor vehicles to 10 per cent. Further, the income duty imposed on green energy vehicles was reduced from 35 per cent to 25 per cent.
These measures, supported by approximately 90 per cent renewable energy dispatch and the favourable e-mobility tariff and the removal of the 15,000 units per month consumption cap, will make Kenya an attractive candidate for substantial investment by foreign players in the e-mobility space.
Secondly, there is a need for collaboration among different stakeholders in developing the charging infrastructure in the country. So far, companies like Kenya Power have demonstrated efforts to drive knowledge in this field. During its recent e-mobility stakeholder forum, the power utility made it clear that its current infrastructure is robust enough to support the switch to electric with the capacity to accommodate 100 per cent of electric two-wheeler vehicles and over 100,000 vehicles operating in the public transport sector and private cars.
The ambitious goal of having at least five per cent of all registered vehicles in Kenya as EVs by 2025, will require a significant increase in charging infrastructure all over the country.
Setting up these charging spots will not only boost the general uptake of EVs in the country but also provide an avenue for learning through data collection. For instance, Roam has managed to develop an AC charger, a DC overnight bus charger and an en route DC bus charger which are giving new insights into how to run an electric bus fleet. Further, Roam aspires to roll out a charging points management platform known as CPOMS where owners of charging stations and users can interact and do business.
Thirdly, more financial institutions should come on board to finance the EVs being acquired by multiple players such as schools, government parastatals, private companies and most importantly, Saccos.
According to data from the Shell Foundation Report of January 2022 on Financing the transition to electric vehicles in sub-Saharan Africa, scaling e-mobility in Africa will require financing for consumers (asset financing for the vehicle), for EV assemblers and importers, and for charging infrastructure, (including both "light" charging infrastructure such as battery swap stations for E2Ws or modifications), to enable at-home.
These findings prove that more financiers should be persuaded to come on board. With Kenya being one of the seven African countries, which will benefit from a Sh129.3 million ($1 million) grant from the African Development Bank to boost the shift to electric mobility, this is an area that more financial institutions need to look into and support.
Last but not least, there is a huge need to increase regulations on the standards for importing EVs, spare parts, and batteries. The action will ensure that Kenya is not a dumping site for sub-standard EV materials in the future.
Above all, consumer awareness and behaviour also require a boost to give adequate information about the benefits of EVs, the incentives needed and sustainability merits.
With information from the McKinsey Centre of Future Mobility indicating that the global EV market is expected to reach 80 per cent of sales across all segments by 2050, now is the time for Kenya to activate these measures, merge them with the new power tariffs and then promote the e-mobility industry.
The impact will go a long way in reducing air pollutants and air pollution-related health issues, ultimately building on to the government's agenda on environmental sustainability and universal healthcare.
At the same time, these opportunities will build onto Kenya's efforts of developing green energy for universal access to clean energy for its citizens.
