Firms seek solutions in renewable energy to curb high cost of power

James Finlays Kitumbe Solar plant. [File, Standard]

Government officials and business leaders have once again highlighted the pressing issue of high electricity costs and their adverse effects on local industries.

While Kenya boasts one of the cleanest energy mixes in Africa, electricity prices continue to rise, pushing many manufacturers to explore alternative renewable energy sources such as solar and wind power to lower operational costs.

At the opening of PowerElec Kenya 2024 conference in Nairobi on Wednesday, the head of policy research and advocacy at the Kenya National Chamber of Commerce and Industry (KNCCI), Kigen Kiplimo, said energy costs are a critical factor influencing the competitiveness of Kenyan products in global markets.

He pointed out that high electricity prices are a significant burden on manufacturers, compelling them to seek cost-effective energy alternatives.

"As manufacturers, we are looking for ways to reduce our operational costs, and electricity is a major contributor," Kiplimo said.

He said that while the initial investment in solar panels and batteries is high, the long-term savings on energy consumption make transitioning to renewable energy financially attractive.

Kiplimo proposed a model where investors install and manage renewable energy systems for manufacturers, then charging them based on usage.

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"Solar energy is a viable option," he said. "If the price is right, manufacturers would gladly adopt it.

"We need affordable, clean energy solutions to stay competitive, especially when exporting to markets like Bangladesh, Vietnam, or India."

The government said it remains committed to achieving 100 per cent renewable energy by 2030, in line with the Kenya Vision 2030.

Director of Renewable Energy at the Ministry of Energy and Petroleum, Benson Mwakina, highlighted Kenya’s progress, noting that 93 per cent of the national energy mix is already derived from renewable sources.

The government is focused on expanding the country’s geothermal, hydro, and solar energy capacity, with an emphasis on geothermal, which currently contributes 985 megawatts (MW) to the national grid.

Mwakina said Kenya has untapped potential of 10,000MW of geothermal and 6,000MW of hydroelectric power, which could be harnessed to meet the growing energy demand.

He, however, acknowledged the challenge of balancing supply and demand.

While the government plays a vital role in scaling up renewable energy capacity, the private sector is increasingly taking steps to mitigate the high cost of electricity.

"Many companies are already moving toward energy self-sufficiency," noted Kiplimo. "In this competitive market, the lower your cost of production, the better your chances in global trade.

"Kenya must find ways to make renewable energy more affordable to ensure our industries can compete with neighbors like Uganda and Ethiopia, where power is significantly cheaper," he said.

While Kenya’s energy vision is ambitious, Mwakina emphasised that private sector involvement is critical.

However, the high-risk nature of renewable energy projects has deterred some investors. As such, international collaboration will be key to achieving the country’s energy goals, particularly in terms of technological advancements and attracting the investments necessary to scale up renewable energy infrastructure.

"Fostering collaboration with international partners is essential to driving technological advancements and attracting investments that will fuel our progress," Mwakina said.

This sentiment was echoed by Prinaven Naidoo, senior account manager at Sungrow Southern Africa, who stressed the importance of energy storage solutions in enhancing the reliability and sustainability of renewable energy systems.

The growing shift toward renewable energy offers a promising solution to the high cost of electricity facing Kenya’s manufacturers.

With the right investments and technology, Kenya can significantly reduce its energy costs, ensuring that its industries remain competitive on the global stage.

The combination of government commitment, private sector innovation, and international partnerships will be pivotal in unlocking the country’s renewable energy potential.