Financial hardships hamper push for solar uptake
Business
By
Macharia Kamau
| Oct 11, 2024
Linda Kamau, co-founder of SowPrecise uses solar energy to offer irrigation services to low-income farmers in Embu County. [Patrick Vidija, Standard]
Solar electricity systems are key to achieving universal electricity connection in Kenya but the economic situation of targeted households raises doubts about whether the country can meet this ambitious goal.
While solar power is a viable alternative for off-grid and grid-connected households facing high power bills, affordability remains a critical challenge.
A new report by Gogla, an organisation representing off-grid solar providers, reveals that only a fifth of households without electricity can afford off-grid solar solutions.
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In Kenya, prices of solar gadgets went up last year following the weakening of the shilling, further pushing the products out of reach for many.
"Many households, particularly in rural areas, face financial constraints that limit their ability to purchase off-grid solar (OGS) systems outright or make regular payments under financing schemes like Pay-As-You-Go (PAYG)," the report said. Economic pressures, including inflation and currency depreciation, further tightened household budgets.
"The ongoing payment for Tier One off-grid solar products (which provide basic services like lighting and phone charging) with PAYG is considered affordable-that is, it would cost five per cent or less of their monthly budget-for only 22 per cent of households lacking access globally."
It added that another 27 per cent of households with access to electricity said they could afford the products but "at a stretch". "(This) would require spending 10 per cent of their income on energy, potentially leading to significant financial strain," said Gogla.
Affordability is even worse for Tier Two OGS products, which offer an enhanced level of energy access. Only one per cent of households globally find these products affordable, with only two per cent able to afford them "at a stretch."
Kenya's weakening currency last year exacerbated the problem, pushing up the cost of solar products.
The report noted that the cost of solar lanterns, for instance, rose by as much as 207 per cent, despite global prices of off-grid solar products dropping by three per cent due to cheaper solar panels and batteries. "In Kenya, price increases for solar lanterns have ranged between 15 per cent and 207 per cent, reflecting the broader volatility in pricing across the sector," said Gogla.
The report noted that lack of electricity hinders business opportunities, thereby creating a "vicious circle of energy poverty and income poverty, which is exacerbated in fragile, conflict-affected, and vulnerable settings".