Joint UNDPNVorld Bank Public Disclosure Authorized Energy

Joint UNDPNVorld Bank -

Energy Sector Management Assistance Programme (ESMAP)

PHOTOVOLTAIC POWER TO THE PEOPLE

The Kenya Case

January 1994

This document bas restricted distribution and may be used by 6cipients onlyinp the performance of their official duties. Its contents may not otherwise be disclosed without UNDP or World Bank authorhtion.

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PHOTOVOLTAIC POWER TO THE PEOPLE

The Kenya Case

January 1994

lENPD Power Development, Efficiency,

Household Fuels Division Industry and Energy Department Private Sector and Finance Vice Presidency

This paper is one of a series issued by the joint UNDPlWorld Bank Energy Sector Management Assistance Programme (ESh4AP). The paper represents the views of its authors and may not be published or quoted as representing tbe views of UNDP, E S W , or the World Bank Group, nor do any of tbe foregoing organizations accept responsibility for its accuracy and completeness.

Table of Contents

List of Acronyms and Abbreviations

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1 . Overview of the Photovoltaic Sector in Kenya . . . . . . . . . . . . . . . . . . . . . . . . 2 History of the Kenyan Photovoltaic Sector . . . . . . . . . . . . . . . . . . . . . . . . 2

. . . . . . . . . . . . . . . . . . . . . . . . . Present Status of the Photovoltaic Sector 3 The Rural Electrification Programme . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Present Performance of Photovoltaic Systems . . . . . . . . . . . . . . . . . . . . . . 6

2 . Policy Towards Photovoltaics in Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 hnportRegim e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

- Foreign Exchange Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3 . Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . . . . . . . . . . . Donor and Government Programmes 9

Private Sector Commercial Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Market Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

5 . Photovoltaic Support Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Spares. Servicing and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Financing Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6 . Regulatory Environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 IndustrialOrganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7 . Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Government Policy: An Economic Case for Rural Photovoltaic Lighting . . . . . . . . . . . 15 Other Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Tables

Table 1.1 Table 1.2 Table 2.1 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 7.1

Figure 1.1 Figure 1.2 Figure 1.3

Annex 1: Annex 2: Annex 3: Annex 4: Annex 5: Annex 6:

Notes

. . . . . . . . . . . . . . . . Estimated Number of PV Installed in Kenya (1993) 4 . REP Connections '87 Feb '93 . . . . . . . . . . . . . . . . . . . . . . . . . 6

Duties and Taxes for PV Equipment . . . . . . . . . . . . . . . . . . . . . . . 8 . Costs for a 53 Wp Lighting System August 1993 . . . . . . . . . . . . . . . . 11

. . . . . . . . . . . Comparative Customer Costs of Photovoltaics (1985 . 1993) 12 Prices of PV Modules (May '90) . . . . . . . . . . . . . . . . . . . . . . . 12 Prices of PV Lamps (May '90) . . . . . . . . . . . . . . . . . . . . . . . . 13 Comparison of Rural Elect&cation Costs . . . . . . . . . . . . . . . . . . . 16

Wes Firm photovoltaic Sales '80-'92 . . . . . . . . . . . . . . . . . . . . . . . . . 3 Cumulative Private PV sales '90-'!32 . . . . . . . . . . . . . . . . . . . . . . . 3

. . . . Annual and Cumulative Connections (all customers). REP: 1987 February '93 6

Annexes LiofContacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Firm Photovoltaic Sales: 1980-1993 . . . . . . . . . . . . . . . . . . . . . . 20 Case for Diversification into Solar Electricity . . . . . . . . . . . . . . . . . . 21 KPLC's R d Electrification Programme (REP) . . . . . . . . . . . . . . . . 24 Minutes of 16th September 1993 Round Table Discussion on Photovoltaics in Kenya . 27

List of Acronyms and Abbreviations

ABM Associated Battery Manufacturers Ah Ampere hour AKF The Aga Khan Foundation AMREF Africa Medical Research Foundation BP British Petroleum BOS Balance of system CIDA Canadian Aid Agency cif cost, insurance and freight CIP Commodity Import Program (USAID) DANIDA Danish Aid Agency DDC District Development Committee EPI Extended Programme on Imrnunisation

-

FINNIDA Finnish Aid Agency fob free-on-board GTZ Gesellshaft fuer Zusammenarbeit (Gennan Technical Assistance Agency) ITDG Intermediate Technology Development Group KBS Kenya Bureau of Standards KEPI Kenya Extended Programme on Immunisation KPC Kenya Pipeline Corporation KPLC The Kenya Power and LighMg Company, Limited KP&T Kenya Post and Telecommunications KREDP Kenya Rural Energy Development Project (USAID-Wed) Ksh Kenya Shilling kVA kilovolt ampere kW kilowatt kwh kilowatt hour ~ W P kilowatt peak KWS Kenya Wildlife Service MW Megawatt M\Nh Megawatt hour MWP Megawatt peak MoE Ministry of Energy NHC National Housing Corporation NORAD Norwegian Aid Agency ODA British Overseas Development Administration PV Photovoltaic REF Rural Electrification Fund (KPLC) REP Rural Electrification Programme (KPLC) SEP Special Energy Programme (GTZ-funded) SIDA Swedish Aid Agency TRP Turkaua Rehabilitation Programme UNICEF United Nations Childrens Fund USAID United States Agency for International Development VAT value-added tax WHO World Health Organization WP Watt peak

Photovoltaic Power to the People - The Kenya Case Page 1

Kenya has been one of the developing world's leaders in the field of renewable energy technologies. From geothermal to win4 improved charcoal stoves to micro-hydropower, Kenya leads most of Afiica in the d '

. . on and use of mewable energies. However,

what d s t m p d m -a from many other developing nations is the prombent, and m many cases, predominant role played by the country's private sector in spearheading the rapid dissmhticm of renewable energy technologies to the counby's consumers.

Phott~~oitaics are one of several such "success" stories m Kenya At least 20,000 photovoltaic units have been sold to privatehouseholds by Kenya's dynarmc private phatwohaic sectar since 1987, more than & domestic umnectiws under Kenya's national "Rrrral Electrification Programme" (REP or grid).' The o v h m majonty of these uuits have been sold to rural farmers, pnmanly for household lighting. At present a total of 1 MWp of photovoltaic units has been installed in Kenya.

What makes photovoltaic dissemination so unusual in Kenya is that rapid dissemination has occumd m the ab- of any articahhi Govennnent policy favoring phatovohaics over other eldcity supply systems (eg, diesel generators). Indeed, Kenya's foreign exchange andrmpartregimesplaceprivatehporbtion and sales of photovoltaics at a distinct disadvantage vis-a-vis other power systems, on the one hand, and danor- financed projects on the other.

The dynamism of the sector in the face of, at best, Government indifference, reflects two important factors. First, the remarkable growth of sales is pnmady athibutable to the large suppressed demand for electrification in rural Kenya. -a is one of the few count&s m f i c a with a large, and growing, rural middle class, which is well-integrated into the cash econumy (eg, wheat, tea, coffee, horticultural crops,

pyrethrum, etc.). These homesteads are generally far fium any source of e l d c ~ . Therefore, photovoltaics offer them the only reliable and affordable access to power for lighting, radios, even televisions.Second, Kenya's dynam~c and competitive private sector is well-attuned to this demand. Over twelve firms supply photovoltaic equipment to Kouseholds. Hundreds of agents, service personnel and technicians form the inikastmctwe of Kenya's rural photovoltaic economy. At least three firms assemble inverters and wind t r a n s f m fbr baton-type h e s c e n t lamps. Kenya's private sector, fiam large multi-national firms to local cottage industries, is a driving force in expansion of photovoltaics in the country.

Shadd the overall policy emkonment, and import and foreign exchange regimes, improve, then photovoltaics would assume even more importmce in Kenya's rural development. Improving this environment would reduce Kenya's recurrent foreign exchange costs for diesel fuel (generators), kerosene (lighting) and materials for dry cell batteries (lighting). It would reduce environmental degradation, pahcularly fiom the discard of millions of dry'cell batteries each year. It would fkther improve the @ty of life for many nrralinhabitantswhoseelittleorno prospectsfor rural electrification in the foreseeable future.

This study examines these factors. It suggests how in- and Government could improve the environment for disseminating small-scale photovoltaic systans and thereby expand rural electriiication through photovoltaics. It makes an ec~lamic case fix expsion of rural electrification for lightingwithphotovoltaicsrelativetoanyothersystem (expansion of the grid m mauy isolated areas, diesel generation, etc.). It also points to the policy factors which could easily enwurage such expansion through the private sector while, at the same time, improving Kenya's economic and foreign exchange position.


1. Overview of the Photovoltaic Sector in Kenya

1.1 Kenya led much of Africa in the field of photovoltaic (PV) technology acceptance during the 1980s. While initial dissemination of photovoltaics was largely attributable to the influence of donors (eg, for school lighting, rural water pumping, solar refigeration for health centers, etc.), later developments have been achieved almost entirely through the private sector for private households. Tens of thousands of units, ranging ji-om small 40 watt lightmg systems to electric fences and pumping systems are in place today in Kenya.

1.2 What has characterized most photovoltaic penetration of Kenya's markets (particularly the damestic commercial market) has been the absence of any axtic&d natiod policy framework. While some policy moves (eg, lifting duties on the importation of photovoltaic panels betweem 1986 and 199 1) have been mhakd, tky have been done outside auy overall poky fhmework Moreover, Government has played virtually no regulatary role in the dust iy .

History of the Kenyan Photovoltaic Sector 1.3 The1981NairobiUNCanf~onNewand Renewable Sources of Energy catdyzd interest in renewable energies amongst donors, the Kenyan Government and the private sector. Several local companies diversified into photovoltaics to supply power for remote teleammmications, pumping, refigeration and various donor-funded projects. Dunng the mideighes, photovoltaic markets in East Afica grew rapidly in response to a drop in photovoltaic prices, increases in worldwide photovoltaic equipment production, and growing interest among the danor community to support solar -a- 1.4 The early photovoltaic market in Kenya was served by several companies (BP, Anjmatics, Alpa Ngwu, Kensid). It developed almost exclusively to supply donor and Government projects. Initial cantracts supplied remote te1-unications power for scores of high fkpency radios and a few micruwave repeater stations. In 1980, an OXFAM project supplied fifty-two 320 Wp shallow well pumping systems to Somali refugee camps, demonstrating the viability of (and establishing a market niche for) photovoltaic water pumping in East Afiica Scares ofpumping systems have been installed

in East Africa since that time.

1.5 In 1 983, the first solar vaccine refigerators were supplied to the region by WHO'S Extended Prg- of Iunmmisation (EPT). By the late 1980s, the EPI rei?iguation pr- had become the major donor - funded application of photovoltaic in East Afiica with over 600 units installed. These primarily serve Government clinics, church missions, communities and non-gove~nmental organizations WGOs).

1.6 Since 1982, photovoltaic companies in East &a have supplied well over 1 MW to government and donor-funded projects for vaccine refrigeration, water pumping and remote power and li-g systems. Solar e l h c systems have also been installed to power switching stations for Kenya Railways, to light remote schools and army camps, and to power electric fences in wildlife reserves and on private ranches.

1.7 Kenya's photovoltaic market is differentiated from other East African markets by the growth of a commercial, nondonor base. The home lighting system market has grown substantially since 1984. The market for "domestic lightmg systems" (which often also power televisions and cassette players) has grown to appmcimately 60% of the entire photovoltaic market in Kenya. This rapid growth occurred in response to demand for electricity for lighting, radios, and to a lesser extent, televisions. The growth of this market has occurred pnmady in Kenya's high potential farming areas. That is, Kenya's expanding rural middle class has provided the major demand for photovoltaic systems in Kenya over the past decade.

1.8 Thegrowthoftheruralphotovoltaiclndustry. was fhciliw by:

re* available solar cell modules and balance of system (BOS) components in Kenya; an4

a large cadre of photovoltaic system sellers and installers operating in the rural market.

1.9 The expansion of photovoltaics into Kenya's nrral areas was fiather catalyzed during the mid- 1980s

This report ir wxitten by Mark Wanlrins and Mike Bess (consultants) and is the result of a World Bank mission led by Robert van der Plas (ENPD) in August 1993.


by several d photovoltaic lightmg system sales and account for a minimum of 76 1 kWp (Annex 3), with installati081 cuinpanies who established bases in urban total photovoltaic sales (ie, including donor, NGO, areas in Kenya's high potential agriculture regions. private) well over 1 MWp installed.

1.10 These cuinpanies o f f d photovoltaic systems to a large number of m a l customers who had suflicient cash to buy single module lightmg systems priced fiom US$ 600 (equivalent) and above. Customers were usually farmers, teachers, other rural salaried employees (eg, Govennnent personnel), business people or city-based workers with homes in rural areas. The companies trained a number of local electricians who went on to join other photovoltaic companies or to set up their own operations.

Kenya: Flrm PV Sabs. 198tb92 110 mP-

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ID

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. m m a a a m ~ 2

1.13 The local photovoltaic miusby can be broadly divided into two sectors:

companies serving the donor sector; and,

companies sening the domestic commercial market. -

Donor Market 1.14 The donor assistance market serves regional and national donor agencies who procure whole systems, usually designed for specific applications. Contracts are in foreign currency and, because the projects are donor-financed, equipment is not subject to sales tax or import duties.

1.15 The four-to-five companies that serve the donor market are nm by expatriates. Bilateral donors tend to implement projects with companies fiom their own countries, and thus competition is often avoided. Because of their access to foreign exchange and their close links with "parent" solar companies, these companies are suppliers of solar equipment to other companies which compete on the domestic market (ie, nondonor market).

Figare 1.l:Firm Photovoltaic Sales (in kWp): 1980-92

1.1 1 By 1987, all companies involved in the photovoltaic mdustry reco- the potmtd for domestic lighting systems. They began to set up their own distribution systems. Companies began intensive madcehg campaigns employing both the cammcial media (newspapers, magazines and radio) and district agricultural fairs to advertise and dermwstrate their products. By 1989 there were at least 10 Nairobi-based companies involved m supplymg photovoltaic equipment. Additionally, there were scores of rural dealers who either worked as . . . s&&anes omairobi-based companies or who acted Figure 1.2: Private Photovoltaic Sales (kWp): 1980-92 as independent agents.

Present Status of the Photovoltaic Sector 1.12 A a m p l e profile of the ~ndustry m Kenya is M c u l t to build because of the large number of players m the mdushy, the dispersed nature of projects and markets, and the dmmty of donors and end--. It is conservatively estimated that there are presently 1.8 MWp of installed capacity m East f i c a (Kenya, T e a , Uganda, Ethiopia, Sudan, Scnnalia and Djib~uti).~ Private sales of photovoltaics m Kenya

Cml l tLn & Y e w R h l e W &h. 1980-92 I*P-

1.16 M a . b a r - h i e d projects in Kenya include the TJNICEFIEPI Vaccine Refiiger- and the T u r h Rehabilitation Project (TRP). The Kenya Wildlife Service (KWS) has also nxeived donor assistance to install a large number of two-way radio systems and over 300 lcm of solar fences. KWS will install over 300 lan of additional solar fencing around national parks and game reserves during the next two years. h a t e game reserves (eg, Kenya's "rhino

- - PI.

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-

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sanctuaxies") have also installed hundreds of refigeration and communications systems. NGOs kilometers of photovoltaic fencing throughout the have also installed numerous water pumping, lighting country. and radio communication systems in remote areas of

Kenya. 1.17 Non-governmental organizations such as AMREF, CARE, the Aga Khan Foundation (AKF) and various church/mission groups have installed solar-

Table 1.1: Estimated Number of Photovoltaic Systems Installed in Kenva - 1993

VaccinerefKgerabon systems

Home Lightmg systems

Water Pumping sy-

2-way radio power supply

SchwVmission powersqlclfi-g systems

Repeater stations I Electric fencing I

Source: Authors

1.18 Likewise, donors have installed water pumping, 1.-g and radio communication systems for their awn pasornrel serving m the field, in addition to tbe actual communities assisted.

Commercial Market 1.19 The domestic (primarily private household) market developed after 1984 when Kenyan entrepnem realized that phatovoltaics wuld meet n d demand to aperate electric lights, radios, televisions and stereos at a cost that was often less expensive than grid d o n s or systems driven by geamtom. Mcmxner, the convenience of photovoltaic syskms added to the incentive to purchase such systems compared to operatmg generators, or using kerosene and drycell batteries (lighting and radios).

Private

Government

7 *- private

1.20 Kenya's damestidhousehold photovoltaic market is based on 10 - 100 Wp power systems that are installed, for the most part, by ~al -based electricians. The market grew as these electricians linked up with urban businessmen, and formed business agreements with solar electric suppliers pnmmly m Nairobi Demand for photovoltaic systems grew expanezltially as consumers became increasingly aware of the advantages of PV system

1.21 There are presently some eight camparties based in Nairobi who supply this market. Each company has scures of agents based in rural areas who market, install and maintain systems. The local commercial market is highly competitive. It suffers from the vagaries of Kenya's cash eamomy,


particularly "booms and busts" in the coffee, tea, horticulture and maize sectors, upon which most rural cash farmers depend for their income. The recent devaluations of the Kenya Shilling have severely affected the photovoltaic industry, vlrtualIy doubling the Kenya Shilling cost of most systems over the past year. Several of these companies could well go out of business or cease their solar promotion activities due to scarcities in foreign exchange and the reduction in demand athibutable to high consumer prices.

1.22 Dunng the six years between 1986 and 1992, the number of installed rural domestic solar electric lighting systems grew expnentially. The number of installed photovoltaic home lighting systems is now approaching the total number of KPLC rural connections ( i n d d a l , commercial domestic of 3 1,000 by the end of '93). A minimum of 20,000 photovoltaic lightmg systems wae in place by July 1993. A relatively high portion (possibly 40%) of the instaUed domestic lighting systems are located in high potential farming areas within 15 km of KPLC utility lines.

1.23 The rapid growth of the Kenya photovoltaic home market occurred pnmanly on a commercial basis, with little donor or government support. This is due to several f-rs.

High demand exists for lighting, televisicm and amenity power among rural-based teachers, businessmen, families of urban workas and government employees. A strong desk for television among rural wage earners is one of the mjor driving forces behind photovoltaic sales;

Numerous oppdmdm exist for dependent agents based in rural areas to gab emplayment by meeting rural photovoltaic demand;

Consumer awareness of the bendts of photovoltaics has grown rapidly through effective marketing and promotian People learn about the systems through newspapers and radio prop-, and see than at country trade fairs and in their neighbors' homes;

The supply of modules has been good over the years. Due to a removal of duties on some photovoltaic equipmeat and the availability of f d g n srchange m the late 1980s, companies were able to sell systems at coqethke prim; an4

Many rural Kenyans have sac ien t dqosable income to spend on amenities such as lighting, radios and television.

1.24 In addition, Kenya's political stability and a strong market economy allowed solar electric companies to establish themselves and gain good reputations with consumers. Kenya's nnal economy from the mid- 1980s to the end of the decade was fairly robust; many farmers (particularly in high potential areas) had iacreasing amounts of disposable income to iwest in durable wnsumer goods such as photovoltaic sys-.

The Rural Electrification Programme 1.25 hd customers choose photovoltaics because these systems are easier to access than grid power. Kenya's main grid primarily serves urban i n d w , residmts and canmenial custoIllers. Less than 3% of the power supplied by the Kenya Power and Lighting C o m p a n y ( K P L C ) i s c o n s u m e d b y r u r a l ~ e r s whereas more than 90% of all Kenyans live in rural areas.

1.26 While KPLC has succeeded in electrifying all 42 of Kenya's district headquarten (1990), little rural electrification has ocarrred outside these centers. Of all KPLC R.ural Electrification Programme (REP) cormedions, cmly half are "domestic" (ie, households), with the remainder being industries and commercial establishments (eg, shops, bars, hotels) in rural areas. At the present rate of connection, it wil l take hundreds of years to connect all of Kenya's rural population.

1.27 As at February 1993, the REP had made over 3 1,000 d 0 1 l s at a capital cost of over Ksh 1.84 biIlian Dcmm contributed roughly one third to meet these costs with DENOTE (the Danish In t ana t i d Development Agency) playing the major role, while Government and KPLC W b u t e d the remaining costs. KPLC contributes 2% of its gross sales each yearto tbe Rural Electrification Fund. KPLC fkanced the REP to the amount of approximately Ksh 91,127,000 during Kenya's Fiscal Year 1992.

1.28 Since 1973, the programme has completed 115 schemes andmade, on average, 1,570 cormections per year. The rate at which comedians are made has i n d d x h d d y m r e c e n t y e a r s , a s an averageof 4,160 d o n s have been made per year over the last five years (Table 1.2). KPLC's Rural Electdication Programme is now focusing on rural industrid electdcation. This is due to the fact that, unlike domestic rural customers (households), rural idustries demand enough power economically to

tbe necessary grid extensions (see Annex 5) for furtherdebils.


Table 1.2 REP Connections: 1987-Februarv '93 (bv vear and cumulative) ; j j 2, f .;.";@gq$@m:$@i . . . . . . . . . .; . ...., :...:.;w.92E.:.:<...:.*:;:::::.~:IIt;.::2:.. .;.:.:.'".' "'."."." .:: ;A;s :>:: '" .. :33x;.,..4w . ..,,.. x ,... '.....%..... :.:.:.: ,.:.xc:: . .,...,..,..., c.kv @$!$#gp2s:~yz . *, .,:@;@@- @jg@mg#@j@#*B@@8;m$g2$,;

i:.. . .. . ... . . ....... ...,..,. %< .. :...+:.:.:.: .... :.. . <....... ..... .<.., . ... . . .,,; :*$$:52;32. .. .... . , , , . , ............ , . (

Total 8706 11494 15132 19067 24491 3 1409 Curmections

Source: KPLC

I I

F i lr 13:Armual& Cumulative Chmedcms (all custmers), REP: 1987-Februaty '93

Present Performance of Photovoltaic Systems failures are due pnmanly to: 1.29 No 've studies have been undertaken m=d status of photovoltaic Poor battery qual~ty. Local "solar battery" and systems in Kmya The eshmated operational "success" automotive batterits are often not of the rate of home photovoltaic systems is 50-80% qualdy needed for photovoltaic systems (they (dcatmgwktktheyareaddyin use). Cantirmed also represent a major cost element for high demand for photovoltaic lilighting suggests that opedng photovoltaic system); most rural lightmg systems are presedy operatianal.

Poor system design and installation; 1.30 Photovoltaic dealers report that system


Poor spare parts supplies; home/domestic market for photovoltaics exists, mean monthly solar radiation falls below 4 kWh/m2/day

Poor consumer/user education; and, during June and July. Dunng this period, batteries in those systems without charge controls devices often

Kenya's climatic conditions (tropical). fail. More m f d o n is necessary on this important topic and should be collected through a survey.

1.3 1 In high potential areas, where much of the

2. Policy Towards Photovoltaics in Kenya -

2.1 The most important government intervention to support photovoltaics was the removal of the 45% duty on photovoltaic equipment in 1986. Additionally, Government policy statements since the early 1980s have encouraged increased use of photovoltaics. Govexnment added solar energy to its entire national educational syllabus m the late-1980s. Government ensured that photovoltaics are covered in energy classes taught at all uuiversities. The Kenya Post and Telecommuuications (KP$T), Kenya Railways, the Kenyan Army, the Kenya Police, KWS, and other Government agencies have also been important photovoltaic customers.

2.2 Unfortunately, Government reintroduced duties and value-added tax (VAT) on photovoltaic equipment in the Budget published in June 1991 (fiscal 1992). Foreign exchange has become mcreasingly scarce for the private sector, particularly a sector like photovoltaics, which does not directly result in exports (hence, an ~ndustry not qddied for preferential access to foreign exchange).

2.3 Nonetheless, in this mfavourable policy and eumornic climate, where private photovoltaic systems are placed at a distinct compebtive disadvantage vis-a- vis Government and donor-Wed programmes, photovoltaic systans ccmtinue to sell bnskly. However, photovoltaic sales have slowed over the past year relative to the 1989-92 period.

2.4 Very few policy-makers are actually aware of the large number of photovoltaic systems installed in rural households or of the potential role photovoltaics could play in rural electrification Section 7 ill- this by setting out an economic (and financiai) case for small-scale photovoltaics pnrnanly for lighting.

2.5 The private sector has had much more of an . . impact an the d k a m a h a of photovoltaics than have donors (see Table 1.1). However, Government policy favours donas rather than small-scale cansumers and the private sector. Donor equipment en- the country duty-he, and so does most rural electrification

equipment. Donor contracts for imported photwoltaic systems are paid offshore in foreign exchange, eliminating the need for the importing company to access foreign exchange locally. Donor agencies have far greater access to foreign exchange than does Kenya's private sector.

2.6 Conversely, local commercial dealers supplying Kenya's private (nondonor) market must pay import duties. Moreover, they must raise the foreign srchange to pay for imported equipment. This puts the private market for photovoltaics at a serious disadvautage vis-a-vis the donor market.

Import Regime 2.7 Before 1984, no category existed in the Customs "Schedule for Duties aud Tariffs" for pho tmok equipment. Duties levied on photovoltaic equipment genedy depended on rakes arbitrarily applied at the border. Photovoltaic equipment was listed Mder several categories (eg, "dc electrical generating equipment" or "diode, transistors and semi-cnnductors"). Duty was applied to photovoltaic equipment, and varied between 3045%.

2.8 In June 1986, Government removed the duty on solar cell modules in response to lobbylng fiom the private sector and commitments made at the 1981 United Nations Conference on New and Renewable Energy. This positive policy intervention reduced prices of solar electric systans to private cunsumers by 3045%. Sales for modules and photovoltaic home lighting system increased dramatidy. However, duties were not removed h m BOS components. Therefore, customer prices on lamps and charge controllers remained high

2.9 I n J u n e 1 9 9 1 , m G o v ~ ' s b i d t o i n ~ revenues, duties were re-introduced on solar equipment. However, the applicable duty codes are complex or even ambivalent. Table 2.1 shows the current import duties and VAT on solar modules and BOS equipment. While this has had an effect on the sales of photovoltaic equipment, sales contirme to


boom.

2.10 Table 2.1 demonstrates that the effective cumulative duty and tax rate for photovoltaic equipment varies fiom 16% (for a photovoltaic pump) to over 50% for a lighmg system using imported batteries (or 42% for a lighting system using local batteries).

2.1 1 Momver, applymg import duties and VAT on solar modules is stil l arbitrary due to the ambiguous

Item

Batteries

Lighting Eqwp

Controllers

PV Panels

Pumps

Fridges

DC Sets

definitions of equipment and components set out by the M m s t ~ ~ of Finance. Solar modules are once again listed under two separate headings under the "Schedule of Duties and Tariffs". For example, modules appear under the headings for "Electric generating sets" and "Diodes, transistors and similar semi-conductor devi as..." Whether a module falls under the former or the latter category is a question of interpretation by the relevant Customs official, as there is no clear distinction between the two.

- - -

Lead-acid (motor vehicle)

Other lead-acid

Ni-Cad

Nickel-Iron

Otha

Parts

Elect Lighbng or Signal Equrp

Miners Safcty Lamps

Parts

BoardsJanels

Diodes,Transistors, etc.

Solar Cells without diodes, etc.

Modules with diodes

-Plrmps

Combined Fridges

unasSemb1ed electrical

Unassembled DC sets

Assembled DC sets

VAT cum Tax

89%

48%

48%

48%

48%

48%

48%

48%

59%

53%

53%

53%

53%

16%

53%

53%

16%

16%


Source: Ministry of Finance, Customs Department.

2.12 However, there is a large difference on the duty levied, as those modules entered in the latter category are subject to higher duties (Table 2.1). Modules w& " d i W t are levied at 30% import duties and 18% VAT (for a cumulative cost increase of 53%), while those modules without diodes are levied at 10% import duty and exempted fiom VAT.

2.13 The naming bebind the tax on modules with diodes is unclear as blocking (or by-pass) diodes improve module perfbmamx, but do not contribute significantly to the cost of the module. This duty system encourages the importation of low @ty amcnphous modules (which do not ambin diodes), and discourages impartaton of higher quahy crystalltne modules (which contain diodes).

2.14 Duties on batteries, charge controllers and lamps range between 25% and 30%. Value-added tax on tfiis eqipmnt is xt at the standard 18%. Thus, the net effective tax on such ~mported equipment ranges between 47.5% and 53%. Imported "automobile" bat&uies are placed in yet a higher duty category (60%) to support (and protect) the local bathy mdustry. Combining value& tax raises the cost of imported batteries to 89% above the cif (cost, insurance and freight) price.

2.15 Import duties' on charge controllers are particularly regressive. High wnsumer prices on charge controllers discomage customers fiom buying charge controllers. Those systems that do not have controllers are more likely to fail. Thus, the import regime encourages the w o n of inferior equipment and encourages the installation of systems

which are more likely to fail thau systems available internationally at comparable prices.

2.16 T h e ~ o n ~ s k l o w ( 1 5 % ) . I f f u n d e d b y donors, pumps escape VAT as well as duty. Vaccine refrigerators escape duty because they are brought in by donors. Virtually all solar refigerators are exempt fiom VAT as they are i m w by donors.

2.17 Thus, photovoltaics are segmented into two categurks; the private sector which falls under the 111 brunt of Government's duty and tax regime, and the donor sector which pays v~rtually no duties or taxes. While no case is made here to inaease taxes and duties on donor-supported p r o m s , there is a strong case to be made for eliminating or reducing duties and tarif& on all photovoltaic and BOS equipment. If such were acmmphhed, rural electrifiication could expand even more rapidly by making small photovoltaic systems more affordable to the rural middle class.3

Foreign Exchange Regime 2.18 Limited foreign exchange availability has canstrained growth of photovoltaic market by preventing companies h m importing photovoltaic modules and BOS equipment. Obtaining letters of credit to import photovoltaic equipment for the private sector has become increasingly diflicult over the pa$ year. This problem has constrained the local commercial market, particularly for home units. USAID's C w Import Program (CIP) assisted the photovoltaic sector, particularly in 1986-87, by allowing local Kenyan (non-multinational) companies to import photovoltaic modules by paying in local

USAID's CIP was suspended in late 1992.

3. Markets

3.1 As mentioned, two market categories predominate in Kenya. Firsf there are donam, nm- pemmaal organkitions (NGOs) and Government itself Second, there is the overall private sector, domhted by naal IKmehOlds (preclomiuantly lighting and radios).

Donor and Govemmemt Programmes 3.2 Donors and Governxmnt have imported photovoltaic equipment since the early 1980s for a varieiyofdevelopment assistauce purposes. Over 450 solar refrigeraton have been installed in numerous

remote locations in Kenya (Table 1.1). These systems usually include a number of modules (typically f m ) , a module mounting structure, a digerator cabinet in-g electronics, a set of speedy designed b k e s for solar applications, (promdug five days additional storage), all hterco~mections, and 111 instalMon and users mauuals.

3.3 Two-way d o communication systems also have played a major role in G o v ~ t t s increased use of photovoltaics (over 200 units installed, Table 1.1). Such systems usually consist of a 40-50 Wp


module, a local battery, a control unit and associated wiring. These systems are now in widespread use by the Kenyan Army, the Kenya Police, the Kenya WrldZie Service (IWS) and many d NGO Projects.

3.4 Photovoltaic-driven electric fencing is widely used in Kenya by both the private and public sectors. Solar fenoes typically require 100 Wp photovoltaic per 10 lan. They require a local batmy, and a charge control mit which steps up the voltage in the fence. Cathodic protection systems have been installed in several locations by the Kenya Pipeline Corporation P C ) .

3.5 Water pumping systems have been iastalled by donors, NGOs and Govexnment to supply villages, refugee camps, livestock watering points and, to a lessa arfenf to meet irrigation needs. Between 30 and 50 photovoltaic pumps have been installed by donors and Goveranent (Table 1.1) over the past thirteen years. Most pumping systems consist of a submersible P W (borehole) or -trQd Pump (low head), a photovoltaic array (anywhere between 7 and 35 modules), power co~lditioning equipment, riser pipes and storage tanks.

3.6 Additionally, school li-g has been expanded through photovoltaics with donor assistmce in many of Kenya's remote areas. Donor assistance to light rural schools has ranged from c h d missions to the US Peace Corps. Many boarding schools have pmhad photwohaic systems out of their own fimds.

3.7 Donor-supported. supply and maintenance programmes are dormnated by multinational companies. Procurement of equrpment is often tied to the relevant donor. Virtually all equipment for donor- supported equipment (from batteries to wntrollers) are imported. This campares mark- to the private domestic marketplace where a considerable amount of the valueadded (non-installed) is of local origin.

Private Sector Commercial Market 3.8 The largest photovoltaic market in Kenya, accounting for over 60% of the value of all photovoltaic equipment installed in the equipmenf is for private home lighbng. At a minimum, these systems provide power simply for li-. More. elaborate systems provide power for lightmg, radio (and cassette playtrs) and televisionshideos. Available infomation shows that at least 20,000 home units have bean sold and installed in Kenya since 1986.

3.9 A typical system cansists of a smgle 40-50 Wp photovoltaic module, four lightmg lamps, a battery, and, m some cases a charge controller.

Modules are generally crystalline and are imported by local firms from major international suppliers. The private sector commercial market, especially for home lighting is domimted primarily by local Kenyan h.

3.10 Thin f ib modules first appeared on the market in Kenya in 1988. They are imparted fkom France by NAPS, fiom Hungary (Chronar-type 10 Wp) by Sollatec, from Siemens by Animatics, and fiom Uni-Solar and Suryovonics by Chintu Engkzrhg. Thin film has been rapidly increasing its market share, and is o h used in smaller (eg, 20 Wp two lighting point) systems.

3.1 1 Most suppliers use local batteries fkom AE3M (Associated Battery Manufactmen), the only battery

in Kenya. AE3M manufacture a 75 and a 100 Ah 'SOW battery, but many suppliers simply sell automobile or larry batteries to customers. Such batteries are less expensive than the "Solar" batteries. Custor~l~as rarely know the difference between battery types-

3.12 Controls are o h supplied by parent companies. For example, BP supply BP-made uxdmls; NAPS supply.their own controls as well. However, the number of systems sold without controls is inmasing. At least 30% of all home systems are now supplied without controls in an effm to reduce costs.

3.13 Fluorescent lamps are supplied with all lighting systems. Although some campanies supply lamps fkom their parent companies, many companies are now using lamps made locally. A thriving "cottage industry" has developed for the photovoltaic system fluorescent lamps.

3.14 Only one group of installers mount modules on a rotatable "tracking mount". This is turned twice a day by the customer to increase energy harvest by 25%.

3.15 Other private photovoltaic systems include fencing (large game and livestock ranches in the country), refigeratiion and water pumping. However, demand for these photovoltaic applications accounts for only a small proportion of total private sector demand relative to small-scale rural household lightmg.

Market Changes 3.16 Since 1986, prices for domeistic lighting systems have remained competitive because of the large number of companies operating in the market. Gxt cutting measures (such as eliminating control &) have reduced system performance. For example,


dealers can cut the cost of a system by about $150 (equivalent) by leaving out the charge controller.

3.17 The market share of amorphous modules has grown rapidly because of lower international prices and because of lower duties applied to amorphous modules (see 3.1, above). When pioneer amorphous campany Chronar folded, its factores in Europe were purchased by other campanies. Several companies now sell 10 Wp Chronar-type modules at very competitive prices in Kenya The modules are inferior to crystalline modules, based on performance and other factors (eg, poor quality glass, very fragile junction boxes).

However, they are less' expensive, hence more campetrtive in the marketplace. Moreover, crystalline modules are not readdy available in the small (5-10 Wp) sizes supplied through amorphous modules. Thus, it can be argued that amorphous modules are l i lhg a necessary and important market niche.

3.18 As noted above, a cottage industry of lamp manufacturers has developed in Kenya. At least three local firms assemble inverters and wind transfoxmers for batcm-type fluorescent lamps. Quahty of the lamps varies, as some cause radio interference, and have short bulb lives.

4. Costs

4.1 Dollar equivalent costs for domestic (househola) photovok systems have remained fairly constant over the past eight years. Table 4.1 sets out the costs for a typical 53 Wp (four light point) system w h d provides appmamately equal benefits as a rural grid wrmection.

4.2 The wholesale price for a 53 Wp system in Kenya is on the order of $922 equivalent (August 1993), wide the installed price is on the order of $1,378 equivalent (approximately Ksh 90,000). Duty comprises over 15% of the wholesale price (delivered cif), while tax (VAT) comprises a further 13% of the whdesaleprice.Mdes,~and~llersared

&bed and taxed at a cunrulative rate of almost 30% of the wholesale price. Moreover, the total wholesale price for this system in January 1993 was Ksh 37,000 compared to Ksh 70,000 in August 1993. The installed price of this system was Ksh 55,000 in January 1993, compared to Ksh 90,000 in August 1993. The price of such a system seems high, but it should be borne in mind that a l l user related costs are included, such as lamps, wiring and swi tks , and indlatian If these are excluded, an equivalent cost of approximately $10,000 per kW is obtained for the cost of generation and distribution.

Sianens M-75,53 Wp Module $340

ABM Battery, 100 Ah* $1 15

Thinlight Lamps (4) $88

Charge Controller $66

Wires & Switch* $50

Total S 5 9

% Total Wholesale 715%

* Locally-produced or assembled, therefore, no d~ . Source:Authors

ties.

4.3 Cun-ent prices (August 1993) for lighting controller and lamps) costs Ksh 75,000 installed A systems vary considerably. For example, a BP 50 Wp Chloride four point lighbng system with battery, four point li-g system (complete with battery, controller, a 50 Wp Crystalk module, and Imps


costs approximately Ksh 64-70,000 installed. A whole array of cliff- w~gurations available to suit Chloride two point lighting system with two lamps, a particular user's needs and his financial constraints. one 10Wp amo~~hous module, a 75 Ah battery without As photovoltaic systems are essentially modular, the controller costs Ksh 14,000 installed. Solar lanterns eqpmnt can be modifkd when user's needs develop. range from Ksh 10,000 to Ksh 18,000. There is a

Source: Authors

Table 43: Prices of PV Modules: May 1990

company

AlpaNgwu

Kenital 1 Helios I nla 1 d a I kit d y I kit only Source: MCTS

Animatics

Chintu

Chloride Solar

Module

Solarex

ARC0

Chronar

ARCO

10 Wp (Ksh)

3,700

10 Wp (US$ equiv)

$132

40 Wp (Ksh)

7,800

40 Wp (US$

$279


Table 4.4: Prices of PV Lamps, May 1990

Alps Ngwu

Animatics

Chintu

Chloride Solar

Kenital

Securicor

Total Solar

- Brand

Labcraft baton

Thin-lite baton

Robin & Altal baton

Labcraft baton

Helios

Helios

Labcraft baton

fin Kenva

8 W (Ksh)

ihiIIinps and

8 W (US$ equiv)

lent)

13 W (US$ equiv)

$3 0

$3 1

d a

d a

d a

d a

$35

sour&: Retailers

5. Photovoltaic Support Infrastructure

5.1 Kenya has an extensive photovoltaic support 5.4 There are at least fourteen local photovoltaic infrastructure. As noted above, numerous suppliers, equipment dhibutors based in Nairobi and . distributors and dealers are located both in Kenya's Mombasa Distributors use several approaches to major urban areas as well as in rural areas (see Annex market home lighbng systems. Three distinct 2 for major dealas). appnmches can be defined for marketing and support:

5.2 The solar industry consists of the "dealer" approach;

module and BOS importers;

urban-based local distributors; and,

a network of nnal outlets which serve thedmarke t s .

5.3 Eight module iqnten were identified dlrring the m e of this survqr (August 1993). Five of these firms supply ova 80% of the present module stock. Three of the h e most important importing companies . . are~photovo l ta icwmpuieswhichsupply regional donor-funded projects as well as supply modules to the local market. The other two major impcntm are lims which supply electronic equipment only (or primarily) to the local market. Three of the importers depend upon photovoltaics exclusively for their income.

the "complete system" approach; an4 the "off-the-shelf' approach.

5.5 The dealer approach relies on a network of up-wuntq agents to sell systems in targeted areas. The regional dealer cooperates with d p d e n t agents in nrral towns, building relationships by provdmg @lay modules on credit and giving special rates to favored agents.

5.6 The com~lete svstem approach markets and installs systems fram the urban center. This approach targets well-off customers and puts a priority on en- stressing that the customer should have as little to do with system management as possible.


5.7 The off-the-shelf approach assembles modules, controls, and batteries into kits which are packed and sent to up-country retail outlets (i.e. appliance stores). The off the shelf buyer is eqx ted to have enough skills to install his own system.

Maintaance and Repair 5.8 There are an increasing number of trained repair groups in Kenya. UNICEF has strict mahkmmz controls for its EPI vaccine reiiigerators. Securicor Solar has a contract to mainbin 200 EPI solar vaccine refigerators in Kenya.

5.9 Training initiatives in Kenya are umfined mostly to the companies themselves. There is no organized effort to train consumers about solar equipment operations and maintumce. Installers work within company hierarchies. The team leader for a gruupcanpletjnganinstallationisusuallyassistedby apprentices. Apprentices learn on-the-job.

5.10 Apprentrceslatermweupwithinthecompany or leave to establish their own companies. The degree to which photovoltaic technicians are trained depends an the company. Some companies train techuiciaus in odytherudiments ofiostallation for fear that themore they train an employee the greater the chance of losing that aqloyee, hereby reducmg reQcmg umpthive edge.

5.11 Local batteries are maintained to a certain exknL Auto ba#ery charging, -ce aud repair is a hiving xural aud urban cottage mdustry. There are more batteries charged at local charging stalidshop

(to power televisions) than there are installed photovoltaic systems. The local recharging cottage rndustry also recycles used batteries by collecting and returning them to ABM (Associated Battery Manuf'ers).

Spare., Servicing and Support 5.12 Local distribution networks have developed for home systems. In most small towns replacement bulbs, distilled water and spare batteries are available. A lack of standardization hascaused problems for some remote systems. "PL" type compact fluorescent lamp replacements may not be available, whereas baton type lamps are common.

5.13 Servicetecmsva~~frcnncampaqtocompaq and h n project to project. Lack of maintemnce and technical support has contributed to many system failures.

Financing Mechanisms 5.14 Argos, a chain of rural retail traders, began a hire-purchase program in 1990 using amorphous photovoltaic systems. The marketing group sold a Sollatec/Chintu boxed lighting system The programme ended when Argos was forced to close dom maty of its d shops due to economic reasons. The German GTZ (A- fm Technical w a n ) has a small-scale haucing programme in place for photovohaics. It has only been in operation for a short period of time as part of GTZ's Special Energy Programme (SEP).

6. Regulatory Environment

Standards 6.1 An attempt was made by the Mmstry of Energy in the late-1980s to set up a "Kenya Energy Labomtq.'." The purpose of the facility, to be funded by the Italian Government, was to increase local testing capacity for energy systems. A number of photovoltaic systems were provided to the site for testing purposes. However, the laboratory does not curre&y save the photovoltaic mdustry.

6.2 The Kenya Bureau of Standards (KBS) has standards in place far a solar battery. Despite these standards, locally-fabricated batteries have quahy control problems. ABM, through its sales outlet Chloride, will replace d d b e batteries retumed within the guarzmtee period. There are no known standards applied or on the books at KBS far other photovoltaic equipment.

Industrial Organization 6.3 An attempt was made to form a Kenyan solar industries association in the late 1980s. However, this . . never mamuhi& aud there has been no subsequent move f e to organism the industry. However, i n f d industry support is strong. Companies genedy cooperate with one another. For example, when modules are in short supply, companies with stocks often supply modules to other companies.

6.4 All private companies umtacted during this study bdieve an d n a d iudushies' a s s d o n would improve the photovoltaic business ewircwment (see Annex6). Theybelieve- is needtoraise standards of service and safety. There is room for improved cocpcdon, but there is a veq~ strong concern among oompauies that Govemumt should play a supportive, not a ngulatq, role in such an association


7. Recommendations

7.1 The following section sets out an economic case for encouraging dissemination of small photovoltaics for household use. It also provides reammendations on how to improve standards in the industry and to encourage development of the photovoltaic industry in Kenya.

Government Policy: An Economic Case for Rural Photovoltaic Lighting 7.2 The best micro- and macrc~conomic case for photovoltaics is made relative to extensions of the national grid. While there will be cases where connections to the grid are more ecanomic, both at a household as well as a national level, the vast majority or rural dwellers will not have the opporhmity to connect to the grid for at least another generatioq if not lager. Moreover, the economic costs of extending the grid into ever-more sparsely populated areas will continue to increase. Kenya's large rural middle class has its danand for e l d c a t i o n through the plachase of tens of thousands of photovoltaic sets for the household The following makes a strong micro- and macro-economic case for encouraging that lrend.

7.3 If, indeed, there are large numbers of rural inhabitants who wish to obtain electricity, but whose demand would be only on the order of less than 30 kwh per month, then current grid extension costs cannot be recovered without substantd subsidies (or externalities such as i n d u s t r i u o q increased on- farm pr-, &.). The cost per kilowatt installed (including all distribution costs) should be factored in whenestnnating naal eledriiication costs, partidarly whencomparingextmdingthegridtoruralconsumers relative to promoting photovoltaics.

7.4 Domestic rural e lMca t ion using photovoltaics compares favorably with grid or generator-based alternatives where power is r e q u d for several lighting points, and radio and television amenities. Table 7.1 compares the bdlalioq annual operating costs, and annualized lifecycle costs of installing grid power, purchasing and using a small gasoline generator and purchasing and operating a 50 Wp photovoltaic system

7.5 The grid d o n in practice, varies considerably. K q variables include whether or not there is stegQwn transformer in the area, how far the conslrmer is kxn thetrzmsfixmer, and how mimy other nnalccmsumers wishto sharethe costs. Sharingcosts

can entail purchasing the transformer, paying for the distribution line, and the connection charges. These costs can run over Ksh 100,000 per con~umer.~

7.6 If there is a transformer nearby, the customer simply has to pay the wiring costs (on the order of Ksh 20-25,000) and the m & n charges which range from KSh 2,500 to KSh 3,500 (see AMex 5). For a majority of rural dwellers, however, grid connections are not viable because there is no supply line in the area, and that will remain so for the foreseeable future. Even when the grid is near at hand, it is often difficult to organism enough fellow customers to pay for the transfmer and the dishibhm system at a reasonable individual cost.

7.7 When subsidies to gnd power are included (i.e the costs of grid-based ma1 elec&Scation borne by donors, KPLC and the Government), photovoltaic systems compare even more favorably. Photovoltaic lighbng is of parhcular interest because, unlike grid or generator power, it can be down-sized sipficantly to meet the needs of the individual household. A single- lamp 10 Wp PV system, for example, can supply the lighbng quirements of a ma l famdy at a cost that is far below that of a grid connection or operating a generator.

7.8 As sales of photovoltaics systems have shown, even in the face of a doubling of prices, demand for photovoltaic systems continues to grow. Demand would increase even more rapidly were duties on photovoltaic equipment reduced or eliminated. There are strong economic arguments to be made, both at an individual and at a national level, for removing duties on photovoltaic equipment, exempting photovoltaic equipment from VAT (as Government currently exempts batteries), and promoting photovoltaics in areas where grid extension is either unlikely in the foreseeable future, or is cc0nomicayI u n j d e d .

7.9 Comparing photovoltaics to small petroleum generators for home use provides even starker umlmts. The average life cycle b s t s of a petroleum generator are on the order of seven times more expensive (to the individual) than a photovoltaic system of comparable size. Considering the fact that photovoltaic systems can be down-sized to meet individual needs, while generators are not available below a certain size (eg, 1 HP/0.75 KVA), the benefits of a photovoltaic system relative to a private generator are substantial for most home applications.


Table 7.1 : Com~arison of Rural Electrification Costs

System Nominal Approximate Typical Running Cost Life Cycle Cost life Installation Cost

(years) to customer (Ksh), ind. (Ks W~ear) (Ks Myear, @ wiring 15%)

Grid Connection @60 kWmonth

- energy 2,500 - 3,000 17,213

annualized total 4,556

0.75 kW gasoline genset

fuel 4,000 13,409

annualized total 12,160

50 Wp PV system 20 65,000 - 90,000 67,39 1

new battery 1 2,800 17,526

annualized total 4,246 Source: Authors

7.10 Add to this the opportunity cost of obtaining and stocking petroleum supplies, spare parts, among other factors, and the bedits of photovoltaics are self- evident. The same applies at a national level, particularly when considering the heavy imbedded f&gn exchange cost of importing gearator sets and operating them.

7.1 1 The substitution effect of rural phdovoltaic lightmg compared to kerosene can be sigdcant as costs for kerosene in m a l areas are o h high Likewise, photovoltaic substitution for dry cell batteries to drive radios and cassette players is SigrUscant, both in econumic and en ' 'd terms (dry cell battay m s a l poses particularly important enviromnd problems).

7.12 I f t h e a v u a g e p ~ o i t a i c ~ s y s t e m h a s a life cycle of 10 to 20 years, then, the present value of

these 20,000 systems wa a ten year period is on the order of more than US$ 20 million in terms of kerosene and dry cell batteries. These are national (and world) economic savings.

7.13 The average photovoltaic li-g system owner would c u r r d y spend US$6 1.80 per year on batteries and kerosene to realize the net effect of the photovoltaic system. This does not include other factors such as opportunity cost to purchase batteries and kemmz, and the fact that the bench in tgms of lumens are much greater for a photovoltaic lighting system. The present value of kerosene and batteries aver the ten year life-cycle of the photovoltaic system isontheorderofUS$1,400. Thecurrent dutyandtax free installed cost of a photovoltaic system is on the order of US$ 1,000, while the d.utied and taxed installed cost ofthe system is onthe order of US$ 1,400. Thus, in terms of oppmhmity cost, the


consumer pays approximately the same for a duty-paid and fully-taxed photovoltaic system relative to using kerosene and dry-cells. Were taxes and duties eliminated, then, the average photovoltaic household would realize a 30% net financial benefit relative to kerosene and batteries in addition to a tremendous benetit in terms of services enjoyed..

7.14 Obviously, the consumer's opportunity cost involves more than expenditures; convenience,

management, and other factors influence de!cisicms to p d m e and utilize equipment. However, from Government's point of view, photovoltaics for lighting repment an unambiguous net savings relative to kerosene and dry cell batteries for this category of rural citizen.

7.15 ~ ~ c a l l y K P L C , d r e m o v e may of these obstacles d foster the spread of small- scale systems. The following recammendations would increase dissemination improve Kenya's energy position:

a. Kenya Power and Lighbng Co. Ltd should cansider supporhg the photovoltaic industry as a key element of its Rural Electrification Programme. At a :minimum, KPLC should work with the industry to establish standards and promote photovoltaics for ligbng in isolated rural areas. KPLC should lobby Govement to reduce, if not eliminate, duties and taxes on photovoltaic equipment.

b. The National Housing Corporation (NHC) has expressed an interest to support photovoltaic dissemination in rural areas by including the wiring and installation of p b o l t i c systans as an o p t i d financing scheme for rural housing. The Rural Housing Loan Scheme, admlrustered

. . by NHC, has

assisted thousands of the individuals to build housesinruralareas.

c. Promdmg additional hmcing of between Ksh 80,000 to 150,000 to include the installation of photovoltaics would require a five to ten year repayment period. Such loans would be parkduly important f a salaried government officials in isolated rural areas and would further have a demonstration effect to encourage dissemination of photovoltaics.

Department, should set up specific categories for photovoltaic equipment (modules, BOS equipment, deep discharge batteries), and should exempt photovoltaic equipment fiom duties.

e. The Mmstry of Finance, VAT Department, should exempt photovoltaic equipment (modules, panels, BOS equipment, deep discharge batteries) from value-added tax.

-

f. Gmmment should encourage importation of quality photovoltaic equipment. The current import regime encourages the importation of inferior equipment and encourages the installation of systems which are more likely to fail than better systems available internationally at comparable prices.

g. Donors should emxmage the dissemination of photovohics. Donor programmes should seek to expand household.domestic d e l d c a t i m where the greatest photovoltaic demand exists.

h. Foreign ex&mge should be made available to the photovoltaic in dust^^ on the basis of clear economic savings for the national economy as well as improving rural living standards. Foreign exchange should be as ease available for photovoltaic imports as for other KPLC equipment.

Other Recommendations a. Local battery pduct~an d standards should

be improved

b. Local production of components for photovoltaic systems could be improved and increased, including assisting local lamp mamktmm, producers of ballast inverters, charge controllers, and battery voltage converters.

c. KPLC should encourage the photovoltaic industry to set standards in coo~dination and consultation with private companies, NGOs, donors and major consumers, with particular attention to safety and controllers (to extend the life of systems), and to promote the 1nd-y;

d. The Mumtry of Finance, Customs

PhotovoItaic Power to the People - The Kenya Case Page 18

Annex 1 - Major Dealers

-

company

NAPS

Alps Ngwu

BP Solar

chintu

Sollatec

Item Imported -

Neste, Kyocera, Siemens

Solarex

BP

Sovlux, Suryovonics, others

Thin film fim Eastern Europe Chr~nar-type.

Siemens

Helies


Annex 2 - Bibliography

Publisher

Nairobi, ODA-ITDG, 1989.

Nairobi, AID, 1987

Nairobi, of Planning, 1989.

Nairobi, 1993.

SADC Energy TAU, Luanda, Angola, 1992

W h g t o n , DC, US Export Council for Renewable Energy, 1993.

Reading University, MSc Thesis, 1990.

h d c m , Commonwealth Science Council, 1 99 1.

Washington, DC, Solar Electric Fund, 1 993.

Nairobi, KENGO, 1 992.

Nairobi, KP&L, 1993.

Nairobi, KPLC, 1 993

Nairobi, Government Printing Oftice, 1993.

Author

Bess, Mike

Bas, Mike

Bess, Mike

British Petroleum,

Bogach. R Reters + Pippa Sellers

Hankins, Mark

Hankins, Mark

Hidans, Mark

Hankins, Mark

KENGO

KPLC

KPLC

Mmshy of Finance

Title

"Comparison of Pumping Systems in Zimbabwe and Kenya: 1989".

"Review of Renewable Energy Programs in Eastern and Southern Afiica: 1987".

"Rural Energy Use in Kenya, 1989".

BP Solar: Solar Systems for East and Central Affica" .

"Assessment of Applications and Markets for Solar Photovoltaic Systems in the SADCC Region".

"East Afiica PV Update 1993: Potential Project Partners and Market Developmentsn.

"Optimising Perfixmame of Small Solar Electric Lighbng Systems in Rural Kenya: Tedmical and Social

"Small Solar Electric Systems for Afiica".

"Solar Rural Electrification in the Developing World, Four Case Studies: Dominican Republic, Kenya, Sri Lanlca and Zimbabwen.

"Workshop Pmcedqs for Regional Solar Electric Training and Awareness".

"Report and Accounts for the Year Ended 30th June, 1992".

"Status of the Rural Electrification Programme"

"Schedule of Tariffs and Duties: 1992".


Annex 3 - Photovoltaic Sales in Kilowatt Peak from 1980 to August 1993

Tahle A3.1

Table 3.1, above, represents sales of photovoltaic uuits in Kenya It should be noted that considerable gaps exist in this infinmation, thereby making the 761 kWp estimate very umservative. This is due to at least two factors. F-, many companies are understandably reluctant to supply public i n f o d o n regarding their markets. !kcdly, supplias do not have complete records of their sales, particularly during the early days (1980-86) of photovoltaics in Kenya as well as the latest sales.

c m ~ a n ~

1. Chintu

Thin Film

c* 2. BPISecuricor

3. Kenital

4. Alpa Ngwu

5. Animatics

6. Total

7. Telesales

Thin Film

8. Chloride

Thin Film

Crystalline

Total Sales in kWp

Mi, these figures should be taken as the minimum private sector sales in Kenya to date. A d d sales will ustamiy be higher than the figures shown above, but to estimate this margin of difference would be &cult d specuhve.

'80-'86

1

8 1

81

92

6-

20

17

22

9

9

7

90

87

88

88

93

7

7

Total

28

20

197

145

24

229

22

0

4 1

0

15

40

761

- ---- - 88

30

72

102

90

10

25

18

22

16

91

--- 89

12

14

24

18

68

9 1

16

18

16

6

33

89


Annex 4

"KPLC AND SOLAR ELEmRICITY THE CASE FOR DIVERSIFICATION INTO SOLAR ELECTRICITY"

by Kiremu Magambo

BP Solar East Africa P.O. Box 47796 Nairobi.

June 1990.

INTRODUCTION

No other power supply can equal the might or has greater utdxty than the grid. However, gnd extensions are expensive and require a lot of maintenance by specially trained personnel. Gnd electricity is also expensive to gemate and depends on the availability of fossil fuels. Cmentional electric power sources cantribute heavily to environmental pollution too.

Solar electncrty - teclmidy referred to as photovoltaic - an the o4ha hand is pollution fie, reliable, in remote areas, where little power is requned, solar electricity is more effective than grid errtension. In fact, KPLC has recognised this fact and is at the moment procuring solar power for three radio repeaters located in remote areas.

This papa iadicates how KPLC starrds to gain by offering to supply solar electricity to those applicants who cannot afford grid extension.

2. CURRENT SITUATION

At the moment most Kenyans living in the rural areas do not have access to grid electricity. The government, through the rural electdidon progriimme, has only marlaged to extend the grid to the district and a few divisional beadquarters m the w u n t ~ ~ . This is no mean achievement by any standards and credit goes to KPLC for successfully exeating the programme.

The rural electrification programme's major obstacle has been and wntinues to be finance. The cost of e x k d b g the grid 1 Km away firm an existing 1 1 Kv line, about KShs. 200,000, is too high for most Kenyans to afford and those living in the rural areas have little hope of being connected to grid electricity in the near future.

The effect of the above has been to deny electricity to many Kenyans who mostly need it for basic lighting.

Electricity is a prerequisite for rural development. It can speed up rural development by improving the living standards of rural m l e , i d g a g r i m production, creating rural based industries and hence employment, thus helping curb rural-urban migration.

Due to high cost of grad extension, it is worthwhile cansidermg offering the solar option to electricity applicants who cannot afford grid extensian Below, the benefits, the approach and the costs are d b b e d .

3. THE SOLAR ELECTRICITY ALTERNATIVE

3.1 BENEFITS OF DIVERSIFYING INTO SOLAR

One may ask why KPLC does not leave it to the applicants to procure solar from other companies if they cannot afford the grid instead of ventming into such a competitive business. The benefits for KPLC to consider are:

a) By diverslfLmg into solar the company's turnover will increase.


b) The mge of services by the company to the public wil l increase, which is in line with the company's motto "on public services'.

c) The company's good image will be enhanced not only because of the added service but fair pricing, after sales service, and increased employment opportmuties.

e) Since minimal operation and mainttmance costs are involved, -ative costs will be reduced.

f ) By &ing fire solar energy for small domestic loads, the expensive grid electricity can be conserved for the priority loads of industry and urban centres.

-

g) The campany d d also help the country's oil import bill in the long nm, hence saving foreign exchange.

3.2 THE APPROACH

The simplest and easiest way to d i d into solar is to offer it as an alkmative to those electricity applicants who cannot afford grid extension The applicants' financial ability is simple to gauge after a site visit, which is madabry even for budgetary quotaiions, by commercial development personnel. Once the development engineers are d e d that the applicant cannot afford grid d c m , they can then advise the wnsumer of the solar option with all its bend&, costs and limitations. It will then be left to the applicant to choose.

The other option is to establish a semi-autonomous department within Commercial divisions similar to the Electxical contracting department. The department would be solely @le for the of the solar business handling solar electxicity enquiries and Iiaising with both Development and Design sections to identi@ the electricity applicants who cannot afford the grid extension to ofkr them the solar alternative.

The third option is to fom a subsidiary company to develop the solar business.

One of the virtues of solar electricity is that one has ody to provide as much or as little as the cmsmer needs at a time, Solar electricxty being modular the consumer can e a d y expand his system should the power quiremcnt incnase.

To provide solar at minimum cost, an individual household approach is recammended. In this approach, each ho-ld would have its own solar anays and batteries from which they cau power their lights and otha appliances. Thebclttayandthesolarpanelswouldbe sizedto give asmuch or as little power as thecustomer wants depending on his financial mans. The solar panels can be ground or roof mounted while the batteries can be placed indoors. This approach eliminates the need for inverters, cktibution lines and the associates voltage drops, and energy meters. The e h r i d y charges can then be made on a fixed-amount basis eliminating bill calculations and reducing . . admlnlstratron costs.

3.3 THE COSTS

The costs being ref& to here are the cads to the cunsumers. The costs to the campany will depend on the modus o p e d adopted and how much capital the company is ready to invest.

Briefly the solar electric products and systems available, and their current Sterling prices are;

i) Solar lautern - Stg. 150. ii) DIY (Do It Yourself) lightmg kit - Stg. 375 iii) Custan designed dcmfftic electric power system whose costs varies h m Stg. 600 upwards -ding on

the load. Bigger loads may feqrure 240 volts ac. systems which incmporate power inverters. iv) 100 litre Solar powered domestic figeratar chv panels, batteries and other accessaries, Stg. 1,000 v) Solar powered floating and borehole water pumps, Stg. 2,000 to 10,000.

There are other products for specral applications which are not considered hen.


The above prices are sti l l very high for most Kenyans. This is true. A subsidy fiom the rural e l e ~ ~ c a t i o n fund is a price reduction measure KPLC ought to take up with the Government. After all, grid extensions under the ~ a l elechfication programme are heavily subsidised by the government and external donor agencies.

3.4 BILLING CONSUMERS

The consumers are presently charged on a monthly basis for e l d c i t y consumed, based on the units consumed as recorded by the energy meters at the consumeis premises. There is of course a monthly fixed charge regardless of the number of units consumed. Billing solar would be simple as only a monthly fixed charge would be necessary. What the amount would be and what it would cover would have to be decided by thecompany. For example the amount might be KShs. 50 to cuver a twice yearly maintenance visit and battay/module replacement once their life times are over, in which case the wnsumer would not need to incur any other expenses after the initial investment. Solar modules and batteries have lifetime of about twenty and five years respecbvely.

4. CONCLUSIONS

There is a case for KPLC to consider diverslfylng into solar. What remains now is the final decision and the evaluation of the methods of approach to decide the one that wiU work best to the advantage of the company.

Photovoltaic techwlogy and its many advantages have nc4 been dealt with here in detail. Similarly the various ways of presenting solar elechicay to diffkmt customers and their merits and demerits have also been left out. However we can show that by using solar there is a cheaper way of elec-g the nnal areas faster and KPLC can play an important role in achieving this. This is because the biggest obstacle to our electrification programmes is funding.

BP Solar is always ready to explain any issues relating to solar electricity to KPLC management and to assist in training and market development. We would welcome the opportumty to discuss this matter with you.

KIREMU MAGAMBO 2 1/6/90

Annex 5

Notes on KPLC's Rural Electrification Programme (REP)

The REP was initiated m 1973 with the objective of providing e ldci ty to the majority of Kenyans who live in rural areas. It is presently admrnistered by Rmal E l d c a t i o n Steering Committee appointed by Permanent Secretary of the M m s t ~ ~ of Energy.

As at February 1993, tk REP hadmade over 3 1,000 d o n s at a capital cost of over Ksh 1.84 billion. Donors contributed roughly one third to meet these costs, while Govefmnent and KPLC d b u t e d the remaining costs.

DANIDA, FINNIDA (the Fimnish International Development Agency), CIDA (the-Canndian International Development Agency), SIDA (the Swedish International Development Agency, ODA (the British Overseas D e V e m -

. . 'on) and NORAD ( tk Norwegian Agency for Mopment) all provided grants and loans,

at various times to the programme.

Until 1992 tk largest donor contributing to REP, DANIDA (whose inputs account for 9% of donor contributions) granted the following to the REP:

Table A5.1 DANIDA Contributions to Kenva's REP

(1987-92. million Kenva ~hiilines) $ p g m @ ; p ~ g < y $ ~ $ g : ~ ~ ~ ~ $ $ g p j ; q , ; ; & ~ t ; w p w , , , , , . . . , . , , . < . . .$$% ' , .:if 2 , '~#$$*;*~~@g;~~~$,,~,F;y~g&$~~~~:;~:::~~:::;,>< . . . . . ...... . , . L . ,,,,,.,,., , ,. L.,...,. .,+, ,.; :?~. . . .~~P'~'*~~~;. . .~." ' .~:; ,*::: :::;:.,;:.;: . &$ . . , , ,.,.., ...* .$.< *4.* , . .: ,* ,.,< y,...,.,> :gggijpn; .:O.,..~ ,,. ...... .. , .:.*.. . ...<. :.:.:,: ;>,..; ~ ~ ; < . : . : . : . ; . : ; . : ; > ~ : 2 ~ @~~@&@Ki@$$$k$g:~2a;mB&d~im$&&.;"j"" iz@e~&@$~~ "m@g&i@8m

Phase I

Phase II

Phase III

Total

KPLC amtributes 2% of its gross sales each year to the Fbal Electrification Fund. KPLC finaud the REP to the amount of approximately Ksh 9 1,127,000 during Kenaya's Fiscal Year 1992.

KPLC's policies state that applications for rural electrification are to be received h District Development Committees (DDCs). These applidons are p r i M them according to a "weighted criteria". These criteria take into account:

all unit costs per kilowatt installed;

the potential for substituting for diesel generabcm;

inclustd employment provisian;

cash crop production and processing;

the potential to serve m v e and commexcial centres;

social factors (eg., schools, clinics, etc.);

other factors.

These uituia favour nrral industry, not rural homes. The Steering Cammittee makes the fbl decision. If a single


customer desires a c o d o n where there is no transformer already, that customer must fully bear the transformer cost or share it with neighbours - assuming they are willing to share.

The major REP costs to KPLC include the following:

Planning costs;

Step down transforma (1 1 kVA - 44/220 VAC-KPLC charges Ksh 282,000 for transformer that serves 50~0nsumers. Even if the end user pay for the transformer, it remains the property of KPLC).

Power d&ibution cmstru&on costs (poles, etc). This is estimated to be in theregion of Ksh 500,000 per lan.

Once a transfama has been mstalled in the proximity of a potential REP customer, the customer is responsible for the following:

Costs of power distribution from transformer to businesshome;

Connection fee: Ksh 2500 nominal domestic single phase hook up fee (called a "token contribution"); Ksh 500 to business in market center (single phase); or Ksh 3,500 to a small industry (tri-phase).

Meter charge: Ksh. 300

Wiring: Ksh 20,000 (typical for 2 bedroom house)

In practice, elexlrification does not occur as smoothly desired because of the Wculty m organizing rural homes, businesses and groups to &bute collectively to the cost of a transformer (the major cost to consumers). Often a sngle customs or small group of consumers will pay for the transformer as a matter of urgency, ad, afterward, other customers will simply pay the comection fee to wnnect to the grid.

A typical REP customer demands 0.5 kW and has a monthly power demand of about 60 kwh. Small rural industries have two to four times this demand.

When wmpared to these large consumers, rural domestic households usually use only a few lights, a radio and a television Midual household loads are typically less than 0.5 kW, and consumption rarely exceeds 30 kwh per month The&&, it is g m d l y not profitable for KPLC to extend lines f a such small loads, especially considering the d.lspersed nature of Kenya's rural population. Moreover, costs of accessing stepdown transfarmers and connection costs are high, often as high (or higher) to the individual consumer as the installed cost of a small photovoltaic system.

For the above reasons, KPLC's Rural Electrification Programme has been &le profitably to connect many rural a. As of Apnl1992,17,240 customers were wnnected uuder the Rural Electrification Fund (REF) "domestic" (ie, household) tariff. A h iher 12,165 customers are listed by KPLC under the "small commercial" tariff. During &call992 (July 199 1 -June 1992), Ksh 9 1,127,000 (approximately USS2.6 million) were contributed by KPLC to the Rural Eleddication Fund as a development sufibarge. 'This surcharge subsidised the connection of 5,022 new custoaners to the grid in 1992 at a subsidised cost of some $508 (equivalent) each.6 This subsidy does not include donor and other Govanment contributions.


Annex 6

Minutes of 16th September 1993 Round Table Discussion on Photovoltaics in Kenya

A round table discussion was held to talk over various issues raised in this paper with key participants fiom the private sector, G o v m and NGOs. The meeting was canvened because many of the companies contacted drrring the survey said that there was a need for better collaboration within the industry. This meeting provided zjn initial opportuuity for solar companies to meet and discuss the problems faced by the solar industry in Kenya with their competitors, together with the power company, government and NGO groups. -

During the meeting, an update on the status of the PV industry in Kenya was presented together with the recommendations included here. The companies and NGO's discussed the most important problems facing the industry and discussed mechanisms which would enable the industry to grow.

There was general agn~-t with the nxmmemhoas of the study. Most of the companies felt that the duties and VAT levied on modules and BOS equipment are inwnsktent and need to be addressed urgently. There was also much discussion about mechanisms to implement such schemes.

In the second half of the meeting, company representatives were asked to recommend which changes they thought would benefit the miustry the most The following remmmendations, ranked according their fhxpmy, are the issues that the group felt should be addressed most urgently:

1. An d o n should be formed so that the irxlust~~ can "speak as one voice" and lobby for its interest (such as removal of duties).

2. There should be better technician training and user training.

3. Standards and a @ty control system should be put in place and enforced.

4. System duties and VAT should be removed

5. System financing mechanisms should be developed to enable low income groups to afford lightmg systems.

6. F e & i shdies &add be carried out to detemhe what the realistic potential of various PV systems are (i.e. lighting, water pumping, etc) verses " u m v d d altemaljves.

7. Down-sized systems should be made available so that a greater cross section of people can afford them.

A follow-up mdustry meeting was arranged at the conclusion of the round table discussion

Table A5.1 List of Round Table Partici~ants

Participants Organisation

1 FREDRICK M MULATYA MIMSTRY OF ENERGY

2 GEORGE M.GIKONY0 MINISTRY OF ENERGY

3 JOSEPH G. GACHURI MINISTRY OF ENERGY

4 FRANCIS HILLMAN BP SOLAR

5 ANLL N ABDULLA TELESALES

6 PAUL MAKOBI TJXPOWER

PETER OFlTA

J . W A M B r n

LYNETTE OBARE

GEORGE MGWDRI

H.BATYA

N. M A m o

P. OWANY

C. MAGERO

J. ILTIJ.ERm

N. MOON

MFlSHER

C. KmENE

JL.ODENY

R.h4 SUDI

S. BORRACCINO

D.OSOTS1

W X PRATT

GUY RICHARDSON

S.P. WAIGANJO

J E NJOROGE

M. WANJAGI

I. KOME

J.R. OMWOMA

S. KAREKEZI

C. RIOBA

MHANKINS

R. VAN DER PLAS

-rEwoWER

KPLC

KENGO

ALPAMGUW

VITAREFAD

WILI(EN LTD

SECUIUCOR

SECUIUCOR

CONSULTANT

APPROTEC

APPROTEC

CHLORIDE EXIDE

KPLC

NATIONAL HOUSING CORPORATION

KENTAL SOLAR

GTZ-SEP

ALPA NGUW

m n c s LTD

NATIONAL HOUSING CORPORATION

TOTAL SOLAR (K) LTD

TOTAL SOLAR (K) LTD

CHLORIDE EXIDE

SOLAR WORLD

CONSULTANT

WORLD BANK


' These estimates are based upon a variety of sources, includmg extensive interviews. Many f b s are understandably reluctant to disclose extensive sales information, but, have been remarkably forthcoming for the present study. They often lack specific photovoltaic sales mformation and provide "good estimates". Import data also provide an imperfect picture of photovoltaic sales due to dsagpgation of import information for various electrical and electronic equipment (see 3, below).

Jim Fanning of NAPS has been serving the photovoltaic market in East A.fiica since the early 1980s.

Most pbtovoitaic equipment is not "fimgble". That is, it cannot be easily used for other purposes. A photovoltaic module cannot be used for other than photovoltaic purposes, and its energy output is so small relativek, say, generators, that it cannot substitute far generators. Likewise, amfmllers (BOS) are not equipment which can be easily converted to other uses. Rathex, p ~ o l t a i c e q q m m t is a a fforeign &ge saver, M a r as it substitutes for other alternative power generating equipment, particularly diesel and petrol generators.

4 The CIP operates by providing equipment fhm US suppliers to the local market paid for in local currex~cy. f i s local currency goes into a special Treasrrry account which is then made available to support the local costs of other USAID- supported programmes (eg, heal& -on, *.I.

For example, recent individual connection charges (KPLC) per consumer were Ksh 60-80,000 (Msambweni), Ksh 100,000-1 35,000 (Watamu and KW), Ksh 45,000-90,000 (Nauyuki, Mt. Kenya), etc.

Average exchange rate for 1991 -92 approximately Ksh 35 to the US dollar. The above figures assume no oppatmity cost, nor shadow exchange rate. Given the w t y cost of foreign exchange, these costs would have been higher (in Kenya Shillings terms). However, the same basic shadow exchange rates apply to photovoltaics. Thesefore, no foreign exchange premium is attached in this instance either to KPLC's rural (grid) e l d c a t i o n or to photovoltaics.

Documents

Joint UNDPNVorld Bank Public Disclosure Authorized Energy