This rapid transition has seen the booming of a private market since the early 1980s – with hundreds of thousands of Solar Home Systems (SHS) installed across rural areas of the country. In 1990, the number of Solar Home Systems in Kenya was 5000. By 2010 over 320,000 had been installed in homes across Kenya.

The private market in household PV systems was launched in the 1980s at the initiative of Harold Burris, a US engineer who had worked in the nascent US solar industry. Burris had been a Peace Corps volunteer in Kenya and when he finished he launched a company to market PV-powered sewing machines. The project was a failure but the technology came in use later on when he met Mark Hankins, another Peace Corps volunteer who was teaching at a secondary school that was in the process of electrification using a diesel generator. Burris convinced Hankins to install a PV
system instead – and using the modules left over from his failed sewing machine project, he installed Kenya’s first solar home system in Karamugi Harambee Secondary School in 1984. After the successful installation, the teachers of the school wanted to install systems in their own homes, and from there the market for SHS was born. Hankins applied for USAID funding to install PV systems in three more schools and include training of local technicians as part of the project.

Again, once the systems were up and running, interest quickly generated in the local community. In 1990, Hankins started researching the development of the SHS market in Kenya and later published a textbook on SHS design and implementation. He went on to set up set up Energy Alternatives Africa (EEA), which became a leading player in the solar PV market in Kenya. EEA was successful in attracting funding from multiple international donors, which supported activities to build the SHS market including training courses, technology development, market surveys, micro-finance experiments and the development of an alternative energy policy. Many more players began entering the SHS market, and with international funding support for capacity building and knowledge dissemination, technical capacity and learning quickly spread. Kenya is now second only to China in the number of SHS installations, marking it number one in the world on a per capita basis.

Wider relevance

The growth of Solar Home Systems in Kenya is of interest for any context where on-grid electrification is a challenge. The development of the Kenyan SHS market is an example of a successful pro-poor transition – involving the successful roll out of small-scale technology to poor and rural areas of the country, where grid access is not a realistic prospect for many years.

This example is also interesting as it was in great part, private sector led – a gap in the market for a new technology was identified by entrepreneurs in the 1980s and built up through locally-led demonstration and marketing activities and the development of local capacity and networks. The private sector innovation narrative was key to the market’s success, but does not tell the whole story. International funding provided forums for exchange, learning and capacity building – which has been crucial to the success of the SHS market.

Finally, the rapid growth of the SHS market is indicative of the potential for countries in the Global South to generate demand and supply of new clean technologies that meet the needs of the poor. Innovation in the Kenyan PV market is moving beyond simply importing technology towards the development of a national solar PV innovation system. Several donors have supported the development of a Climate Innovation Centre in Kenya, and a PV module assembly plant, also involving donor support, began operations in August 2011.

Context and background

In Kenya, the grid-based electricity rate is well below the average for Sub-Saharan Africa – with 84% of the population lacking access to electricity. The national grid is concentrated to the South and West of the country, covering only 25% of the national territory. Connectivity in rural areas is especially low, and although the Government has made a commitment to expanding the grid – aiming to achieve 100% connectivity in rural areas by 2030 – it is a hugely costly and complex operation to connect remote areas, and there are doubts about the feasibility of achieving this goal in the short term.

Solar Home Systems provide an alternative to allow rural dwellers to access electricity without connecting to the grid. The market for SHS in Kenya has developed rapidly over the past 30 years, with annual sales growing from 1000 in the late 1980s to around 20,000-25,000 systems per year in recent years. The total of the population with an installed SHS is still small – at roughly 4.4% of total rural households by 2011 – meaning that this technology has not yet replaced common practices for lighting and charging phones such as kerosene and batteries . However, the market has received political backing from the Kenyan government and ongoing financial backing from
international donors, and as such, its growth is expected to continue at pace.

Enabling factors

To build the SHS market, early entrepreneurs had to generate rural Kenyans’ interest in a new and unfamiliar technology. Hankins and Burris employed a variety of marketing strategies, the most successful of which was to introduce a working example in strategic locations such as village shops or schools. These local demonstration activities were key to building interest and demand of rural communities across Kenya. When bigger players such as Total Solar entered in the market in the late 1980s, they employed similar marketing strategies – subsidising demonstration systems in homes and local dealerships across the country – which led to the rapid diffusion of the market.

An equally important social factor in the success of the market was building local capacity and networks. Right from the beginning, Burris and Hankins engaged local Kenyan technicians by including training opportunities in their funding bids. Hankins also up SolarNet – a network for Kenyan PV actors – in 1992. A specialised PV training centre, the KARADEA Solar Training Facility (KSTF), was set up and supported with funding from at least five international donors. EEA worked closely with KTSF and over ten years 175 PV technicians, mostly from East Africa, were trained at the facility.

In terms of economic factors, international donor funding underpinned the capacity building and dissemination activities that allowed the market to thrive. Paradoxically, however, much of this public funding was sought and won by selling a narrative of the SHS transition as a true “free-market” success story that had grown without public sector support. SHS entrepreneurs identified problems in the market and sought donor funding to fix them – lessons learnt were disseminated through donor reporting and workshops, allowing private sector actors to make use of the learning and grow the market . In the 1990s, the Global Environment Facility and the 17 International Financial Corporation developed the Photovoltaic Market Transformation Initiative, which aimed to support a “true free market for PV products” by making finance available for supply and demand side interventions. This financial approach proved unsuccessful, however, and the programme was ultimately reworked to focus on capacity building. The Kenyan PV Capacity Building Project was launched in 2006, supporting the Kenya Renewable Energy Association, PV curriculum development, training courses, production of three manuals (for users, vendors and installers), and a quality assurance programme.

The SHS market has also received some limited political support from the Kenyan Government. In 2002, future president Mwai Kibaki promised in his election campaign to achieve electrification in the Northeast Region – a sparsely populated area with limited grid infrastructure. PV systems were the only way to fulfil this promise quickly, so the Ministry of Energy set up the Institutional PV Systems Programme (IPVSP) in 2005 – which is estimated to have supported the installation of up to 4000 systems in schools and other public facilities. Public policy actions supported the growth of the PV market in its early years. In 1986, the 45% import duties and VAT on PV modules were completely removed following lobbying by the private sector and World Bank. However, this supportive fiscal environment has not remained stable – duties were raised again in the 1990s and reduced back to zero in 2002. In 2013, a 16% VAT was imposed on solar goods. In 2015 a feed in tariff was introduced, although this has been critiqued for being set too low to be truly effective. In 2012, the Kenyan Government set an overall goal of the Rural Electrification Authority to increase connectivity to 100 per cent by 2030 and an interim goal of 50 per cent by 2022.

Scope and evidence

  • In terms of both annual sales and overall numbers of SHSs installed, Kenya accounts for around 10 per cent of the global market, making it second only to China and therefore number one in the world on a per capita basis.
  • Figures suggest SHS constitute around three-quarters of the solar PV capacity in the country, or an estimated 6-8MWp.
  •  Annual sales of SHS are estimated to have grown from 1000 systems in the late 1980s to around 20,000-25,000 systems in recent years.
  • The estimated number of SHS installed in Kenya by 2010 amounted to 320,000. This represents nearly 20 per cent of total electricity grid consumers.
  • The World Bank estimates that since 2009, 4.3 million solar products have been sold in Kenya, and 937 thousand tons of greenhouse gases have been avoided.
  • It is estimated that roughly 25,000 – 30,000 solar PV products are traded annually in the Kenyan market and that at least every household has owned at least one solar PV product.
  • Despite the market size and potential, only around 4.4 per cent of total rural households (on and off grid) had an SHS by 2011 – meaning that SHSs are still a niche technology that have not yet replaced the more common practices for lighting and phone charging, usually met by kerosene and batteries.
  • Innovation in the Kenyan market is moving beyond the selling of imported technologies towards the development of an innovation system around PV.
  • Several donors are supporting the implementation of a Climate Innovation Centre, and a PV module assembly plant, also involving donor support, began operations in August 2011 .

Lessons for a rapid transition

  1. Keep it local – To embed and make this new technology spread, early entrepreneurs concentrated on building local capacity and supply chains to deliver and maintain Solar Home Systems (SHS). From the 1980s, Kenyan technicians in rural areas were offered training opportunities. Kenya’s first photo-voltaic (PV) module assembly plant opened in 2011.
  2. Show don’t tell! – SHS entrepreneurs found that the best way to convince new clients to install solar systems in their homes was by setting up a demonstration kit, in a local shop, school or home. Once people saw the system at work,  demand quickly spread.
  3. The power of entrepreneurial role models – SHS entrepreneurs in Kenya stressed that the SHS market had grown through private sector innovation. However, paradoxically, this story was a powerful tool in securing international public funding, which then underpinned and supported the capacity building and dissemination activities that were fundamental to the market’s success.

References

Byrne, R., Mbeva, K., & Ockwell, D. (2018). A political economy of niche-building:
Neoliberal-developmental encounters in photovoltaic electrification in Kenya. Energy
Research and Social Science , 44 (August 2017), 6–16.
https://doi.org/10.1016/j.erss.2018.03.028

Byrne, R., Ockwell, D., Urama, K., Ozor, N., Kirumba, E., Ely, A., Becker, S. and Gollwitzer, L. (n.d.). Sustainable energy for whom? Governing pro-poor, low carbon pathways to development: Lessons from solar PV in Kenya. 2017 . Retrieved from
https://www.iea.org/energyaccess/

Kenya Climate Innovation Center (KCIC) (2017) Kenya Solar PV Market Assessment
https://www.kenyacic.org/sites/default/files/publications/KCIC%20Solar%20Survey-3.pdf

Ockwell, D., Byrne, R., Hansen, U. E., Haselip, J., & Nygaard, I. (2018). The uptake and diffusion of solar power in Africa: Socio-cultural and political insights on a rapidly emerging socio-technical transition. Energy Research and Social Science , 44 (May), 122–129. https://doi.org/10.1016/j.erss.2018.04.033

Ondraczek, J. (2013) ‘The Sun Rises in the East (Of Africa): A Comparison of the Development And Status of Solar Energy Markets in Kenya and Tanzania’, Energy Policy 56: 407-17

Newell, P., Phillips, J., Pueyo, A., Kirumba, E., Ozor, N., & Urama, K. (2014). The Political Economy of Low Carbon Energy in Kenya . IDS Working Papers (Vol. 2014).
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