Some 355 solar contractors, manufacturers, and importers snapped up production permits from the Energy and Petroleum Regulatory Authority (Epra) in the year to June 2024, signalling increased demand for solar services.
As the price of electricity in Kenya continues to skyrocket, customers have increasingly resorted to alternative sources of power particularly solar photovoltaic (PV) to take advantage of the falling prices of solar components such as panels, inverters, and batteries.
This demand has attracted hundreds of new companies into the business, which has more than doubled the number of solar companies registered by Epra from just 741 in the financial year 2018/19 to 1,603 in 2023/24.
More individuals are specialising in solar works such as installation and maintenance with 7,329 PV technicians having been licensed by Epra, up from just 4,502 five years earlier.
“Licences were granted to 154 solar PV technicians, 355 solar PV contractors, manufacturers, and importers,” said Epra in its statistics report for the financial year 2023/24.
As the solar business booms, each entrant in the market is targeting its own niche, with some focusing on the importation of solar components from leading manufacturers and suppliers in the major markets such as China, Japan, Germany, and the US for supply to the local market.
Others are specialising in local assembly of solar components, while there has also been a growing number of solar companies that offer full Engineering, Procurement, and Construction works under long-term Power Purchase Agreements (PPAs) with clients, especially large power users.
Electricity prices have gone up sharply in recent years, which has raised the cost of living and doing business in the country. Large power users such as manufacturers have been one of the biggest casualties of the high electricity prices, with energy costs making up about a third of their operating costs.
Power prices are set to rise further in the coming years partly due to the new Public Private Partnerships (PPP) deals that the government is currently pursuing, to build high-voltage power transmission lines to enhance the quality of electricity supply.
It is on this backdrop that many power consumers are either entirely switching to using captive power or supplementing their supply from the national grid with captive power.
Captive power plants operate by generating electricity primarily for the consumption of the owner and not for sale to the public. Total captive power capacity hit a historic 532.6MW in the year to June 2024.
“Captive power generation remains attractive to commercial and industrial consumers due to its cost-effectiveness, ease of setup, and supportive government policies,” said Epra.
Solar PV and bioenergy are the largest sources of captive power with installed capacities of 229.2MW and 161.8MW respectively. The others are waste heat recovery (83.5MW), hydro (33MW), thermal (21.3MW), and geothermal (3.7MW).
