Kenya will this year benefit from multiple financial instruments for the expansion of solar use in a push to support green living projects and energy-efficient buildings.
Since the beginning of the year, a number of financial organisations have announced funding arrangements with the country to this end.
The most recent entrant, the European Investment Bank (EIB), announced last week that it would give a Sh7.5 billion loan this year for the construction of two solar power plants, underlining the growing interest by global organisations to finance local green projects.
The bank said the €60 million (Sh7.5 billion) credit line would go to Radiant Energy and Eldosol Energy, which are owned by the same developers, and whose solar projects are located next to each other in Eldoret. The two parks have a capacity of 40 megawatts each.
The solar plants will be connected to the national power grid. The electricity will cost Sh12.36 per unit under Kenya’s feed-in-tariff for solar power.
“The financing will be finalised soon,” said EIB East Africa head Catherine Collin.
EIB records show that the construction of the two farms will cost Sh17.6 billion.
This means the Sh7.5 billion loan will cover only part of the expenses, so the developers will raise the remaining Sh10.1 billion through other avenues, including equity.
Meanwhile, solar energy systems maker Orb Energy on January 18 announced $1million (Sh103million) in financing as part of the efforts to promote the expansion of renewable energy in Kenya.
The company said it had raised the money to grow its in-house finance facility, which helps small and medium-sized enterprises buy rooftop solar systems.
It aims to provide finance to potential users looking to reduce electricity costs both at home and in their businesses by acquiring a rooftop solar system.
The company said that Participatory Microfinance Group for Africa (Pamiga), an African finance institution and an initiative of France-based International NGO Centre for International Development and Research (CIDR), provided half the amount while Germany’s development finance institution, DEG, provided the rest.
The money will be used to boost its residential and commercial solar business in Kenya, where it began operating in 2014. Since then, it has invested more than $2.million in the country.
Orb, which manufactures solar panels, solar water heating systems, and also does installations, has sold more than 10,000 solar systems in the country since 2014, the company CEO said.
This comes at a time when the solar equipment space has been gaining attention after the government said it was seeking to accelerate uptake of renewable energy in rural areas.
In January, the World Bank also approved $150 million (Sh15 billion) financing for the Kenya Off-grid Solar Access Project. The funds will enable the Rural Electrification Authority (REA) to establish solar mini grids and boost transformer networks across the country.
REA Chairman Simon Gicharu said the mini grids would lead to an increase in solar pumping systems to provide water for drinking and irrigation in 14 underserved counties in northern and north-eastern Kenya.
“The authority will in the New Year continue to strive to meet the target of universal access by the year 2020,”said Dr Gicharu.
The government has adopted measures to promote the use of solar energy, by for instance, waiving import duty and value added taxes on solar water heating and solar PV systems. Besides, it has made it mandatory for households and institutions that use more than 100 litres of hot water a day to install solar water heaters.
Orb CEO Damian Miller said his company, which partners with local banks and MFIs to arrange financing for customers, had installed systems in more than 10, 000 homes.
“We recently launched a larger range of residential rooftop solar systems in Kenya. In India, we have installed more than 30 MW of rooftop solar systems, and we expect to see Kenya start to pick up in this direction,” he said.
“We are still early in the adoption cycle, and many customers are still not aware of the benefits of solar for cost savings and enhanced reliability of energy supply. However, the early adopters that we have served are generally satisfied with their investments,” he added.
Orb’s Vice-President – Africa, Ramin Nadimi, said they had partnered with Equity Bank and Kenya Women Microfinance Bank on both SME and residential projects.