- What investment strategies can Kenya adopt to achieve its ambitious energy goals?
Achieving Kenya’s nationally determined contribution (NDC) target of reducing greenhouse gas emissions by 30% by 2030 relative to business-as-usual levels will require a concerted effort to put its energy sector on a low-carbon trajectory, particularly in light of the country’s economic development goal of attaining middle-income status in the same time frame. The government has undertaken several important initiatives. Last year, for instance, President Ruto outlined Kenya’s ambition to achieve 100 percent renewable power by 2030 and to fuel the green industries of the future by 2040. Kenya can no doubt achieve its goal if it develops green energy systems, such as those based on solar, wind power, and storage. While the EU has committed almost €12 million in grants to leverage public and private investments in the Kenyan green hydrogen industry and the Global Gateway invests €3.4 billion in climate and nature in Kenya, private sector investment also needs to be leveraged. This will be beneficial for large-scale as well as mini-grids.
- How can innovative financing models support the development of renewable energy infrastructure in Kenya?
As the global investment community transitions away from fossil fuels, which are becoming more challenging to finance, a commitment to net zero emissions positions Kenya as an attractive destination for investment. The good news is that private finance represents almost 41% of total climate finance tracked in Kenya, and most of this was directed to renewable energy generation. The country must continue investing to fuel a solar revolution that promises to transform the Global South. Unlocking Solar’s potential in emerging economies demands policy change, financial innovation, guarantees, and a robust private sector. We must transform risk into opportunity through strategic partnerships across public, private, and international sectors. For example, ISA’s Affordable Finance at Scale programme is created to explore innovative and profitable financial arrangements to enable solar projects and renewable energy practices. It helps to mitigate the risks involved in innovative energy practices and facilitate low-cost solar energy solutions on a large scale. Under this programme, we have partnered with financial institutions across the world to assist solar power development projects. Moreover, guarantee mechanisms can help attract private investors as they provide financial safety nets.
- What are the main infrastructure challenges facing Kenya’s grid expansion, and how can they be addressed?
Grid connection is only cost-effective if it is built to serve densely populated areas. It is important that we utilise solar mini-grids and standalone solar systems to enhance universal energy access. ISA’s research has shown that grid extension alone will leave 660 million people without electricity by 2030 – the year by which it is expected that electricity access to all will be provided. For villages and towns more than 10-15 kilometres from the grid, solar mini-grids are particularly useful; while for those with population densities of less than 400 people per km², solar stand-alone systems will make sense. This implies that large, centralised networks are mainly located around major urban centers, thus excluding large sections of the population living in inaccessible rural areas. There is a need for an integrated plan of action within the renewable energy sector and enhanced training of personnel regarding specific skills relating to transmission. Additionally, there are recommendations to allocate adequate financial resources by the government especially for operation and maintenance while citing the importance of developing a community engagement plan for the areas along which the transmission line passes and the need to leverage technology to reduce the land space needed for right-of-way acquisition. Use of the already existing government reserves alongside other public infrastructures such as road networks, water and sewerage infrastructure, and railways among others could be considered to reduce wayleave acquisition challenges.
- How can regulatory and policy frameworks be improved to support Kenya’s renewable energy goals?
Kenya’s commitment to renewable energy is evident in its energy mix, which is predominantly comprised of renewable sources like wind, solar, geothermal, and hydro, accounting for about 90% of the installed capacity. The Government of Kenya has been proactive in fostering public-private partnerships (PPPs) for the development of the transmission sector with support from the World Bank and the International Finance Corporation.
To further enhance these efforts, particularly in the deployment of solar mini-grids, robust policy frameworks are essential. Mini-grids have proven effective in increasing electricity access across Sub-Saharan Africa, including in Kenya, where policy and regulatory support can significantly amplify this impact.
For Kenya, establishing clear regulatory frameworks that encourage the installation of solar mini-grids can catalyze rural electrification. Policies should focus on simplifying licensing and permitting processes for mini-grid operators, ensuring tariff structures that balance affordability with sustainability, and providing incentives for using local resources and labour.
Moreover, integrating solar mini-grids with national grids requires policies that allow for grid interconnectivity when it becomes feasible. This includes technical and regulatory provisions for mini-grid operators to sell excess power to the national grid or draw from it when solar generation is insufficient.
The International Solar Alliance has already facilitated the creation of aggregated demand for 236 solar mini-grids across nine member countries, demonstrating the effectiveness of policy advocacy in this area. Kenya could expand its solar mini-grid projects by adopting similar aggregated demand models, which would enhance energy security and economic development in rural and remote areas.
In conclusion, by strengthening regulatory frameworks and providing clear, supportive policies for solar mini-grids, Kenya can further harness its abundant solar resources to meet its renewable energy goals, reduce reliance on fossil fuels, and promote sustainable development.
- What roles do international partnerships like (ISA) play in advancing Kenya’s renewable energy ambitions?
At ISA, we are dedicated to advancing solar energy in member countries, particularly those facing significant challenges like Least Developed Countries (LDCs) and Small Island Developing States (SIDS). We facilitate the implementation of diverse solar technologies, ranging from rooftop systems to solar mini-grids, alongside promoting green hydrogen solutions. Through our initiatives, we showcase scalable benefits and drive innovation through various demonstration projects.
Central to our mission is capacity building, where we enhance local expertise through targeted training programs and bolster the solar sector’s development. We have piloted an innovative financial mechanism, the Global Solar Facility, to draw private capital into underserved markets, especially in Africa, backed by safeguards like payment guarantees and insurance to mitigate investment risks.
ISA also commits to providing analytics and advocacy to break down information barriers that deter investments, offering detailed reports and insights that guide developers and investors in navigating the solar landscape.
We actively engage both public and private sectors, encouraging investment and supporting scalable local solutions through platforms like our SolarX startup challenges. This approach helps foster a robust ecosystem of clean energy enterprises and infrastructure.
Ultimately, ISA’s efforts are geared towards helping countries achieve its energy goals by promoting the widespread adoption of solar energy solutions, thereby accelerating deployment and creating a supportive environment for solar energy.
- What are some of the hurdles preventing developing countries from adopting renewable energy sources such as solar and what is your organization doing to address these bottle necks?
Despite solar energy’s potential to enhance access, three significant imbalances challenge its widespread adoption:
- Geographical Imbalance: Solar investments are concentrated in developed nations, leaving regions like Africa with limited opportunities, hindering progress and potential.
- Sectoral Imbalance: Investments favor large-scale solar farms, while smaller-scale applications crucial for decentralized energy, such as solar pumps and cold storage, receive less attention.
- Manufacturing Concentration: Over 80% of solar manufacturing is concentrated in just two countries, causing supply chain vulnerabilities and price increases.
To counter these imbalances, ISA’s strategies include:
- Scaling Solar Mini-grids and Standalone Systems: These are essential for providing universal energy access in areas beyond grid reach. We have initiated a solar facility to attract investments into underserved sectors with mechanisms like payment guarantees.
- Diversifying Solar Manufacturing: We support local manufacturing of solar modules in countries with sufficient demand to reduce supply chain risks and costs.
- Integrating Solar Energy in Various Sectors: We explore emerging technologies like green hydrogen and ensure their effective integration to transition sectors to lower carbon pathways.
- Fostering Global Knowledge Exchange: We enhance international cooperation to improve national policies and attract investments.
- Capacity Building and Regulatory Change are necessary enablers. We have also provided training to nearly 5000 people across the developing world on ways to make a living out of supporting solar energy. We are working on developing STAR Centres in countries that will be a hub of training, technology, knowledge, and expertise on solar energy.
- ISA is committed to enabling financial mechanisms towards boosting investment flows to achieve global energy goals.
- What needs to be done to ensure that climate finance is flowing uninterrupted to Africa, which is bearing the brunt of climate change?
Africa has immense potential in deploying solar energy capacities, yet due to investment risks, the region has not been able to leverage its potential. High-level discussions involving industry experts and leaders underscored its potential to overcome financing barriers, mitigate risks, and pave the way for scalable solar investments across Africa. Handholding entrepreneurs can help them become major suppliers of solar energy across countries and regions. Notably, in collaboration with Invest India, ISA launched the first edition of the SolarX Startup Challenge at COP27 in November 2022 in Egypt, to boost entrepreneurship and startups in the solar energy sector and address energy and investment gaps. To help overcome financial discrepancies through guarantees in the region and de-risk solar, the ISA set up a Global Solar Facility (GSF) for its African member countries. Approved during the Fifth Assembly, the GSF encompasses an investment insurance and payment guarantee fund. The GSF aims to address this challenge and provide security to the investments. The ISA offers a guarantee, albeit in a limited manner, to its Member Countries in Africa, through the Affordable Finance at Scale programme, in partnership with financial institutions across the world.
Photo credit: ISA https://isolaralliance.org/about/director-general
