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. 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 The paper represents the views of its authors and may not be published or quoted as representing tbe views of UNDP, E S W , or the World Bank Group, nor do any of tbe foregoing organizations accept responsibility for its accuracy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 hnportRegime . . . . . . . . . . . . . . . . . . . . . . . . . . .- . . . . . . . . . 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 Estimated Number of PV Installed in Kenya (1993) . . . . . . . . . . . . . . . . 4 Table 1.2 REP Connections '87 . Feb '93 . . . . . . . . . . . . . . . . . . . . . . . . . 6 Table 2.1 Duties and Taxes for PV Equipment . . . . . . . . . . . . . . . . . . . . . . . 8 Table 4.1 Costs for a 53 Wp Lighting System .August 1993 . . . . . . . . . . . . . . . . 11 Table 4.2 Comparative Customer Costs of Photovoltaics (1985 .1993) . . . . . . . . . . . 12 Table 4.3 Prices of PV Modules (May '90) . . . . . . . . . . . . . . . . . . . . . . . 12 Table 4.4 Prices of PV Lamps (May '90) . . . . . . . . . . . . . . . . . . . . . . . . 13 Table 7.1 Comparison of Rural Elect&cation Costs . . . . . . . . . . . . . . . . . . . 16 Ws e Figure 1.1 Firm photovoltaic Sales '80-'92 . . . . . . . . . . . . . . . . . . . . . . . . . 3 Figure 1.2 Cumulative Private PV sales ' 90-'!32. . . . . . . . . . . . . . . . . . . . . . .3 Figure 1.3 Annual and Cumulative Connections ( all customers). REP: 1987 .February '93 . . . 6 Annexes Annex 1: LiofContacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Annex 2: Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Annex 3: Firm Photovoltaic Sales: 1980-1993 . . . . . . . . . . . . . . . . . . . . . . 20 Annex 4: Case for Diversification into Solar Electricity . . . . . . . . . . . . . . . . . . 21 Annex 5: KPLC's R d Electrification Programme (REP) . . . . . . . . . . . . . . . . 24 Annex 6: Minutes of 16th September 1993 Round Table Discussion on Photovoltaics in Kenya . 27 Notes 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 (GennanTechnical 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 ~WP 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 pyrethrum, etc.). These homesteads are generally far in the field of renewable energy technologies. From fium any source of e l d c ~Therefore, . photovoltaics geothermal to w in4 improved charcoal stoves to offer them the only reliable and affordable access to micro-hydropower, . . Kenya leads most of Afiica in the power for lighting, radios, even televisions.Second, d' on and use of mewable energies. However, Kenya's dynam~cand competitive private sector is what d s t m p d m - a from many other developing well-attuned to thisdemand. Over twelve firms supply nations is the prombent, and m many cases, photovoltaic equipment to Kouseholds. Hundreds of predominant role played by the country's private sector agents, service personnel and technicians form the in spearheading the rapid dissmhticm of renewable inikastmctwe of Kenya's rural photovoltaic economy. energy technologies to the counby's consumers. At least three firms assemble inverters and w ind t r a n s f m fbr baton-typeh e s c e n t lamps. Kenya's Phott~~oitaics are one of several such "success" stories private s ector,fiam large multi-national firms to local m Kenya At least 20,000 photovoltaic units have been cottage industries, is a driving force in expansion of sold to privatehouseholds by Kenya's dynarmc private photovoltaics in the country. phatwohaic sectar since 1987, more than & domestic umnectiws under Kenya's national "Rrrral Shadd the overall policy emkonment, and import and Electrification Programme" (REP or grid).' The foreign exchange regimes, improve, then photovoltaics o v h m majonty of t heseuuits have been sold to would assume even more importmce in Kenya's rural rural farmers, pnmanly for household lighting. At development. Improving t his environment would present a total of 1 MWp of photovoltaic units has reduce Kenya's recurrent foreign exchange costs for been installed in Kenya. diesel fuel (generators), kerosene (lighting) and materials for dry cell batteries (lighting). It would What makes photovoltaic dissemination so unusual in reduce environmental degradation, pahcularly fiom Kenya is that rapid dissemination has occumd m the the discard of millions of dry'cellbatteries each year. ab- of any articahhi Govennnent policy favoring It would fkther improve the @ t y of life for many phatovohaics over other eldcity supply systems (eg, nrralinhabitantswhoseelittleorno prospectsfor rural diesel generators). Indeed,Kenya's foreign exchange electrification in the foreseeable future. andrmpartregimesplaceprivatehporbtion and sales of photovoltaics at a distinct disadvantage vis-a-vis This study examines these factors. It suggests how other power systems, on the one hand, and danor- n i- and Government could improve the financed projects on the other. environment for disseminating small-scale photovoltaic systans and thereby expand rural The dynamism of the sector in the face of, at best, electriiication through photovoltaics. It makes an Government indifference, reflects two important ec~lamic case fix expsion of rural electrification for factors. First, the remarkable growth of sales is lightingwithphotovoltaicsrelativetoanyothersystem pnmady athibutable to the large suppressed demand (expansion of the grid m mauy isolated areas, diesel for electrification in rural Kenya. a - is one of the generation, etc.). It also points to the policy factors few count&s m f i c a with a large, and growing,rural which could easily enwurage such expansion through middle class, which is well-integrated into the cash the private sector while, at the same time, improving econumy (eg, wheat, tea, coffee, horticultural crops, Kenya's economic and foreign exchange position. Photovoltaic Power to the People - The Kenya Case Page 2 1. Overview of the Photovoltaic Sector in Kenya 1.1 Kenya led much of Africa in the field of in East Africa since that time. photovoltaic (PV) technology acceptance during the 1980s. While initial dissemination of photovoltaics 1.5 In 1983, the first solar vaccine refigerators w as largely attributable to the influence of donors (eg, were supplied to the region by WHO'S Extended for school lighting, rural water pumping, solar Prg- of Iunmmisation (EPT).By the late 1980s, refigeration for health centers, etc.), later the EPI rei?iguation p r - had become the major developments have been achieved almost entirely donor - funded application of photovoltaic in East throughthe private sector for private households. Tens Afiica with over 600 units installed. These primarily of thousands of units, ranging ji-om small 40 watt serve Government clinics, church missions, lightmg systems to electric fences and pumping communities and non-gove~nmentalorganizations systems are in place today in Kenya. WGOs). 1.2 What has characterized most photovoltaic 1.6 Since 1982, photovoltaic companies in East penetration of Kenya's markets (particularly the &a have supplied well over 1 MW to government damestic commercial market) has been the absence of and donor-funded projects for vaccine refrigeration, any axtic&d natiod policy framework. While some water pumping and remote power and l - ig policy moves (eg, lifting duties on the importation of systems. Solar e l h c systems have also been installed photovoltaic panels betweem 1986 and 1991) have to power switching stations for Kenya Railways, to been mhakd, tky have been done outside auy overall light remote schools and army camps, and to power poky fhmework Moreover, Governmenthas played electric fences in wildlife reserves and on private virtually no regulatary role in the d u s t i y . ranches. History of the Kenyan Photovoltaic Sector 1.7 Kenya's photovoltaic m arket is differentiated 1.3 The1981NairobiUNCanf~onNewand from other East African markets by the growth of a Renewable Sources of Energy catdyzd interest in commercial, nondonor base. The home lighting renewable energies amongst donors, the Kenyan system market has grown substantially since 1984. Government and the private sector. Several local The market for "domestic lightmg s y stem s" (which companies diversified into photovoltaics to supply often also power televisions and cassette players) has power for remote teleammmications, pumping, grown to appmcimately 60% of the entire photovoltaic refigeration and various donor-funded projects. market in Kenya. This rapid growth occurred in Dunng the mideighes, photovoltaic markets in East response to demand for electricity for lighting, radios, Afica grew rapidly in response to a drop in and to a lesser extent, televisions. The growth of this photovoltaic prices, increases in worldwide market has occurred pnmady in Kenya's high photovoltaic equipment production, and growing potential farming areas. That is, Kenya's expanding interest among the danor community to support solar rural middle class has provided the major demand for -a- photovoltaic systems in Kenya over the past decade. 1.4 The early photovoltaic m ar ket in Kenya was 1.8 Thegrowthoftheruralphotovoltaiclndustry. served by several companies (BP, Anjmatics, Alpa h was f cw by: l i Ngwu, Kensid). It developed almost exclusively to supply donor and Government projects. Initial re* available solar cell modules and cantracts supplied remote te1-unications power balance of system (BOS) components in for scores of high fkpency radios and a few Kenya; an4 micruwave repeater stations. In 1980, an OXFAM project supplied fifty-two 320 Wp shallow well a large cadre of photovoltaic system sellers pumping systems to Somali refugee camps, and installers operating in the rural market. demonstrating the viability of (and establishing a market niche for) photovoltaic water pumping in East 1.9 The expansion of photovoltaics into Kenya's Afiica Scares ofpumping systems have been installed nrral areas was fiathercatalyzed 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. Photovoltaic Power to the People - The Kenya Case Page 3 by several dphotovoltaic 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 cuinpanieso f f d photovoltaic systems 1.13 The local photovoltaic miusby can be broadly to a large number of m a l customers who had divided into two sectors: suflicient cash to buy single module lightmg systems priced fiom US$ 600 (equivalent) and above. companies serving the donor sector; and, Customers were usually farmers, teachers, other rural salaried employees (eg, Govennnent personnel), companies sening the domestic commercial business people or city-based workers with homes in market. - rural areas. The companies trained a number of local electricians who went on to join other photovoltaic Donor Market companies or to set up their own operations. 1.14 The donor assistance market serves regional and national donor agencies who procure whole systems, usually designed for specific applications. Kenya: Flrm PV Sabs. 198tb92 Contracts are in foreign currency and, because the mP- 110 projects are donor-financed, equipment is not subject to sales tax or import duties. m n 1.15 The four-to-five companies that serve the donor market are n m by expatriates. Bilateral donors ID tend to implement projects with companies fiom their own countries, and thus competition is often avoided. ID Because of their access to foreign exchange and their close links with "parent" solar companies, these (0 companies are suppliers of solar equipment to other . m m a a a m ~ 2 companieswhich compete on the domestic market (ie, nondonor market). Figare 1.l:Firm Photovoltaic Sales (in kWp): 1980-92 C m l l t L n & Y e w R h l e W &h. 1980-92 I*P- -- 1.11 By 1987, all companies involved in the PI. photovoltaic mdustry r eco- the potmtd for domestic lighting systems. They began to set up their m - own distribution systems. Companies began intensive am - madcehg campaigns employing both the cammcial m - media (newspapers, magazines and radio) and district agricultural fairs to advertise and dermwstrate their m - products. By 1989 there were at least 10 - W r r a n Nairobi-based companies involved m supplymg p photovoltaic equipment. Additionally, there were . . of scores . 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 1.16 M a . b a r - h i e d projects in Kenya include 1.12 A a m p l e profile of the ~ndustry m Kenya is the TJNICEFIEPI V accine Refiiger- and the M c u l t to build because of the large number of T u r h Rehabilitation Project (TRP). The Kenya players mthe mdushy, the dispersed nature of projects Wildlife Service (KWS) has also nxeived donor and markets, and the d m m t y of donors and end--. assistance to install a large number of two-wayradio It is conservatively estimated that there are presently systems and over 300 lcm of solar fences. KWS will 1.8 MWp of installed capacity m East f i c a (Kenya, installover 300 lan of additional solar fencing around T e a , Uganda, Ethiopia, Sudan, Scnnalia and national parks and game reserves during the next t wo Djib~uti).~ Private sales of photovoltaics m Kenya years. h a t e game reserves (eg, Kenya's "rhino - Photovoltaic Power to the People The Kenya Case Page 4 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 y - s Private 2-way radio power Government supply SchwVmission powersqlclfi-g systems Repeater stations I *- Electric fencing Source: Authors I 7 private 1.18 Likewise, donors have installed water 1.20 Kenya's damestidhousehold photovoltaic pumping, 1 . -g and radio communication systems market is based on 10 - 100 Wp power systems that for their awn pasornrel serving m the field, in addition are installed, for the most part, by ~ a l - b a s e d to tbe actual communities assisted. electricians. The market grew as these electricians linked up with urban businessmen, and formed Commercial Market business agreements with solar electric suppliers 1.19 The domestic (primarily private household) pnmmly m Nairobi Demand for photovoltaic systems market developed after 1984 when Kenyan grew expanezltially as consumersbecame increasingly entrepnem realized that phatovoltaics wuld meet aware of the advantages of PV system n d demand to aperate electric lights, radios, televisions and stereos at a cost that was often less 1.21 There are presently some eight camparties expensive than grid d o n s or systems driven by based in Nairobi who supply this market. Each geamtom. Mcmxner, the convenience of photovoltaic company has scures o f agents based in rural areas who syskms added to the incentive to purchase such market, install and maintain systems. The local systems compared to operatmg generators, or using commercial market is highly competitive. It suffers kerosene and drycell batteries (lighting and radios). from the vagaries of Kenya's cash eamomy, - Photovoltaic Power to the People The Kenya Case Page 5 particularly "booms and busts" in the coffee, tea, Ma n y rural Kenyans have s a c i e n t horticulture and maize sectors, upon which most rural dqosable income to spend on amenities such cash farmers depend for their income. The recent as lighting, radios and television. devaluations of the Kenya Shilling have severely affected the photovoltaic industry, vlrtualIy doubling 1.24 In addition, Kenya's political stability and a the Kenya Shilling cost of most systems over the past strong market economy allowed solar electric year. Several of these companies could well go out of companies to establish themselves and gain good business or cease their solar promotion activities due reputations with consumers. Kenya's nnal economy to scarcities in foreign exchange and the reduction in from the mid- 1980sto the end of the decade was fairly demand athibutable to high consumer prices. robust; many farmers (particularly in high potential areas) had iacreasing amountsof disposable income to 1.22 Dunng the six years between 1986 and 1992, iwestin durable wnsumer goods such as photovoltaic the number of installed rural domestic solar electric sys-. lighting systems grew expnentially. The number of installed photovoltaic home lighting systems is now The Rural Electrification Programme approaching the total number of KPLC rural 1.25 hd customers choose photovoltaics because connections ( i n d d a l , commercial domestic of these systems are easier to access than grid power. 3 1,000 by the end of '93). A minimum of 20,000 Kenya's main grid primarily serves urban i n d w , photovoltaic lightmg systems wae in place by July residmts and canmenial custoIllers.Less than 3% of 1993. A relatively high portion (possibly 40%) of the the power supplied by the Kenya Power and Lighting instaUed domestic lighting systems are located in high Company(KPLC)isconsumedbyrural~ers potential farming areas within 15 km of KPLC utility whereas m ore than 90% of all Kenyans live in rural lines. areas. 1.23 The rapid growth of the Kenya photovoltaic 1.26 While KPLC has succeeded in electrifying all home market occurred pnmanly on a commercial 42 of Kenya's district headquarten (1990), little rural basis, with little donor or government support. This is electrification has ocarrred outside these centers.Of all due to several f-rs. KPLC R.ural Electrification Programme (REP) cormedions,cmly h alf are "domestic" (ie, households), High demand exists for lighting, televisicm with the remainder being industries and commercial and amenity power among rural-based establishments (eg, shops, bars, hotels) in rural areas. teachers, businessmen, families of urban At the present rate of connection, it will take hundreds workas and government employees. A strong of years to connect all of Kenya's rural population. desk for television among rural wage earners is one of the m jor driving forces behind 1.27 As at February 1993, the REP had made over photovoltaic sales; 3 1,000 d 0 1 l s at a capital cost of over Ksh 1.84 biIlian Dcm m contributed roughly one third to me et Numerous oppdmdm exist for dependent these costs with DENOTE (the Danish I n t a n a t i d agents based in rural areas to gab Development Agency) playing the major role, while emplayment by meeting rural photovoltaic Government and KPLC W b u t e d the remaining demand; costs. KPLC contributes 2% of its gross sales each yearto tbe Rural Electrification Fund. KPLC fkanced Consumer awareness of the bendts of the REP to the amount of approximately Ksh photovoltaics has grown rapidly through 91,127,000 during Kenya's Fiscal Year 1992. effective marketing and promotian People learn about the systems through newspapers 1.28 Since 1973, the programme has completed and radio prop-, and see than at 115 schemes andmade, on average, 1,570 cormections country trade fairs and in their neighbors' per year. The rate at which comedians are made has homes; 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 The supply of modules has been good over the last five years (Table 1.2). KPLC's Rural years. Due to a removal of duties on some Electdication Programme is now focusing on rural photovoltaic equipmeat and the availability of industrid electdcation. This is due to the fact that, f d g n srchange m the late 1980s, companies unlike domestic rural customers (households), rural were able to sell systems at coqethke idustries demand enough power economically to p rim ;an4 tbe necessary grid extensions (see Annex 5) for furtherdebils. Photovoltaic Power to the People - The Kenya Case Page 6 Table 1.2 REP Connections: 1987-Februarv '93 (bv vear and cumulative) ...;...j ... j 2, f .;.";@gq$@m:$@i ; . . : .....,> "'."."." :;A;s : i:.. '" ...... . :.. :...:.;w.92E.:.:<...:.*:;:::::.~:IIt;.::2:.. .. ,. x,.. '..:.: :33x;.,..4w ............,..,.%< . .: .. % ... :,.:.xc:: . ..,...,..,..., . .;.:.:.'".' c.kv @$!$#gp2s:~yz ..:...+:.:.:.:....:...<............ .<.,.......,,; :*$$:52;32. , , .*,. . ..... , @ , : @ ; @- @jg@mg#@j@#*B@@8;m$g2$,; , ( . ,............ . Total 8706 11494 15132 19067 24491 3 1409 Curmections Source: KPLC I I F i l r 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 Local "solarbattery" and Poor battery qual~ty. n Kmya The eshmated operational "success" systems i automotive batterits are often not of the rate of home photovoltaic systems is 50-80% qualdy needed for photovoltaic systems (they (dcatmgwktktheyareaddyinu se). 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 s ystem design and installation; 1.30 Photovoltaic dealers report that system - Photovoltaic Power to the People The Kenya Case Page 7 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. 1.31 In high potential areas, where much of the 2. Policy Towards Photovoltaics in Kenya - 2.1 The most important government intervention equipment.Donor contracts for imported photwoltaic to support photovoltaics was the removal of the 45% systems are paid offshore in foreign exchange, duty on photovoltaic equipment in 1986. Additionally, eliminating the need for the importing company to Government policy statements since the early 1980s access foreign exchange locally. Donor agencies have have encouraged increased use of photovoltaics. far greater access to foreign exchange than does Govexnment added solar energy to its entire national Kenya's private sector. educational syllabus m the late-1980s. Government ensured that photovoltaics are covered in energy 2.6 Conversely, local commercial dealers classes taught at all uuiversities. The Kenya Post and supplying Kenya's private (nondonor) market must Telecommuuications (KP$T), Kenya Railways, the pay i mp ort duties. Moreover, they must raise the Kenyan Army, the Kenya Police, KWS, and other foreign srchange to pay for imported equipment. This Government agencies have also been important puts the private market for photovoltaics at a serious photovoltaic customers. disadvautage vis-a-vis the donor market. 2.2 Unfortunately, Government reintroduced Import Regime duties and value-added tax (VAT) on photovoltaic 2.7 Before 1984, no category existed in the equipment in the Budget published in June 1991 Customs "Schedule for Duties aud Tariffs" for (fiscal 1992). Foreign exchange has become p h o t m o k equipment. Duties levied on photovoltaic mcreasingly scarce for the private sector, particularly equipment genedy depended on rakes arbitrarily a sector like photovoltaics, which does not directly applied at the border. Photovoltaic equipment was result in exports (hence, an ~ndustrynot q d d i e d for listed Mder several categories (eg, "dc electrical preferential access to foreign exchange). generating equipment" or "diode, transistors and semi-cnnductors"). Duty was applied to photovoltaic 2.3 Nonetheless, in this mfavourable policy and equipment, and varied between 3045%. eumornic climate, where private photovoltaic systems are placed at a distinct compebtive disadvantage vis-a- 2.8 In June 1986, Government removed the duty vis Government and donor-Wed programmes, on solar cell modules in response to lobbylng fiom the photovoltaic systans ccmtinue to sell bnskly. However, private sector and commitments made a t the 1981 photovoltaic sales have slowed over the past year United Nations Conference on New and Renewable relative to the 1989-92 period. Energy. T his positive policy intervention reduced prices of solar electric systans to private cunsumers by 2.4 Very few policy-makers are actually aware of 3045%. Sales for modules and photovoltaic home the large number of photovoltaic systems installed in lighting system increased dramatidy. However, ruralhouseholds or of the potential role photovoltaics duties were not removed h m BOS components. could play in rural electrification Section 7 i l - Therefore, customer prices on lamps and charge thisby setting out an economic (and financiai) case for controllers remained h igh small-scale photovoltaics pnrnanly for lighting. 2.9 InJune1991,mGov~'sbidtoin~ 2.5 The private.sector . has had much more of an revenues, duties were re-introduced on solar impact an the d k a m a h a of photovoltaics than have equipment. However, the applicable duty codes are donors (see Table 1.1). However, Government policy complex or even ambivalent. Table 2.1 shows the favours donas rather than small-scale cansumers and current import duties and VAT on solar modules and the private sector. Donor equipment en- the country BOS equipment. While t his has had an effect on the duty-he, and so does most rural electrification sales of photovoltaic equipment, sales contirme to - Photovoltaic Power to the People The Kenya Case Page 8 boom. definitions of equipment and components set out by the M m s t ~ of~Finance. Solar m od ules are once again 2.10 Table 2.1 demonstrates that the effective listed under two separateheadings under the "Schedule cumulative duty and tax rate for photovoltaic equip- of Duties and Tariffs". For example, modules appear men t varies fiom 16% (for a photovoltaic pump) to under the headings for "Electric generating sets" and over 50% for a lighmg system using imported "Diodes, transistors and similar semi-conductor batteries (or 42% for a lighting system using local devia s..."Wh ether a module falls under the former or batteries). the lattercategory is a question of interpretation by the relevant Customs official, as there is no clear 2.1 1 Momver, applymg import duties and VAT on distinction between the two. solar modules is still arbitrary due to the ambiguous Item VAT cum - - - Tax Batteries Lead-acid (motor 89% vehicle) Other lead-acid 48% Ni-Cad 48% Nickel-Iron 48% Otha 48% Parts 48% Lighting Eqwp Elect Lighbng or 48% Signal Equrp Miners Safcty 48% Lamps Parts 59% Controllers BoardsJanels 53% PV Panels Diodes,Transistors, 53% etc. Solar Cells without 53% diodes, etc. Modules with diodes 53% Pumps -Plrmps 16% Fridges Combined Fridges 53% unasSemb1ed 53% electrical DC Sets Unassembled DC 16% sets Assembled DC sets 16% Photovoltaic Power to the People - The Kenya Case Page 9 Source: Ministry of Finance,Customs Department. 2.12 However, there is a large difference on the which are more likely to fail thau systems available duty levied, as those modules entered in the latter internationally at comparable prices. category are subject to higher duties (Table 2.1). Modules w& " d i W t are levied at 30% import duties 2.16 T h e ~ o n ~ s k l o w ( 1 5 % ) . I f f u n d e d b y and 18% VAT (for a cumulative cost increase of donors, pumps escape VAT as well as duty. Vaccine 53%), while those modules without diodes are levied refrigerators escape duty because they are brought in at 10% import duty and exempted fiom VAT. by donors. Virtually all solar refigerators are exempt fiom VAT as they are i m w by donors. 2.13 T he naming bebind the tax on modules with diodes is unclear as blocking (or by-pass) diodes 2.17 Thus, photovoltaics are segmented into two improve module perfbmamx, but do not contribute categurks; the private sector which falls under the 111 significantly to the cost of the module. This duty brunt of Government's duty and tax regime, and the system encourages the importation of low @ y t donor sector which pays v~rtually no duties or taxes. amcnphous modules (which do not ambin diodes), and While no case is made here to inaeasetaxes and duties discourages impartaton of higher quahy crystalltne on donor-supported p r o m s , there is a strong case modules (which contain diodes). to be made for eliminating or reducing duties and tarif& on all photovoltaic and BOS equipment. If such 2.14 Duties on batteries, charge controllers and were acmmphhed, rural electrifiication could expand lampsrange between25% and 30%. Value-added tax even more rapidly by making small photovoltaic on tfiis eqipmnt is xt at the standard 18%. Thus,the systems more affordable to the rural middle class.3 net effective tax on such ~mported equipment ranges between 47.5% and 53%. Imported "automobile" Foreign Exchange Regime bat&uies are placed in yet a higher duty category (60%) 2.18 Limited foreign exchange availability has to support (and protect) the local bathy mdustry. canstrained growth of photovoltaic market by Combiningvalue& tax raises the cost of imported preventing companies h m importing photovoltaic batteries to 89% above the cif (cost, insurance and modules and BOS equipment. Obtaining letters of freight) price. credit to import photovoltaic equipment for the private sector has become increasingly diflicult over the pa$ 2.15 Import duties' on charge controllers are year. This problem has constrained the local particularly regressive. High wnsumer prices on commercial market, particularly for home units. charge controllers discomage customers fiom buying USAID's C w Import Program (CIP) assisted charge controllers. Those systems that do not have the photovoltaic s ector,particularly in 1986-87, by controllers are more likely to fail. Thus, the i mport allowinglocal Kenyan (non-multinational) companies regime encourages the w o n of inferior to import photovoltaic modules by paying in local equipment and encourages t he installation of systems USAID's CIP w as suspended in late 1992. 3. Markets 3.1 As mentioned, two market categories remote locations in Kenya (Table 1.1). These systems predominate in Ken ya. Firsf there are donam, nm- usually include a number of modules (typically f m ) , pemmaalorgankitions (NGOs) and Government a module mounting structure, a digerator cabinet itself Second, there is the overall private sector, n g - i electronics, a set of speedy designed domhted by naalIKmehOlds (preclomiuantly lighting b k e s for solar applications, (promdug five days and radios). additional storage), all hterco~mections,and 111 instalMon and users mauuals. Donor and Govemmemt Programmes 3.2 Donors and Governxmnt have imported 3.3 Two-way d o communication systems also photovoltaic equipment since the early 1980s for a s have played a major role in G o v ~ t tincreased varieiyofdevelopment assistauce purposes. Over 450 use of photovoltaics (over 200 units installed, Table solar refrigeraton have been installed in numerous 1.1). Such systems usually consist of a 40-50 Wp - Photovoltaic Power to the People The Kenya Case Page 10 module, a local battery, a control unit and associated Modules are generally crystalline and are imported by wiring. These systems are now in widespread use by local firms from major international suppliers. The the Kenyan Army, the Kenya Police, the Kenya private sector commercial market, especially for home WrldZie Service (IWS)and many dNGO Projects. lighting is domimted primarily by local Kenyan h . 3.4 Photovoltaic-driven electric fencing is widely 3.10 Thin f i b modules first appeared on the used in Kenya by both the private and public sectors. market in Kenya in 1988. They are imparted fkom Solar fenoes typically require 100 Wp photovoltaic per France by NAPS, fiom H u ngary (Chronar-type 10 10 lan. They require a local batmy, and a charge Wp) by Sollatec, from Siemens by Animatics, and control mit which steps up the voltage in the fence. fiom Uni-Solar and Suryovonics by Chintu Cathodic protection systems have been installed in Engkzrhg. Thin film has been rapidly increasing its several locations by the Kenya Pipeline Corporation market share, and is o h used in smaller (eg, 20 Wp PC). two lighting point) systems. 3.5 Water pumping systems have been iastalled 3.1 1 Most suppliers use local batteries fkom A E3M by donors, NGOs and Govexnment to supply villages, (Associated Battery Manufactmen), the only battery refugee camps, livestock watering points and, to a in Kenya.AE3M manufacture a 75 and a lessa arfenf to meet irrigation needs.Between 30 and 100 Ah 'SOWbattery, but many suppliers simply sell 50 photovoltaic pumps have been installed by donors automobile or larry batteries to customers. Such and Goveranent (Table 1.1) over the past thirteen batteries are less expensive than the "Solar" batteries. years. Most pumping systems consist of a submersible Custor~l~as rarely know the difference between battery P W (borehole) or -trQd Pump (low head), a types- photovoltaic array (anywhere between 7 and 35 modules), power co~lditioning equipment, riser pipes 3.12 Controls are o h supplied by parent and storage tanks. companies. For example, BP supply BP-made uxdmls; NAPS supply.their own controls as well. 3.6 - Additionally, school l ig has been However, the number of systems sold without controls expandedthrough photovoltaics with donor assistmce is inmasing. At least 30% of all home systems are in many of Kenya's remote areas. Donor assistance to now supplied without controls in an effm to reduce light rural schools has ranged from c h d missions to costs. the US Peace Corps. Many boarding schools have p m h a dphotwohaic systems out of their own fimds. 3.13 Fluorescent lamps are supplied with all lighting systems. Although some campanies supply 3.7 Donor-supported. supply and maintenance lamps fkom their parent companies, many companies programmes are dormnated by multinational are now using lamps made locally. A thriving "cottage companies. Procurement of equrpment is often tied to industry" has developed for the photovoltaic system the relevant donor. Virtually all equipment for donor- fluorescent lamps. supported equipment (from batteries to wntrollers) are imported. This campares mark- to the private 3.14 Only one group of installers mount modules domestic marketplace where a considerable amount of on a rotatable "tracking mount". This is turned twice a the valueadded (non-installed) is of local origin. day by the customer to increase energy harvest by 25%. Private Sector Commercial Market 3.15 Other private photovoltaic systems include 3.8 The largest photovoltaic market in Kenya, fencing (large game and livestock ranches in the accounting for over 60% of the value of all country), refigeratiion and water pumping. However, photovoltaic equipment installed in the equipmenf is demand for these photovoltaic applications accounts for private home lighbng. At a minimum, these for only a small proportion of total private sector systems provide power simply for l i -. M ore . demand relative to small-scale rural household elaborate systems provide power for lightmg, radio lightmg. (and cassetteplaytrs) and televisionshideos. Available infomation shows that at least 20,000 home u nits Market Changes have bean sold and installed in Kenya since 1986. 3.16 Since 1986, prices for domeistic lighting systems have remained competitive because of the 3.9 A typical system cansists of a smgle 40-50 large number of companies operating in the market. Wp photovoltaic module, four lightmg lamps, a Gxt cutting measures (such as eliminating control battery, and, m some cases a charge controller. &) have reduced system performance. For example, - Photovoltaic Power to the People The Kenya Case Page 11 dealers can cut the cost of a system by about $150 However, they are less' expensive, hence more (equivalent) by leaving out the charge controller. campetrtive in the marketplace. Moreover, crystalline modules are not readdy available in t he small (5-10 3.17 The market share of amorphous modules has Wp) sizes supplied through amorphous modules. Thus, grown rapidly because of lower international prices it can be argued that amorphous modules are lilhg a and because of lower duties applied to amorphous necessary and important market niche. modules (see 3.1, above). When pioneer amorphous campany Chronar folded, its factores in Europe were 3.18 As noted above, a cottage industry of lamp purchased by other campanies. Several companies now manufacturers has developed in Kenya. At least three sell 10Wp Chronar-type modules at very competitive local firms assemble inverters and wind transfoxmers prices in Kenya The modules are inferior to crystalline for batcm-type fluorescent lamps. Quahty of the lamps modules, based on performance and other factors (eg, varies, as some cause radio interference, and have poor quality glass, very fragile junction boxes). short bulb lives. 4. Costs 4.1 Dollar equivalent costs for domestic &bed and taxed at a cunrulative rate of a lmost 30% of (househola)photovok systems have remained fairly the wholesale price. Moreover, the total wholesale constant over the past eight years. Table 4.1 sets out price for this system in January 1993 was Ksh 37,000 the costs for a typical 53 Wp (four light point) system comparedto Ksh 70,000 in August 1993. The installed w h d provides appmamately equal benefits as a rural price of this system was Ksh 55,000 in January 1993, grid wrmection. comparedto Ksh 90,000 in August 1993. The price of such a system seems high, but it should be borne in 4.2 The wholesale price for a 53 Wp system in mind that a l l user related costs are included, such as Kenya is on the order of $922 equivalent (August lamps, wiring and s w i t k s , and indlatian If these 1993), wide the installed price is on the order of are excluded, an equivalent cost of approximately $1,378 equivalent (approximately Ksh 90,000). Duty $10,000 per kW is obtained for the cost of generation comprises over 15% of the wholesale price (delivered and distribution. cif), while tax (VAT) comprises a further 13% of the whdesaleprice.Mdes,~and~llersared Sianens M-75,53 Wp Module $340 ABM Battery, 100 Ah* $1 15 Thinlight Lamps (4) $88 Charge Controller $66 Wires & Switch* $50 Total S59 %Total Wholesale 715% * Locally-produced or assembled, therefore, no d~ties. . Source:Authors 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 - Photovoltaic Power to the People The Kenya Case Page 12 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 e q p m n t 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 Module 10 Wp (Ksh) 10 Wp (US$ 40 Wp (Ksh) 40 Wp (US$ equiv) AlpaNgwu Solarex 3,700 $132 7,800 $279 Animatics ARC0 Chintu Chronar Chloride Solar ARCO Kenital Helios 1 I nla 1 da I kit d y I kit only Source: MCTS - Photovoltaic Power to the People The Kenya Case Page 13 -Brand Table 4.4: Prices of PV Lamps, May 1990 fin Kenva ihiIIinps and 8W 8 W (US$ lent) 13 W (Ksh) equiv) (US$ equiv) Alps Ngwu Labcraft baton $30 Animatics Thin-lite $3 1 baton Chintu Robin & Altal da baton Chloride Solar Labcraft baton da Kenital Helios da Securicor Helios da Total Solar Labcraft baton $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; the "complete system" approach; an4 urban-based local distributors; and, the "off-the-shelf' approach. a network of nnaloutlets which serve thedmarkets. 5.5 The dealer approach relies on a network of up-wuntq agents to sell systems in targeted areas. 5.3 Eight module i q n t e n were identified dlrring The regional dealer cooperates with d p d e n t the m e of this survqr (August 1993). Five of these agents in nrral towns, building relationships by firms supply o v a 80% of the present module stock. provdmg @ ly modules on credit and giving special a Three of.the.h e most important importing companies rates to favored agents. are~photovoltaicwmpuieswhichsupply regional donor-funded projects as w el as supply l 5.6 svstem approach markets and The com~lete modules to t he local market. The other two major installs systems fram the urban center. This approach impcntm are lims w hich supply electronic equipment targets well-off customers and puts a priority on only (or primarily) to the local m ark et.T h ree of t he e n- stressing that the customer should have as importers depend upon photovoltaics exclusively for little to do with system management as possible. their income. - Photovoltaic Power to the People The Kenya Case Page 14 5.7 The off-the-shelf approach assembles (to power televisions) than there are installed modules, controls, and batteries into kits which are photovoltaic systems. The local recharging cottage packed and sent to up-country retail outlets (i.e. rndustry also recycles used batteries by collecting and appliance stores). The off the shelf buyer is e q x t e d returning them to ABM (Associated Battery to have enough skills to install his own system. Manuf'ers). Maintaance and Repair Spare., Servicing and Support 5.8 There are an increasing number of trained 5.12 Local distribution networks have developed repair groups in Kenya. UNICEF has strict for home systems.In most small towns replacement mahkmmz controls for its EPI vaccine reiiigerators. bulbs, distilled water and spare batteries are available. Securicor Solar has a contract to mainbin 200 EPI A lack of standardization hascaused problems for solar vaccine refigerators in Kenya. some remote systems. "PL" type compact fluorescent lamp replacements may not be available, whereas 5.9 Training initiatives in Kenya are umfined baton type lamps are common. mostly to the companies themselves. There is no organized effort to train consumers about solar 5.13 Servicetecmsva~~frcnncampaqtocompaq equipment operations and maintumce. Installerswork and h n project to project. Lack of maintemnce and within company hierarchies. The team leader for a technical support has contributed to many system gruupcanpletjnganinstallationisusuallyassistedby failures. apprentices. Apprentices learn on-the-job. Financing Mechanisms 5.10 Apprentrceslatermweupwithinthecompany 5.14 Argos, a chain of rural retail traders, began a or leave to establish their owncompanies. The degree hire-purchase program in 1990 using amorphous to which photovoltaic technicians are trained depends photovoltaic systems. The marketing group sold a an t he company. Some companies t rain techuiciaus in Sollatec/Chintu boxed lighting system The odytherudimentsofiostallation for fear that themore programme ended when Argos w as forced to close they train an employee the greater the chance of losing dom maty of its dshops due to economic reasons. that aqloyee, herebyreducmgreQcmg umpthive edge. The German GTZ ( A - fm Technical w a n ) has a small-scale haucing programme in place for 5.11 Local batteries are maintained to a certain photovohaics. It has only been in operation for a short exknL Auto ba#ery charging, -ce aud repair period of time as part of GTZ's Special Energy is a hiving xural aud urban cottage mdustry. There are Programme (SEP). more batteries charged at local charging stalidshop 6. Regulatory Environment Standards Industrial Organization 6.1 An attempt w as made by the Mmstry of 6.3 An attempt was made to form a Kenyan solar Energy in the late-1980s to set up a "Kenya E nergy industriesassociation . . in the late 1980s. However, this Labomtq.'." The purpose of the facility, to be funded never mamuhi& aud there has been no subsequent by the Italian Government, was to increase local move f e to organism the industry. However, testing capacity for energy systems. A number of i n f d industry support is strong. Companies photovoltaic systems were provided to the site for genedy cooperate with one another. For example, testing purposes. However, the laboratory does not when modules are in short supply, companies with curre&y save the photovoltaic mdustry. stocks often supply m odu les to other companies. 6.2 The Kenya B ureau of Standards (KBS) has 6.4 All private companies umtacted during this standards in place far a solar battery. Despite these study bdieve an d n a d iudushies' a s s d o n would standards, locally-fabricated batteries have quahy improve the photovoltaic business ewircwment (see control problems. ABM, through its sales outlet Annex6). Theybelieve- is needtoraise standards Chloride, will replace d d b e batteries retumed of service and safety. There is room for improved within the guarzmtee period. There are no known cocpcdon, but there is a veq~ strong concern among standards applied o r on the books at KBS far other oompauies that Govemumt should play a supportive, photovoltaic equipment. not a ngulatq,role in such an association - Photovoltaic Power to the People The Kenya Case Page 15 7. Recommendations 7.1 The following section sets out an economic can entail purchasing the transformer, paying for the case for encouraging dissemination of small distribution line, and the connection charges. These photovoltaics for household use. It also provides costs can run over Ksh 100,000 per con~umer.~ reammendations on how to improve standards in the industry and to encourage development of the 7.6 Ifthere is a transformer nearby, the customer photovoltaic industry in Kenya. simply has to pay the wiring costs (on the order of Ksh 20-25,000) and the m & n charges which range Government Policy: An Economic Case for Rural from KSh 2,500 to KSh 3,500 (see AMex 5). For a Photovoltaic Lighting majority of rural dwellers, however, grid connections 7.2 The best micro- and macrc~conomic case for are not viable because there is no supply line in the photovoltaics is made relative to extensions of the area, and that will remain so for the foreseeable future. national grid. While there will be cases where Even when the grid is near at hand, it is often difficult connections to the grid are more ecanomic, both at a to organism enough fellow customers to pay for the household as well as a national level, the vast majority transfmer and the dishibhm system at a reasonable or rural dwellers will not have the opporhmity to individual cost. connect to the grid for at least another generatioq if not lager. Moreover, the economic costs of extending 7.7 When subsidies to gnd power are included (i.e the grid into ever-more sparsely populated areas will the costs of grid-based m a1 elec&Scation borne by continue to increase. Kenya's large rural middle class donors, KPLC and the Government), photovoltaic has its danand for e l d c a t i o n through systems compare even more favorably. Photovoltaic the plachase of tens of thousands of photovoltaic sets lighbng is of parhcular interest because, unlike grid or for the household The following makes a strong generator power, it can be down-sized sipficantly to micro- and macro-economiccase for encouraging that meet the needs of the individual household. A single- lrend. lamp 10 Wp PV system, for example, can supply the lighbng quirements of a m a l famdy at a cost that is 7.3 If, indeed, there are large numbers of rural far below that of a grid connection or operating a inhabitants who wish to obtain electricity, but whose generator. demand would be only on the order of less than 30 k w h per month, then current grid extension costs 7.8 As sales of photovoltaics systems have shown, cannot be recovered without substantd subsidies (or even in the face of a doubling of prices, demand for externalities such as i n d u s t r i u o q increased on- photovoltaic systems continues to grow. Demand farm,- rp would increase even more rapidly were duties on &.). The cost per kilowatt installed photovoltaic equipment reduced or eliminated. There (including all distribution costs) should be factored in whenestnnating naal eledriiicationcosts,partidarly are strong economic arguments to be made, both at an whencomparingextmdingthegridtoruralconsumers individual and at a national level, for removing duties relative to promoting photovoltaics. on photovoltaic equipment, exempting photovoltaic equipment from VAT (as Government currently 7.4 Domestic rural e l M c a t i o n using exempts batteries), and promoting photovoltaics in photovoltaics compares favorably with grid or areas where grid extension is either unlikely in the generator-based alternatives where power is r e q u d foreseeable future, or is cc0nomicayI u n j d e d . for several lighting points, and radio and television amenities. Table 7.1 compares the bdlalioq annual 7.9 Comparing photovoltaics to small petroleum operating costs, and annualized lifecycle costs of generators for home use provides even starker installing grid power, purchasing and using a small umlmts. The average life cycle b s t s of a petroleum gasoline generator and purchasing and operating a 50 generator are on the order of seven times more Wp photovoltaic system expensive (to the individual) than a photovoltaic system of comparable size. Considering the fact that 7.5 The grid d o n in practice, varies photovoltaic systems can be down-sized to meet considerably. K q variables include whether or not individual needs, while generators are not available there is stegQwn transformer in the area, how far the b elo w a certain size (eg,1 HP/0.75 KVA), the benefits conslrmeris kxnthetrzmsfixmer, and how mimy other of a photovoltaic system relative to a private generator nnalccmsumers wishto sharethe costs. Sharingcosts are substantial for most home applications. - Photovoltaic Power to the People The Kenya Case Page 16 of Rural Electrification Costs Table 7.1 : Com~arison System Nominal Approximate Typical Running Cost Life Cycle Cost life Installation Cost (years) to customer (Ksh), ind. (KsW~ear) (KsMyear, @ 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 these 20,000 systems w a a ten year period is on the and stocking petroleum supplies, spare parts, among order of more than US$ 20 million in terms of other factors, and the bedits of photovoltaics are self- keroseneand dry cell batteries. These are national (and evident. The same applies at a national level, world) economic savings. particularly when considering t he heavy imbedded f&gn exchange cost of importing gearator sets and 7.13 The average photovoltaic l ig - system operating them. owner would c u r r d y spend US$6 1.80 per y ear on batteries and kerosene to realize the net effect of the 7.1 1 The substitution effect of rural phdovoltaic photovoltaic system. This does not include other lightmg compared to kerosene can be sigdcant as factors such as opportunity costto purchase batteries costs for kerosene in m a l areas are o h h igh and kemmz, and the fact that the bench in tgms of Likewise, photovoltaic substitution for dry cell lumens are much greater for a photovoltaic lighting batteries to drive radios and cassette players is system.The present value of kerosene and batteries SigrUscant, both in econumic and en ' 'd terms aver t heten year life-cycle of the photovoltaic system (dry cell battay m s a l poses particularly important isontheorderofUS$1,400. Thecurrent dutyandtax e n v i r o m n d problems). free installed cost of a photovoltaic system is on t he order of US$ 1,000, while the d.utied and t ax ed 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 sinstalled cost ofthe system is onthe order of US$ a life cycle of 10to 20 years, then, thepresent value of 1,400. Thus, in terms of oppmhmity cost, the - Photovoltaic Power to the People The Kenya Case Page 17 consumerpays approximately the same for a duty-paid Department, should set up specific categories and fully-taxed photovoltaic system relative to using for photovoltaic equipment (modules, BOS kerosene and dry-cells. Were taxes and duties equipment, deep discharge batteries), and eliminated, then, the average photovoltaic household should exempt photovoltaic equipment fiom would realize a 30% net financial benefit relative to duties. kerosene and batteries in addition to a tremendous benetit in terms of services enjoyed.. e. The Mmstry of Finance, VAT Department, should exempt photovoltaic equipment 7.14 Obviously, the consumer's opportunity cost (modules, panels, BOS equipment, deep involves more than expenditures; convenience, discharge batteries) from value-added tax. management, and other factors influence - de!cisicms to p d m e and utilize equipment. However, f. Gmmment should encourage importation of from Government's point of view, photovoltaics for quality photovoltaic equipment. The current lighting repment an unambiguous net savings relative import regime encourages the importation of to kerosene and dry cell batteries for this category of inferior equipment and encourages the rural citizen. installation of systems which are more likely to fail than better systems available 7.15 ~ ~ c a l l y K P L C , d r e m o v e internationally at comparable prices. m a y of theseobstacles d foster the spread of small- scale systems. The following recammendations would g. Donors should emxmage the dissemination of increase dissemination improve Kenya's energy photovohics. Donor programmes should seek position: to expand household.domestic d e l d c a t i m where the greatest photovoltaic a. Kenya Power and Lighbng Co. Ltd should demand exists. cansider supporhg the photovoltaic industry as a key element of its Rural Electrification h. Foreign ex&mge should be made available to Programme. At a :minimum, KPLC should the photovoltaic in dust^^ on the basis of clear work with the industry to establish standards economic savings for the national economy as and promote photovoltaics for ligbng in well as improving rural living standards. isolated rural areas. KPLC should lobby Foreign exchange should be as ease Govement to reduce, if not eliminate, duties available for photovoltaic imports as for other and ta xes on photovoltaic equipment. KPLC equipment. b. The National Housing Corporation (NHC) Other Recommendations has expressed an interest to support a. Local battery pduct~an d standards should photovoltaic dissemination in rural areas by be improved including the wiring and installation of p b o l t i c systans as an o p t i d financing b. Local production of components for scheme for rural housing. . . The Rural Housing photovoltaic systems could be improved and Loan Scheme, admlrustered by NHC, has increased, including assisting local lamp assisted thousands of the individuals to build m a m k t m m , producers of ballast inverters, housesinruralareas. charge controllers, and battery voltage converters. c. Promdmg additional hmcing of between Ksh 80,000 to 150,000 to include the installation c. KPLC should encourage the photovoltaic of photovoltaics would require a five to ten industry to set standards in coo~dination and year repayment period. Such loans would be consultation with private companies,NGOs, parkduly important f a salaried government donors and m aj or consumers, with particular n isolated rural areas and would officials i attention to safety and controllers (to extend further have a demonstration effect to the life of systems), and to promote the encourage dissemination of photovoltaics. 1nd-y; d. The Mumtry of Finance, Customs PhotovoItaic Power to the People - The Kenya Case Page 18 Annex 1 - Major Dealers - company Item Imported - NAPS Neste, Kyocera, Siemens Alps Ngwu Solarex BP Solar BP chi n t u Sovlux, Suryovonics, others Sollatec Thin film fim Eastern Europe Chr~nar-type. Siemens Helies Photovoltaic Power to the People - The Kenya Case Page 19 - Annex 2 Bibliography Author Title Publisher Bess, Mike "Comparison of Pumping Systems in Nairobi, ODA-ITDG, 1989. Zimbabwe and Kenya: 1989". Bas, Mike "Review of Renewable Energy Programs in Nairobi, AID, 1987 Eastern and Southern Afiica: 1987". Bess, Mike "Rural Energy Use in Kenya, 1989". Nairobi, of Planning, 1989. British Petroleum, BP Solar: Solar Systems for East and Central Nairobi, 1993. Affica" . Bogach. R Reters + Pippa "Assessment of Applications and Markets SADC Energy TAU, Luanda, Sellers for Solar Photovoltaic Systems in the Angola, 1992 SADCC Region". Hankins,Mark "East Afiica PV Update 1993: Potential W h g t o n , DC, US Export Project Partners and Market Developmentsn. Council for Renewable Energy, 1993. Hankins, Mark "Optimising Perfixmame ofSmall Solar Reading University, MSc Thesis, Electric Lighbng Systems i n Rural 1990. Kenya: Tedmical and Social Hidans, Mark "Small Solar Electric Systems for Afiica". h d c m , Commonwealth Science Council, 1991. Hankins,Mark "Solar Rural Electrification in the Washington, DC, Solar Electric Developing World, Four Case Studies: Fund, 1993. DominicanRepublic, Kenya,Sri Lanlca and Zimbabwen. KENGO "Workshop Pmcedqs for Regional Solar Nairobi, KENGO, 1992. Electric Training and Awareness". KPLC "Report and Accounts for the Year Ended Nairobi, KP&L, 1993. 30th June, 1992". KPLC "Status of the Rural Electrification Nairobi, KPLC, 1993 Programme" Mmshy of Finance "Schedule of Tariffs and Duties: 1992". Nairobi, Government Printing Oftice, 1993. - Photovoltaic Power to the People The Kenya Case Page 20 Annex 3 - Photovoltaic Sales in Kilowatt Peak from 1980 to August 1993 - ---- --- Tahle - A3.1 c m ~ a n ~ '80-'86 87 88 89 90 91 92 93 Total 1. Chintu Thin Film 12 10 6- 28 c * 20 20 2. BPISecuricor 1 88 30 14 25 16 17 7 197 3. Kenital 145 4. Alpa Ngwu 24 24 5. Animatics 81 72 18 18 18 22 229 6. Total 22 22 7. Telesales 0 Thin Film 16 16 9 41 8. Chloride 0 Thin Film 6 9 15 Crystalline 33 7 40 Total Sales in kWp 81 88 102 68 91 89 90 7 761 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. M i ,these figures should be taken as the minimum private sector sales in Kenya to date. A d d sales w ill ustamiy be higher thanthefigures shownabove, but to estimate this margin of difference would be &cult d specuhve. Photovoltaic Power to the People - The Kenya Case Page 21 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 referredto as photovoltaic an the o4ha hand is pollution f ie ,reliable, in remote areas, where littlepower is requned, solar electricity is more effective than grid errtension. In fact, KPLC has recognised this fact and is at themoment procuring solar power for three radio repeaters located in remote areas. This papa iadicateshow KPLC starrdsto gain by offeringto 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 1Km away firm an existing 11 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 a sk why KPLC does not leave it to t he 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. - Photovoltaic Power to the People The Kenya Case Page 22 b) The mge of services by the company to the public will 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 i nto 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 commercialdevelopment personnel. Once the development engineers are d e d that the applicant cannot afford grid d c m , t h ey 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 t he 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 t hi s approach, each ho- ld would have its own solar anays and batteries fromwhich they cau power their lights and otha appliances. Thebclttayandthesolarpanelswouldbesizedto 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-amountbasis eliminating bill calculations and reducing admlnlstratroncosts. 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 w ater pumps, Stg. 2,000 to 10,000. There are other products for specral applications which are not considered hen. Photovoltaic Power to the People - The Kenya Case Page 23 The above prices are still very high for most Kenyans. This is true. A subsidy fiom the rural e l e ~ ~ c a t i fund o n 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 m any advantages have nc4 been dealt with here in detail. Similarly the various ways of presentingsolar elechicay to diffkmt customers and their merits and demerits have also been left out. However we can show thatby using solar there is a cheaper w a y of elec-g the nnal areas faster and KPLC can play an important role in achievingth is.This is because the biggest obstacle to our electrificationprogrammes 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 m atter with you. KIREMU MAGAMBO 2 1/6/90 Annex 5 Notes on KPLC's Rural Electrification Programme (REP) The REP was initiated m 1973with the objective of providing e l d c i t y 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 . . SIDA (the Swedish International Development Agency, ODA (the B Development Agency), ritish Overseas DeVem- 'on)and NORAD ( t k Norwegian Agency for M o p m e n t ) all provided grants and loans, at various times to the programme. Until 1992tk l argestdonor contributingto 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, : ~ , ~ . ~. ~ .$ "m@g&i@8m @~~@&@Ki@$$$k$g:~2a;mB&d~im$&&.;"j""iz@e~&@$~~ $ , g. p j ;,q,.,.,,. , < ;...* .$.<~ ;.& * t.* 4 ; w., :w p .$$%' , . .:if ., * ,.< . . .. ....... , .,,....... y,...,.,> :gggijpn.:O.,..~ ; ,. . ,,,,,.,,., 2 , '~#$$*;*~~@g;~~~$,,~,F;y~g&$~~~~:;~:::~~:::;,>< L ..,.:.*.. , . ...<. L.,...,. : ; . .>. : ,;., : ~, : .,+, . ; ~ :;?,*:::: ... ~ <~.. . ~:P : . ~: . '; ; : ; .., '* ;~ :~ : ;; . . ~ >. .~ 2 '~ ~:. " .~:; 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 hDistrict Development Co mmittees(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. b These uituia favournrral industry,not rural homes. The Steering Cammittee makes the fldecision. If a single Photovoltaic Power to the People - The Kenya Case Page 25 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. Onc e a transfamahas 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, elexlrificationdoes 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 connectmany rural a. As of Apnl1992,17,240customerswere wnnected uuder the Rural Electrification Fund (REF)"domestic" (ie, household) tariff. A h i h e r 12,165 customers are listed by KPLC under the "small commercial" tariff. During &call992 (July 1991-June 1992), Ksh 9 1,127,000 (approximatelyUSS2.6 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 a t a subsidised cost of some $508 (equivalent) each.6This subsidy does not include donor and other Govanment contributions. - Photovoltaic Power to the People The Kenya Case Page 26 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 w as 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 zn initial j 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 m eeting, an update on the status of the PV industry i n 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 a gn- ~t with the nxmmemhoas of the study. M ost of the companies felt that the duties and VAT levied on modules and BOS equipment are inwnsktent and need to be addressed urgently. There w a s also much discussion about mechanisms to implement such schemes. In the secondhalf of the meeting, company representatives were asked to recommend which changes they thought would benefit the miustry the m o st The following remmmendations, ranked according their fhxpmy, are the issues that the group felt should be addressed most urgently: can "speak as one voice" and lobby for its interest (such 1. An d o n should be formed so that the irxlust~~ 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 -rEwoWER J.WAMBrn KPLC LYNETTE OBARE KENGO GEORGE MGWDRI ALPAMGUW H.BATYA VITAREFAD N. M A m o WILI(EN LTD P. OWANY SECUIUCOR C. MAGERO SECUIUCOR J. ILTIJ.ERm CONSULTANT N. MOON APPROTEC MFlSHER APPROTEC C. KmENE CHLORIDE EXIDE JL.ODENY KPLC R.h4 SUDI NATIONAL HOUSING CORPORATION S. BORRACCINO KENTAL SOLAR D.OSOTS1 GTZ-SEP W X PRATT ALPA NGUW GUY RICHARDSON m n c s LTD S.P.WAIGANJO NATIONAL HOUSING CORPORATION J E NJOROGE TOTAL SOLAR (K) LTD M. WANJAGI TOTAL SOLAR (K) LTD I. KOME CHLORIDEEXIDE J.R. OMWOMA S. KAREKEZI C. RIOBA SOLAR WORLD MHANKINS CONSULTANT R. VAN DER PLAS WORLD BANK Photovoltaic Power to the People - The Kenya Case Page 28 ' 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 "goodestimates". Import data also provide an imperfect picture of photovoltaic sales due to dsagpgation of i mport 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. Ms ot 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 substitutefar generators. Likewise, amfmllers(BOS) are not equipment which can be easily converted to other uses. Rathex, p ~ o l t a iecq q m m t is a afforeign &ge saver, M a r as it substitutesfor 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 100,000-135,000 (Watamu and KW), Ksh 45,000-90,000 (Nauyuki, Mt. Kenya), etc. Average exchange ratefor 1991-92 approximatelyKsh 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.