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Solar Overseas PV Markets

Demand analysis of emerging PV markets: Kenya

January 4, 2021 Mars Chang


Country profile

Kenya has an estimated population of 51 million. It has maintained an annual GDP growth of 4.5 to 6% in recent years. Hit with a double whammy of huge debts and the COVID-19 pandemic, Kenya sees the exports of domestic agricultural products—a perennial staple of its economy—struggle. Supply chains of other industries were also interrupted by the crisis. Meanwhile, its ongoing trade tension with China adds further uncertainty to its economic prospects. International credit rating agencies Moody’s and Fitch have respectively assigned Kenya a rating of B2 and Bbb-, citing concerns over its financial well-being. Both ratings indicate negative economic prospects. 

Geographically, Kenya lies in the eastern Africa and borders with Somalia to the east, Uganda to the west, and Ethiopia and Sudan to the north. There is a variety of climatic conditions in Kenya, with a tropical monsoon enveloping the entire country and a mild climate prevailing among coastal regions and hot and humid plateaus.

Every year, the highest temperature is 26 °C and the lowest one is 12 °C. The annual solar radiation averages 1,700 kWh/m2.

Renewable energy development

Kenya has long been at the mercy of chronic power shortage. Around half of its population have no access to electricity, which is particularly the case in rural regions. To resolve power shortage, the Kenyan government invests heavily in natural gas-driven power generation and renewable development—with the aim of achieving 100% of renewable generation by 2030.

Hydropower and geothermal energy account for the majority of installed renewable capacity in Kenya, accounting for a combined share of nearly 80%. Wind power is the third largest renewable source in Kenya. The country’s biggest wind power project, which has a combined capacity of 310 MW, was commissioned in mid-2019, pushing up the domestic installed wind capacity. Other renewables such as solar PV and biomass hold less than 10% of the installed renewable capacity because of underdevelopment.

Kenya renewable energy installation

Solar policies and outcomes

Kenya’s feed-in tariff (FiT) program has played a role in developing the domestic renewable industry since its launch in 2008. The program has been updated twice, with the 2012 version now in place, under which the payment for solar generation is arbitrarily set at USD 0.12/kWh. While the payment is generous compared with the global rate, it does not help much to encourage Kenyan solar demand because of obscure and inconsistent administrative regulations.

Utility-scale PV projects in Kenya are also compensated at an FIT rate of USD 0.12/kWh. Four such projects, each being 160 MW in size, began construction in 2017. Two of them are under way, whereas the other two have stalled due to administrative and financing reasons. As the local PV supply chain is sketchy, the Kenyan government relies on foreign developers to build projects. Moreover, scarce infrastructures have led to a sparse grid network, which makes it difficult to commission projects.

Rural dwellers, which make up a significant portion of the Kenyan population, are facing severe power shortage. Thus, there is some demand for off-grid projects in Kenya, although it occurs in a patchy fashion.

Kenya cumulative PV installation

As for how Kenya’s solar policy will evolve, there is some talk about introducing an auction system. Implementing an auction system and reducing the FIT payment rate may push the Kenyan solar industry further forward, considering that local projects are still subsidized under the 2012 version of the FIT program and solar costs have been coming down remarkably around the world. Having said that, the auction program is still under development; how it will work or turn out remains to be seen.

Kenya-China trade: Module import and export

China has exported 100 to 180 MW of modules to Kenya in recent years, a modest shipment. So, much of Kenyan PV demand remains to be tapped. The relatively high module shipment volume seen in 2019 was partly due to a wave of draw-in for building utility-scale projects clinched in 2017.

Kenya module export (2017-19)


For Kenya, developing renewables can help ease the chronic lack of electricity across the nation. Much of the domestic renewable capacity is devoted to hydropower and geothermal energy, but PV and wind power installations have just begun to grow.

While the FIT system has long served to drive Kenya’s solar demand, the demand has yet achieved much growth over the years on account of obscure and inconsistent administrative regulations. But since PV costs have been declining, the Kenyan government mulls introducing an auction system. If the centerpiece of Kenya’s solar development policy does shift to an auction system and the regulatory framework is reformed to maturity, then Kenyan solar demand may surge.

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