Tuesday, March 11, 2008

Kenya's 2nd Largest Resource

Our largest resource is our well educated, literate and skilled population. Our 2nd? For me, its the almost guaranteed 12 hr sunlight. At the moment, KenGen is struggling to keep up with the demand for electricity and only meets the 15% continuity gap required between demand and supply. To this extent, its looking at getting an additional 1,000MW from the geothermal project to add to the 1,200MW it gets from hydroelectric and outsourcing. Still,

  1. with our economy projected to double in size every 10yrs, i.e. double electivity demand
  2. Rural electrification project underway and whose effect on demand has not been quantified
  3. population growth not slowing down
demand will soon outstrip supply.

Hence the need to bring solar energy into national energy policy. I'd envisage that the easiest and more efficient way to institute the policy would be to concentrate
on consumer rather than industrial demand. A few years back when I was planning to build in chags, I was quoted Ksh50,000 for
solar panels to electrify a 3-bed house. That might be out of reach for most Kenyans, but I believe there is where a national policy
would come in inform subsidies, tax breaks where imports are required and even promotion of
solar farms. As a matter of urgency, GoK should require all new houses being built to be solar powered
(or at least, to have certain mw being produced by installed solar panels). It can then systematically require
other properties to install solar panels to produce given mw.

 Already seeing the opportunity, a Chinese company is 
buidling a factory to manufacture solar panels in Kenya. Other articles on the same, by Afromusing and BDA.


Afromusing said...

Hello MainaT, thank you for this timely post. I do concur that the focus should be on consumer adoption of solar tech. As you pointed out, the costs are rather high, but with govt tax breaks this can be surmounted. There is so much more to talk about, as there are also installations that can use reflectors instead of pricey PV. Solar without the panels as it were. (so swamped, please give me a day and i will do a post on this CSP tech)

Nganga said...

Solar energy opportunity is huge. Government policy will be critical but in addition, the needs to be an innovative approach to power generation and distribution.

For example, ausra (http://ausra.com/) and similar companies are already developing solar energy generation "plantations" that are both affordable and durable.

Companies such as www.bloosolar.com and www.solexant.com are developing thin film nanosolar that can be printed on a large scale at very competitive prices.

The economic reality in Kenya doesn't allow for a solar panel on every roof. However, if we had the legistlation to support IPP who would distribute the energy in localized areas - Think of it as a village in the middle of nowhere. People use parafin to cook and light their houses. If an entrepreneur could invest in a small solar generation plant and equip it with a reliable storage device, then provide wiring to the homes in this village, he could then charge a daily "power" fee equivalent to the family's "parafin" budget for the day. With today's technology, the entrepreneur could program each home to receive power equivalent to the amount paid by the customer on a daily basis. Think of it as buying airtime for your celtel line. If you run out of credit, you wait until you have money and buy more credit.

Shai Aggassi, formally of SAP, has a similar model targeting the automobile market. But a lot of parallels can be drawn.

Bobby said...

Theses a difference between skills and qualifications. There are many Kenyans who have papers(read qualifications) but they lack the skill required to be competitive

Nganga said...


I agree with the skills vs. qualifications issue. But here is the reason and the solution.

The skill deficiency is primarily as a result of our education system and subsequent work environment. Our education system doesn't encourage us to think broadly and independently. Rather, it asks us to study the books, answer the questions as instructed and we are successful. A more liberal approach to education would help us think differently and acquire the skills we need whether as physicists or English teachers.

As an employer, it is clear that my new hires require a 3 to 6 month window to condition them to think for themselves. Employers must build into their training process the conditioning for employees to feel empowered to make decisions, not take orders. It is important to allow them to feel like they can make mistakes without losing their jobs. The limited employment opportunities make most employees less likely to make decisions on their own for fear of losing the job.

I also believe that for most industries, it might be necessary to recruit an expatriate. Only reason being that again, our Kenyans are very smart, very "educated" but defficient in the skills department. An expatriate hire for a 6 to 12 month window will help speed up the skill acquisition and shorten the learning phase for any organization that wants to be progressive. An expatriate, just so we are clear, could be a Kenyan who has worked in the west or a foreigner.

MainaT said...

Afromusing, please light up that post on CSP, and more usefully, please point me in the direction of company that is currently selling those effecicent solar panels and at what cost.

MainaT said...

Nganga, without GoK engagement, solar panel will remain a huge and unexploited opportunity. The reason are two-fold. In the absence of its engagement in solar power, GoK will continue to support the largely ineffecient and corrupt behemoth that is KPLC. KPLC provides a seductive substitute i.e. pay a connection fee of Ksh35,000 and you become part of the national grid. Yet it losing almost 25% of power its soruces from KenGen and others via vandalism and associated acts.
GoK involvement will mean that some of the funds set aside for rural electrification can be set aside and used to promote the usage of solar in new homes

Nganga said...

I prefer to look at opportunities outside of GOK. That said, there are newly elected MPs who are progressive and might actually support legistlation. One such MP is Joseph Lekuton http://www.mzalendo.com/Members.Details.php?ID=239
He has said that he would support legistlation on such progressive agenda.

Until then however, we should look at the opportunity as the situation is today in Kenya. Then as some VC says, if the legislation is passed that supports the solar energy opportunity, it will be gravy and not raison d'etre.

A dogs life in Africa said...

I live on the edge of the rift and use wind and solar - it's ridiculously expensive to replace/upgrade my windmill (.5 mill Ksh) so solar is the way to go (140k) but solar is only 6 hours per day guys!!! Wind blows all day and night.... but it's the batteries that cost a bomb...frankly I don't see Kenyans going green - we have this system because there is no power here.

André said...

Hi Tony,
I've been quietly following the proceedings on this blog since 2006 and from what I see, I believe we can establish a mutually beneficial partnership drawing from our synergies.
I head an Investment Company based in Nairobi and your post on going regional is what got my attention.
I know that you primarily invest in the NSE and I respect that. I also used to be 100% invested in the bourse until the downturn of last year showed me that my clients and I were seriously overexposed.
We've now gotten into real estate development as a hedge against unwanted southward movements of our All-Share Index (thus letting my shareholders and I sleep easy regardless of the political situation at any given point in time.)
I empathize with Kenyans living in Diaspora who lack proper contacts on the ground to ease their Investment activities back home and it is my hope that our company will be instrumental in bridging this gap.
I'm also hoping that as a leader you are not opposed to positive change and can thus look at the possibilities that our Investment Vehicle can bring to yours with an open mind.
Kindly look at our website, http://www.neocenturyea.com and let me get your thoughts.
Andrew Kiriti,
Neo-Century Investment Company (East Africa) Limited

MainaT said...

Ok Andre, I'll pass-by.