KENYA SOLAR WATER HEATING MARKET
A summary of SolarisKit’s full report on the Kenyan solar water heating market
Kenya boasts the ideal conditions for a promising solar water heating market. Being an equatorial country, it receives a high amount of solar radiation, perfect for solar water heating (SWH). There were an estimated 77,000 SWH units installed in Kenya in 2017, but it is believed that the potential market for SWH units in Kenya is around 3.5 million units. This means that the current market is at only around 2.6% of its full potential. This article will seek to summarise the level of development of the SWH market for Kenya. SolarisKit has prepared a full report that can be accessed at the end of this article, which includes scores for each indicator, as well as an explanation of each indicator and the framework used.
PARAMETER 1: SWH SUPPORT FRAMEWORK
Whereas there is no target formally adopted by the government specific to SWH, there is a draft energy bill which promotes the widespread use of renewable energy. Even though there are no government targets, SWH systems is currently VAT exempt, which thoroughly helps the SWH market. There are no specific loan programs offered by the government to SWH suppliers, there are some partnerships between financial institutions and national SWH distributors. These partnerships, however, make it difficult for smaller, local distributors to enter the market. The impressive feature in Kenya’s policies towards SWH are the building mandates that have been put in place to require SWH into new housing developments or alterations and extensions to existing buildings.
PARAMETER 2: NATIONAL CONDITIONS
As Kenya is an equatorial country, it has high levels of sunlight which makes it an ideal destination for SWH. However, the current market penetration is quite low, an indicator which comparing the total installed capacity of solar water heaters in operation per 1,000 inhabitants. The best available data for the SWH market growth is that of the International Energy Agency (IEA) for Sub Saharan Africa between 2012 and 2017. This value stood at 11%, which is a high level of growth for SWH markets. The payback period for domestic solar water heaters in Kenya ranges between two to four years, which is a promising return. Heating fuel subsidies can negatively impact SWH market growth, however, Kenya has slowly but surely phased out these subsides that were introduced in 2004.
PARAMETER 3: FINANCING
For the financing parameter, the country credit rating and the access to finance are the two indicators that are assessed. This parameter considers the access to capital and macroeconomic conditions, both which can affect investor confidence. Kenya’s credit rating was not too promising for potential investment. The access to finance was average, so Kenya did not score too well in this category. However, Kenya makes up for this in other parameters.
PARAMETER 4: BUSINESS CLIMATE
Finally, the business climate takes into account the ease of doing business and SWH business infrastructure. The Doing Business project, a subsidiary of the World Bank, assesses business regulations and their enforcement across countries. Kenya scored well in this metric, ranking 56th out of 190 countries for ease of doing business with. In terms of product standards and certification for SWH equipment, there are standards that exist in Kenya (a code of practice entitled ‘Solar Water Heating for Domestic Hot Water Kenya’), but this is as far as the standards go. There are no domestic solar thermal testing facilities, nor are there regional, national, or international product certifications introduced for SWH equipment in Kenya. However, there do exist SWH technician and contractor licenses that are recognised on a national level and require previous work experience and/or academic education.
SUMMARY
Kenya boasts one of the most enabling SWH markets in East Africa. The building mandates implemented have helped the SWH market immensely, highly encouraging the implementation of SWH into new buildings and extensions to existing buildings. Also, the VAT exemption of SWH equipment has helped importing and exporting any components and units related to SWH. Even though there is not much data relating to the exact level of SWH market growth, the estimates point in a very promising direction. The amount of sunlight in Kenya makes this a very desirable market, as SWH would be perfect for these conditions. The low payback period increases consumer confidence, along with the SWH technician and contractor licenses that are recognised on a national level. Kenya is a very promising SWH market, one to look out for in the future.