Kenya's PV Market Driven By Policies

The "Renewable Energy Development Roadmap 2025-2030," released by Kenya's Ministry of Energy in March of this year, has given the local photovoltaic industry a significant boost.

By raising the photovoltaic installed capacity target from 3.5 GW to 5 GW, this significant step forward clearly indicates that Kenya's photovoltaic market is poised for rapid growth. For local photovoltaic importers, this policy is both a boon and presents numerous challenges: supply chains must be streamlined, policies must be aligned, and competition will intensify.

The new policy incorporates a triple incentive system of "higher targets + increased subsidies + mandatory installation requirements," paving several profitable avenues for importers.

The most direct one is the increase in installed capacity-5 GW by 2030. This translates to nearly 4.8 GW of new PV equipment over the next five years. Based on current average international prices, this represents a nearly $5 billion business.

With such a large market, there's ample room for business expansion, especially in the distributed PV sector. The subsidy increase from 30% to 40% lowers the barrier to entry for households and small businesses to install PV, making it easier for them to install and, in turn, making our products more readily available.

Another particularly effective hard rule: new buildings must install PV, or they'll be subject to a 15% "energy offset tax." This isn't just talk; it creates a "must-have" demand for commercial building PV. Kenya is experiencing rapid urbanization, with commercial buildings proliferating. Based on the annual growth rate of the construction industry, this policy should generate at least 200 megawatts of stable orders annually. For importers, this demand can be accurately calculated, making it easier to stock up and plan purchase quantities in advance.

The new "PV + Energy Storage" model has also opened up new business opportunities. As we all know, Kenya's power grid is unstable, especially in rural and remote areas. Installing PV without energy storage can be problematic. The current policy includes energy storage equipment on the exemption list for the East African Community's Common External Tariff, reducing the cost of importing energy storage. Data shows that last year, installed energy storage capacity in Kenya's commercial and industrial sectors accounted for over 40% of the country's total. With future policy support, this proportion is expected to rise. Importing more energy storage equipment is a surefire way to go.

International funds are also helping Kenya. For example, the World Bank-funded Kenya Off-Grid Solar Access Project (KOSAP) received $12 million in performance incentives and another $30 million in loans to promote photovoltaic products. Furthermore, the Global Climate Fund (GCF) is also investing, further stabilizing government subsidies and ensuring guaranteed returns on sales.

While opportunities abound, importers also face significant pressure. First and foremost is the hurdle of tariffs-imported photovoltaic modules are subject to a 20% tax, higher than in many neighboring countries. This directly increases the price of imports, weakening competitiveness. While energy storage equipment is tariff-free, photovoltaic modules account for the bulk of system costs. Without reducing this cost, project quotes lack an advantage.

Competition among peers is also becoming increasingly fierce. Now that the market is booming, major international companies are eager to grab a piece of the action: China's CATL and EVE Energy are assembling locally, offering lower costs; Europe's Tesla and Sonnen are targeting the high-end market, offering higher prices but strong brand recognition. Local assembly plants are also in place. The lithium battery assembly plant opening in Mombasa in 2030 will have an annual production capacity of 50MWh. While battery cells will still have to be imported, the ability to assemble locally has taken away business from pure importers.

Policy implementation also presents uncertainties. While subsidies have been raised to 40%, don't forget that the fixed feed-in-tariff for photovoltaic power generation will be eliminated in 2022 and replaced with an auction system. It's unclear whether these subsidies will change in the future. Furthermore, some African countries have previously experienced delayed subsidy payments. Waiting for reimbursement could lead to cash flow problems. Furthermore, the technical standards and certifications for "PV + Energy Storage" are still unclear, making it difficult to determine which specifications to choose when purchasing.

The supply chain is also a concern. The market is growing rapidly, requiring constant supply, but international logistics often cause delays, ports are often congested, and exchange rates fluctuate. Imported components are settled in US dollars, while sales are received in shillings. Any exchange rate fluctuation can erode profits. Furthermore, the mandatory installation policy for new office buildings could lead to a sudden influx of orders. If inventory is insufficient or the goods cannot be transferred on short notice, you could miss out on business.

Faced with these opportunities and challenges, importers need to change their mindset. They need to move beyond simply reselling goods and become providers of complete energy solutions. First, they need to optimize their supply chains. Since some East African Community countries offer low tariffs, they can collaborate with them to establish a transit point for PV modules, shipping them there before transferring them to Kenya to save on tariffs. Since energy storage equipment is duty-free, they can import more and then collaborate with local assembly plants to combine PV and energy storage, improving their competitiveness.

We also need to adapt our approach to dealing with customers. Simply selling equipment isn't enough; services must be packaged as well. For example, we can learn from M-KOPA's successful approach, integrating PV with mobile payment to create a "pay as you go" model. Instead of paying in full upfront, customers can pay over time, which will attract more buyers. Furthermore, we can build a technical team to help customers install the equipment, perform maintenance, and monitor system performance. This will reduce the worry for customers and encourage them to continue working with us. Especially when supplying commercial buildings, we can customize "PV + energy storage" solutions to help them save on electricity costs and avoid the 15% tax-a move that customers will undoubtedly embrace.

Financial flexibility is also crucial. Aren't there international support funds? For example, KOSAP loans can help connect clients and offer flexible payment options. We can also work with local banks to secure loans specifically for PV projects, bundling government subsidies with repayments and sharing the risk. Regarding exchange rate fluctuations, we can negotiate with suppliers to settle in RMB or lock in the exchange rate in advance to prevent profits from being eroded by exchange rates.

Technology also needs to stay current. We should consider how to effectively integrate "PV + energy storage," collaborate with leading international technology companies, introduce intelligent management systems, and enhance our service offerings.

Furthermore, we should monitor local technical standards and prepare products that meet them in advance, lest we wait until the standards are finalized before imported goods fail to meet them. There are also second-hand lithium batteries. Now many people in rural areas want cheap photovoltaic equipment. We can cooperate with recycling companies to get some safe second-hand batteries and sell them to rural users. This is also a good market.

Finally, policies need to be closely monitored. Set up a dedicated team to monitor changes in subsidies, tariffs, and technical standards. Attend more meetings with industry associations and discuss your challenges and needs with those who set the policies, striving to make them more favorable. Think ahead about what to do if policies change; don't panic after they happen.

The "Renewable Energy Development Roadmap 2025-2030" demonstrates that Kenya's photovoltaic industry has entered a golden age, driven by policy. For importers, this presents not only an opportunity to sell more goods, but also a chance to establish a firm foothold in the industry. Instead of simply reselling goods, they should leverage policy benefits into advantages. By optimizing the supply chain, providing better services, bolstering finance, and improving technology, they can shift from simply "selling equipment" to "helping customers solve their energy problems."

To achieve the 5 GW target, importers must take the lead: introducing leading international technology and equipment to meet local user needs while balancing policy requirements with business needs. By reducing tariff costs, seizing opportunities in energy storage, and developing new business models, they can not only profit but also help Kenya improve its energy mix and achieve sustainable development.

The future of Kenya's photovoltaic market depends on whether policies are implemented, technology keeps pace, and healthy competition among peers occurs. For importers, as long as they can flexibly adjust their strategies and closely monitor policies, they will undoubtedly become key players in the regional market during this wave of energy transformation and contribute effectively to national development.