Kenya to give concession in order to benefit from KSh72.5b ($500 million) US firm
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Kenya faces tough rules to tap KSh72.5b ($500 million) from a US firm, Husk Power Systems for the construction of solar mini-grids
Kenya faces tough rules to tap KSh72.5b ($500 million) from a US firm, Husk Power Systems for the construction of solar mini-grids.
If Kenya wants to take advantage of the $500 million (Sh72.5 billion) financing being mobilized by US-based company Husk Power Systems, it to give concession for the construction of at least 100 solar mini-grids.
As part of a significant commitment to accelerate climate-resilient economic growth in rural Sub-Saharan Africa, Husk is anticipated to mobilize funds through equity and debt to finance multiple solar projects.
Within five years ahead of 2030, the deadline for achieving the Sustainable Development Goals (SDGs), including universal energy access as part of SDG7, the company aims to have 2,500 net-zero mini-grids operating in off-grid and weak-grid communities in the region.
“Meeting the targets of the Africa Sunshot will require operational excellence from Husk, and we are ready to mobilize immediately. It will also need the active support of governments to get the right policies in place that integrate mini-grids as a central component of national electrification and energy transition plans,” said Manoj Sinha, Husk’s Co-Founder, and CEO.
Early this year, the firm put forward a new public-private partnership (PPP) framework, offering to mobilize financing to the projects if the right conditions are met by interested jurisdictions.
“All investors, including development finance institutions, infrastructure funds, and commercial debt providers, must provide the appropriate quantum, tenure, and cost of capital to meet these accelerated timelines,” added Sinha.
Husk is yet to identify four additional markets to upscale the projects tenfold, but Kenya could win the place if it agrees to, among other conditions, roll out at least 100 solar mini-grids, which aligns with Husk’s business model. Husk currently has more than 200 mini grids in operation in Nigeria and India.
The Nigeria numbers are expected to be up-scaled to 1,000, while in the Democratic Republic of Congo (DRC), there are 500 such projects financed by the firm.
Its five-year goal targets connecting 225,000 micro small and medium-sized enterprises (MSMEs) and 150 Megawatts (MW) installed rooftop solar commercial and industrial (C&I).
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Kenya currently taps solar power mainly from the Cedate and Malindi Solar plants, each with a capacity of 40 megawatts.
Consumers, mainly industries, have lately been switching to individual solar power generation to cut costs.
The electricity dispatch from solar plants to the national grid, which accounts for about 2.7 percent of the total energy mix, is still low compared to other sources such as hydro, geothermal, wind, and thermal.
With the rising drought that has cut the hydro-power, more solar power could be used to bridge the gap while simultaneously helping Kenya switch away from dirty and costly thermal power.
Unlike solar, thermal power generators are compensated using the Fuel Cost Charge— one of the components blamed for the high electricity bills in the country.
The growing significance of solar has prompted the government to draft regulations where homes and businesses will net off excess power at zero financial cost to the off-taker, Kenya Power, under a 10-year contract.
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