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Capacity Building for Renewable Energy SMEs in Africa: Access and Potential use of Clean Modern forms of Energy Services in Kenya

By

Ayago Wambile


EXECUTIVE SUMMARY

About 94% of Kenya’s rural habitants have no access to electricity, with a backdrop of increasing yearly demand recorded from small and micro-enterprises (SMEs)[1] social institutions, public as well as private entities in the arid and semi-arid lands (ASALs). Most of these reported demands are however considered either too remote or are wide spread to permit economic justification for long distance grid extension to all settlements or institutions[2]. In addition, the energy systems currently in use in the remote areas, mostly isolated gen-sets are considered inefficient and highly costly. It increases operational costs, affects production systems and reduces organization’s capacity for growth, thus in overall, suppressing rural economy. As a result, majority of the populations are rendered vulnerable and are subjected to poverty trap as their alternative livelihoods is threatened and incomes limited to traditional production systems like pastoralism and subsistence farming.

In general, the grid connection in rural areas has been slow. It takes longer time and is costly. As a result alternative, affordable, and environmentally friendly energy sources are needed to bridge the present energy gap at the national level as well as in under privileged arid and semi arid areas of the country to meet the supply-demand equilibrium. The use of the renewable energy technologies (RETs) by SMEs in the region would not only enable creation of suitable energy mix that would stabilize national energy production, reduce organization’s energy costs and the country’s fuel crises but would also provide alternative livelihood among peri-urban and rural inhabitants making them resilient in the wake of catastrophic shocks like the recently experienced droughts and global financial meltdown that have affected food prices in the country. It is expected that investment of RETs through SMEs and rural institutions would enable or could facilitate communities to move beyond survival and subsistence to sustainable development and diversified livelihood options. Besides, use of RETs is not only environmentally benign but often economically competitive.

It is on this basis that AFREPREN/FWD in collaboration with international donors, development and financing agencies is implementing a number of renewable energy and energy efficiency projects. The projects aim at promoting renewables (mainly biomass-based cogeneration, small hydro, wind and solar energy) and energy efficiency in the following Eastern and Southern African countries: Tanzania, Uganda, Kenya, Zambia, Mozambique, Ethiopia, Malawi and Swaziland. The overall development objective of these projects is to use renewable energy to strengthen existing and embryonic SMEs, agro-industries, tourist entities, rural institutions (schools, hospitals, welfare homes, churches, etc) and engage relevant key stakeholders involved in pro-poor renewables development through training, technical assistance and investment support.

In order that the access, affordability and potential of clean renewable energy services to be assessed among SMEs in Kenya, AFREPREN/FWD commissioned this survey in arid and semi arid districts to assess a number of indicators on energy use and adoption. Some of the indicators entail analysis of SME productivity, costs effectiveness, and the level of access to cleaner and modern forms of energy services as a result of use cleaner and environment friendlier energy sources. Detailed background information on SMEs is also included for future follow-up. This study entails analysis and interpretation of the data and information collected from three arid districts and one semi-arid district; namely: Mandera, Garissa, Marsabit, and Tharaka respectively.

As mentioned, the main aim of this survey was to identify a minimum of 20 SMEs, agro-industries, tourist entities and church-based institutions (missions, schools, hospitals, children homes, etc) whose operations could benefit from installation of renewable energy (cogeneration, small hydro, wind pumps, small-scale wind turbines, solar PV and solar water heaters) or whose core business is or could be sustainable energy services. The benefits accrued could be one or a combination of the following:

  • Cost savings
  • Increased productivity
  • Access to cleaner and modern forms of energy
  • Any other relevant benefit

Chapter 2 of this report provides background of the report, while Chapter 3 summarizes the methodology employed in the survey and summarize the terms of reference. The key results and findings of the survey are summarized in Chapter 4, while Chapter 5 details the key conclusions and recommendations of the survey.

[1] There was need to define what constitute SMEs. In general, there is no universally agreed definition of SMEs and they range from those based on the number of employees to those based on business turnover and assets (World Bank, 2007). Generally SMEs would be defined as firms or business entities with as high as 100 employees to low of 5 employees or can also be those with $ 250,000 or less (ibid).

[2] In some areas even the government administrative headquarters like the district commissioners offices do not have access to electricity.


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