Project Management . Capital Raising . Renewable Energy


There’s been a lot of debate on the merits of self-generation of power as opposed to on-grid electricity connection in Kenya. Different players in the energy sector have expressed their opinion in Kenya’s major daily newspapers as well as through social media op-eds. Some of these articles have questioned the motives behind recent recommended policy changes on Solar PV by the regulator, Energy Petroleum Regulatory Authority (EPRA). These came about after revisions of the existing Energy (Solar Photovoltaic Systems) Regulations, 2012. 

Is the “Switch to Solar campaign dead on arrival? 

As we begin a new year, it’s important to take stock of the current state and trends in the sector. This includes an assessment of the policy and regulatory aspects and general market landscape. This brief puts three key components of the policy into perspective:

Solar Panels

A look into the Solar PV Draft Regulations: 

  1. Classes of Solar PV workers licences

The regulator proposes to rename the license into Class SPW1, Class SPW2, Class SPW3, and Class SPW4. The delineation of each class is around what system size a particular license holder is allowed to service. For instance, SPW1 holders can design, install, test, commission, repair and maintain solar PV systems not exceeding 400 Wp whereas for SPW2 this goes up to 3kWp including solar water pumping systems. One of the developers we spoke with noted that this license is too small for many players that operate at that level yet the skills and knowledge at that level enable more to be done. 

For SPW3, it is 50kWp and 10kWp for grid tied solar PV systems and single-phase hybrid systems respectively while for a SPW4 license holder, there’s no capacity limit. The regulator also envisages having a mechanism of upgrades across each class, regular renewal of license and tracking of licensees as well as a transition process for the current T1, T2 and T3 license class holders. A notable change is that whereas returns on projects handled were previously done at a company level, each of the new license class for technicians is required to submit a list of projects undertaken since 2012. The regulations should allow the SPW3, to install units with more capacity than 50kWp, given the experience and training required. Recent studies show that on average, captive solar PV installations for industries, commercial farms and industrial parks are more than 50kWp. 

  1. Licensing for Manufacturers, Importers, Vendors and Contractors

Market players will also be issued licenses categorised as Class SPC1, Class SPC2, Class SPC3, and Class SPC4 with more or less similar capacity limits built into what level of project size a market participant can implement. What this means is that a Class SPC1 holder would need to have a SPW1 staff, for a Class SPC2 holder a SPW1 staff and so on. Further, a Class SPM provides a manufacturing nod for any company that wishes to play in that space. 

  1. Professional indemnity cover

Licensed contractors are expected to take out and maintain a professional indemnity insurance cover. This is tiered according to the hierarchy of the license classes. For instance, it is KES 1.0M, KES 5.0M, and KES 10.0M for SPC2, SPC3, and SPC4 respectively. For the SPW4 category this is also KES 10.0M. 

What to watch out for; 

  1. Noncompliance risk

There is a number of offences that could get a practitioner be it a technician or company in trouble. These offences range from practicing with an expired license, undertaking a project in excess of the scope of one’s current license, selling products that are of a sub-standard quality metric, failure to submit compliance data to the regulator among others. The fines can range as low as KES 5,000 (USD 50) to as high as KES 1,000,000 (USD 10,000). However, it is important to note that some of the fines are maybe charged on a per incident basis while some accruing on each day of non-compliance. For instance, if accused of sale of substandard products, the fine is KES 10,000 (USD 100), and this applies to each product that does not meet the standard. As such, if one has 200 products in inventory that don’t comply, the cumulative penalty is KES 2,000,000 (USD 20,000) which is higher than the broad stroke range provided initially (KES 1 mn or USD 10,000). Additionally, revocation of licenses is still a possibility in any of the above aspects of non-compliance. 

  1. Approval delays

The draft regulations have prescribed timelines within which the regulator shall process license and certification applications as follows;  

  • Sixty (60) days from the date of receipt of the application for new licensing application or upgrades of existing worker licenses;
  • Thirty (30) days from the date of receipt of the application in the case of applications for new licenses or upgrades of existing licenses and 
  • Thirty days (30) from the date of receipt of the application for applications for renewal of licenses. 

The above timelines are reasonable on paper. However, in reality this might be difficult to implement in the absence of a robust approval and feedback system. 

Quality Assurance & Consumer Awareness

The proposed policy changes are generally very good for the consumer.  Conversations with actors indicate there could be numerous significant players operating without licenses. Maybe this is the reason the regulator seems keen on enforcing more stringent measures. However, there is a school of thought that feels that with more strict compliance and punitive measures, small energy companies could find it hard to survive, to the benefit of bigger players. Immature markets such as that of solar PV need a whole array of actors i.e. small, medium sized, big firm, niche players amongst others.  

We think that the overall approach of intended regulatory oversight by the regulator is strongly enforcement of punitive measures to deter bad elements into the solar PV sector. To compliment this, ERPA could also borrow a leaf from Lighting Global/ Lighting Africa Program which focussed on improving the operating environment market of the off-grid lighting sector with a focus on devices targeted at powering households such as pico solar lights and solar home systems (SHS). In Kenya LG/LA implemented initiatives (deemed very successful) that addressed specific needs across the supply chain, such as quality assurance, consumer awareness and market intelligence. Consumer awareness focused on educating end uses on the approved distributors and quality products through upcountry road shows etc. 


The jury is still out as to whether these regulations are the silver bullet that will enhance quality, standardisation and consumer confidence in solar technologies. Moreover, in terms of 2021 market outlook, we expect more activity from the regulator with respect to more guidelines around tariffs for sector players, release of mini-grid regulations among others. We also expect continued push by the public utility, KPLC, to ask for higher tariffs. This is given the declining revenues brought about by the economic carnage and the aftereffects of Covid-19 on business activities especially from commercial loads as well as the increased migration to captive solar. However, it is unlikely that the regulator might act owing to the increasing closeness to the country’s elections where matters regarding tariffs are less evidence based but rather carry political undertones. Moreover, with KenGen recently declaring its intentions to directly offer energy solutions directly to its commercial clients, will the new regulations give this public utility an unfair competing edge? 

The Energy Act of 2019 also allows for net metering, but the implementation mechanism is far from completion. These could as well take longer or be watered down given the challenges facing the major electricity off-taker. Nevertheless, this year should be a more hopeful one for the energy market notwithstanding. So let’s keep pushing - let’s keep fighting - stay Safe! 

Article written by: Wanjohi Theuri, a Distributed Energy Finance and Business Advisor. Article includes contributions from different actors in the Solar PV Sector.