Understanding why KenGen hasn’t invested in solar electricity

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

24 March 2019

Numbers don’t lie; they only confuse. After reading last week’s article, Norman Chege posted a rejoinder on his Facebook page in which he disagreed with the analysis that I had presented.

According to his calculations, a solar water heater can recover its cost in less than two years. This is how he worked it out:

“An electric boiler would cost Sh25,000, and has a 3kW heater that comes on for 2 hours in the morning or 2 hours in the evening or both. To heat water regardless whether used or not.

“[This] implies 2hrs x 3kW x Sh23/kW x 30days = Sh4,140 per month [or] Sh49,680 per year. As per your research, the cost of the 100litres installed solar hot water system is Sh75,000, which implies less than two years payback period.”

Norman’s calculations are correct, but he is not analysing the same situation as the one I analysed last week. Mine was the case of a house that already has an instant hot shower installed. I was looking at the economics of replacing such a system with a solar heater. My conclusion was that such a move wouldn’t be wise.

Norman, on the other hand is looking at a situation where the house has an electric boiler and the boiler is providing hot water for more uses other than showers. In such a case, I agree with him: solar heating would be the wise choice.

I engaged Norman in an online conversation and we agreed that it does not make economic sense to move from instant hot showers to solar heaters. However, for large consumers, the cost of installing solar water heating can be recovered from electricity saving within two years – in some cases in less than a year.

When it comes to domestic solar electricity; the cost-benefit analysis is quite different. I will revisit it with current prices in a future article.

In the meantime, a review of recent industrial scale solar electricity projects will serve as a good reference point. In 2014, Strathmore University unveiled a 600kW (600,000W) system that was installed at a cost of Sh134 million. This works down to about Sh223 per watt.

The following year, 2015, the Garden City malls launched its 1,560kW system. It cost Sh190 million, which works out to Sh122 per watt.

Last year, 2018, the Rural Electrification Authority completed a 55MW (55,000kW) solar farm in Garissa at a cost of Sh13 billion. This one comes to Sh236 per watt.

How does that compare with other “green” power sources? Well, the latest 168MW (168,000kW) Olkaria-V geothermal power station by KenGen comes at a cost of about Sh135 billion. That is, about Sh80 per watt – about one third of the cost of solar.

In addition, geothermal power is generated all the time, unlike solar which is only available at daytime…on a sunny day. We can now appreciate why KenGen has invested heavily in geothermal and nothing in solar electricity.