Is it wise to replace grid electricity with solar?

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

13 April 2025

One of my followers on the X platform (formerly known as Twitter) asked me to comment on the wisdom of buying a solar electricity system as replacement for grid power. I have discussed this matter numerous times in this column and the conclusion is always the same: if you have access to the grid, migrating to solar power is unwise. However, given that prices are constantly changing downward, it is good to repeat the analysis every so often.

The details of the case are as follows: a person whose monthly electricity bill was Sh4,000 spent Sh1.2 million on a solar system. The new system has 10kW panels and 10.2kWh batteries for storage.

According to my X follower, this investment isn’t wise since the payback period is too long – Sh1.2 million divided by Sh4,000/month comes to 300 months, or 25 years. I agree; that is far too long to wait. It works down to about 2.8 per cent per annum return on investment.

It raises the obvious question of; if you have Sh1.2 million, can you invest it at a place that pays you at least Sh4,000 per month? The answer is yes! Think about it: Sh4,000 per month accumulates to Sh48,000 in a year. Sh48,000 is just 4 per cent of Sh1.2 million. So, if you can get a “savings account” that pays above 4pc, you will earn enough interest from the money to pay the electricity bills.

Still, I am also concerned about the sizing of the solar system. 10kW panels and 10.2kWh batteries seem to be too much for a house that spends only Sh4,000 per month. According to the independent electricity cost calculator website (www.stimatracker.com), such a house consumes about 120kWh per month. This comes to about 4kWh daily.

Therefore, this house would be well-served by a solar system of about half the quoted capacity; that is, 5kW panels and 5kWh battery storage. Luckily, solar electricity systems can be designed in a modular form that allows convenient up-sizing as the demand for power in the house increases. You simply add more panels and batteries.

I did a quick check with the leading suppliers of solar equipment and found that such a down-sized system will cost about Sh500,000. This brings down the pay-back period to about 10 years. This is about 7 per cent per annum return on investment. Is it still wise?