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Solar energy firms in Kenya receive World Bank boost

By Bedah Mengo NAIROBI (Xinhua) -- Off-grid lighting distributors in Kenya have received grants that will enable them to expand their services to hundreds of Kenyans who cannot access clean energy.

The eight distributors received a total grant of 1.05 million U. S. dollars from the World Bank in an effort to increase access to reliable and affordable off-grid lighting (OGL) solutions in Kenya.

The firms qualified for the grant after winning a competition, which sought to deliver financial support to eligible distributors of modern off-grid lighting products in Kenya, last June. The winners were announced last month.

“Communities that will benefit most from clean, sustainable energy solutions are those with least access to these products, as they have to pay high up-front capital costs,” said Belinda Mills, Energy SME (ESME) programme manager during the event in Nairobi.

The eight selected companies are Hensolex, One Degree Solar, Renewable Energy Ventures, Smart Solar Kenya, Solataa Ltd, Sollatek Electronics Ltd, SunnyMoney Kenya and Mibawa Suppliers.

Launched in June last year, the competition was funded by the Russian Federation through the World Bank, and operated under the ESME Trust Fund.

The initiative aims to support small energy businesses development in sub-Saharan Africa to foster local private entrepreneurship and invest in the provision of energy services in remote, un-served or under-served regions.

Mills noted that the OGL grants will fill gaps in offering clean energy in Kenya by providing working capital to distributors, who in turn will sell products at low prices, whilst still being able to replenish stock.

“Clients will thus immediately benefit from cheaper, cleaner light sources whereas the distributor will be assured of short and medium term cash flow,” Mills explained.

OGL products mainly use solar energy for lighting and mobile phone charging. They thus reduce the overreliance on electricity and kerosene lamps.

According to the World Bank, there is real need for high quality lighting products to be more readily available in the Kenyan market to reduce the burden of unclean energy.

Annual sales of OGL products in Kenya have grown tremendously as people seek clean energy. The sales are expected to rise due to increased usage of mobile phones and limited connection to electricity.

Improved quality of available off-grid products and the development of easy payment options such as pay-as-you-go models are contributing to their increased popularity.

According to Global Village Energy Partnerships (GVEP), off- grid lighting and other clean, renewable energy initiatives are threatened by inadequate funding and investment options.

“Commercial banks’ limited knowledge on the industry’s prospects and perceived high risks coupled with weak balance sheets and credit history among the SMEs are a stumbling block to fast uptake of the technology.

Manufacturers are also grappling with how to increase production to match demand, while importers tie up considerable funds due to bureaucracies in the manufacturing process,” she noted.

Against this backdrop, the OGL product distributors were asked to submit proposals for grants.

The proposals were required to have targets for product sales; a viable business plan including sustainability after the grant is completed; key measurable milestones; an environmental sustainability plan; a detailed budget, and procurement plan.

An independent evaluation committee consisting of professionals drawn from diverse fields with a bias towards renewable energy, rural business and finance assessed the proposals and picked the winner.

Kenya’s government, through the Ministry of Energy and Petroleum, participated in the project.

“By achieving business scale and commercial viability, we are confident that this programme will succeed in bringing about strong impact and the reduction of dirty lighting for majority of Kenyans,” said Caesar Mwangi, Regional Director Africa, GVEP, which provided business advisory services to the applicants.

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