Wednesday, February 28, 2024

Microsoft co-founder to sell mini solar plants in Kenya

According to the Business Daily, Microsoft co-founder Paul Allen plans to sell 10 small-scale solar plants in Kenya that his private company has constructed in recent years.

Paul Allen’s multi-billion dollar private firm, Vulcan, has been operating electricity mini grids in the last two years in Samburu and Kajiado, connecting homes and businesses to solar power as a social tool to transform lives.

Company officials on 1 November reportedly said that Allen wanted to use the power projects to demonstrate business viability of rural mini-grids to investors, empower communities and trigger interest among businesses to invest in offgrid power solutions. The Microsoft co-founder is ranked the 21st richest person in the world with a net worth of USD 18.9bn, according to Forbes magazine. Vulcan has invested in Uber, the Alibaba Group and Spotify and is now keen to inject capital in Kenya’s green energy projects. “We are looking to transfer ownership of the mini grids to private investors or government agencies with whom we are having talks,” Vulcan programme officer Courtney Blodgett said on the sidelines of a solar energy conference in Nairobi organised by the Netherlands-based SolarPlaza. “We are keen to invest in other strategic renewable energy projects,” she added.

The company has been selling electricity to Kenyan rural folk at a tariff of between USD 1.80- 4.0 (KES 180-400) per kilowatt hour (kWh) unit, depending on their consumption levels. This is higher than charges for solar power connected to the national grid at KES 12 per unit, partly because customers do not pay upfront charges for connection to mini grids. The higher tariffs are also due to the fact that mini-grids lack economies of scale associated with the central power transmission in the national grid which is subject to regulatory interventions, ensuring lower tariffs.

The average revenue from electricity sales to consumers on the mini grids stands at KES 535 (USD 5.34) per month with the largest consumer using power worth KES 1,550 (USD 15.38) monthly while the lowest is KES 38. Allen’s Kenyan mini grids have a capacity of between 1.5 -6 kilowatts (kW) with each unit powering up to 62 customers. The grids are operated and remotely monitored by UK-based using smart meters, making it flexible to track consumption and payment. The 10 mini grids are located in Olenarau and Olturoto in Kajiado and Samburu villages of Marti, Opiroi and Barsaloi. Kenya’s renewable energy market has recently attracted dozens of investors eyeing a piece of the country’s solar, wind and geothermal resources. US-based Powerhive is yet another firm in the Kenyan market that sells power directly to consumers, while Nairobi-based PowerGen has sought approval from the energy regulator to generate and sell power to homes using solar energy micro grids.

Energy experts reckon that micro and mini grids, especially those that rely on solar-powered sources, offer Africa the shortest route to lighting off-grid towns where stretching national power grids is not cost-effective. Small grids work well in areas with a dense concentration of homes since distribution lines cover short distances.

The above infrastructure investment by Allen is typical of the increased infrastructure investment into East African countries such as Kenya. The region is currently one of the leading magnets for FDI flows, both private and public and we foresee this continuing to underpin the growth we have witnessed in the region over the past 18 months.

Credit: CNBC Africa


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