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Solar stories: Diaries respondents’ experiences with off-grid solar

Isabella and her husband are serious farmers in rural Makueni and among the better-off families in the area.  They grow maize, vegetables, and bananas commercially and are doing well enough to send their older children to boarding school.  When Isabella received her unusually-large merry-go-round payout of KSh 50,000, she decided to take on a few home improvement projects, including the purchase of a solar panel, battery, inverter, and wiring throughout her house.  The project cost her KSh 37,000.  She would have preferred a grid connection, but there is no transformer near her home, and there’s no telling when it will get close enough for her to connect.  Isabella is very happy with her investment. She loves that her solar unit lights the whole house, that the children now can read at night with “clean light,” and that she can watch the evening news.  She hasn’t bought paraffin since the solar was installed, a savings she estimates at about KSh 600 per month.  Sure, it will be five years before she’s technically saving money, but, she believes the value from the solar was worth the expense.

Betty also says her investment in solar has been worth it.  She bought an M-KOPA unit for a deposit of KSh 3,500 and KSh 50/day, a total of KSh 21,750 over the course of a year.  When we speak to her in June 2016, she has only KSh 1400 left on the unit she bought to power the shop/canteen she runs in a rural area outside of Eldoret.  She now can work longer hours and charge customers’ phones.  They now stay longer and spend more money.  She says that with children in school, she’d never be able to come up with a lump sum to connect to electricity.  M-KOPA is just what she needed.  Relative to her Diaries level income of just around KSh 3000/month, even M-KOPA was a huge expense.  But for her, it was one that paid off.

When we started the Kenya Financial Diaries in 2012, 68% of our respondent households were using paraffin as their main source of lighting.  Twenty-six percent relied on electricity and only 3% on solar sources. Lacking an electricity connection or strong solar power was a pain.  Paraffin lamps put out a lot of smoke and unpleasant smell, giving children headaches when doing their homework at night. Lamps had to be moved around the house to the places where needed.  Mobile phones had to be charged at friends’ homes and businesses, making smartphones feel especially impractical.  Television was out of the question.

Fast forward to 2016, when we revisited our Diaries respondents, and we find that 25 households had connected to the electricity grid (mostly through a new subsidized connection scheme implemented by the government and the World Bank), and 15 had acquired solar.  Two of these households bought M-KOPA units, paying off their solar investment over time, the rest buying their units outright.  These solar connections were not cheap.  Diaries households were spending 4-6% of their consumption (about KSh 250-500) on all energy sources during the course of the Diaries.  They would need to make bigger investments—and get together a substantial lump sum—to buy equipment and, in at least two cases, wire their homes for electricity.  Today they run solar power through these wires, but they still hope—like most—to one day connect to the grid.

Until then solar is bridging the gap, sometimes exceptionally well, like it has for Isabella and Betty.

But, for others, it hasn’t been as beneficial.  Loretta and Howard stopped paying on their M-KOPA unit once they were able to connect to the grid. They’re not sure what will happen because they’ve stopped paying.  For now, the unit just sits idle in the house. They say they might finish paying it off so that they have a backup during blackouts.  Jacinta spent KSh 30,000 on a large solar system and wiring and wishes she could take it back now that the cost of connecting to the grid in her area has fallen to KSh 15,000.  Once connected to the grid, families can get the power they need for just KSh 300 per month in pre-paid tokens[1].

A grid connection is still unrealistic for Faith, but she learned the hard way that a small solar investment would only deliver small benefits.  Her investment of Ksh 13,500 gave her a system that only partially lights the house and doesn’t give any outside light, which was something she really hoped for.  She says on cloudy days, the light doesn’t last long.  She just goes to bed early.  She wishes she had waited, too, not for the grid, but for a solar unit that would have been closer to an equivalent in terms of the power it could provide.

Many of those who have installed solar in their homes are clearly happy with what they’ve got.  But, so far, none are saving money.  The thing is, paraffin is cheap.  But low income families also know that when it comes to reliable, clean, strong power, cheap is expensive.

[1] As of June 2015, 36% of Kenya Power customers were connected via pre-paid meters, according to the KPLC Annual Report.

 

Julie Zollmann is an independent consultant with focus on understanding the demand-side of retail financial service markets.

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