Powering Africa: Observations from Kenya Reply

By Catherine Wolfram (UC Berkeley)

During his trip to Africa at the end of June, President Obama announced the Power Africa initiative. The press release highlighted several goals, including adding generation capacity in the six target countries, which include Kenya, and increasing the number of households and businesses with access to electricity by at least 20 million.

I was recently in Kenya meeting with potential partners for a research project that will measure rural households’ demand for grid connections, as well as the social and economic benefits of bringing people electricity. (The project is joint with Professors Ted Miguel and Eric Brewer and funded, in part, by USAID’s new Higher Education Solutions Network (HESN).) I gained several insights on the opportunities for growth in the local power sector as well as the challenges to bringing power to more Kenyans.

Let me start with a couple facts. The total electric generating capacity in Kenya is about 1,700 MW. By comparison, the generating capacity in California, where population is 40 million compared to Kenya’s 45 million, is 70,000 MW. Kenya has plans to add substantial capacity in the near future, including several large geothermal projects.

On the distribution side, the Rural Electrification Authority in Kenya has made tremendous strides over the past six years building out the low-voltage distribution network. Nationwide, more than three-quarters of the Kenyan people now live within 1.2 km of the grid. We visited a regional office for the agency and saw rows and rows of transformers, waiting to be installed, so this share will likely grow even higher in the future.

New transformers awaiting installation

New transformers awaiting installation

Kenya Power Company, which operates the distribution system nationwide, will connect a household to the grid as long as it’s within 600 meters of a transformer, so many households are within striking distance. Here’s the catch, though. The household has to pay about $400 to KPC for the connection, and there is talk that the company plans to increase the connection charge to almost $900 this summer. In a country where the per capita income is around $800, most households are priced out of a connection.

As a result, roughly 20 percent of the population actually has electricity in their homes. More than half of the people in the country are living under the grid without access to it.

Many households in Kenya are near the grid, but not yet connected

Many households in Kenya are near the grid, but not yet connected

I met with a grandfatherly gentleman I’ll call Mr. X in Kisumu rural, close to Lake Victoria. His house, on a steep hill overlooking a picturesque valley, is about 100 meters downhill from a secondary school that began receiving electricity 3 years ago. He quietly answered questions about his living situation and smiled patiently at my attempts to thank him in Swahili (“asante sana”).

Mr. X became animated when the conversation turned to “stima” or electricity. He was indignant that the nearby school had electricity but he did not. When probed, he told us that the only reason he did not have power was the large connection charge – he could pay for the wiring in his home and afford the monthly payments.

Without electricity, Mr. X spends about $7 per week buying kerosene that he uses to cook and power a large, pressured kerosene lamp that lights his whole house. Plus, to buy kerosene each week, he must pay about $1.25 for a motor scooter ride to the nearest village, about 5 km away.

When probed about what he would most like to do if he got electricity, he mentioned cooking and lighting his home, so it’s likely that his kerosene costs would decline significantly with a connection. He also wanted to iron his clothes and operate a welder, the latter of which could potentially bring him more income.

Access to electricity has the potential to transform many lives – creating income-generating opportunities, allowing children to study later at night and replacing expensive, time-consuming and polluting alternatives such as kerosene. As energy economists, we have many opportunities to learn about the benefits of electricity as well as the best business and policy models to use to increase access. Programs like Power Africa can be hugely impactful, so we need to make sure we do them right.

About the author:
 Catherine Wolfram is an Associate Professor of Business Administration at the UC Berekeley Haas School of Business and co-director of the Energy Institute at Haas. Wolfram has published extensively on the economics of energy markets. She has studied the electricity industry around the world and has analyzed the effects of environmental regulation, including climate change mitigation policies, on the energy sector. She is currently implementing several randomized control trials to evaluate energy efficiency programs.

This blog was also published with the Energy Collective and the Energy Economics Exchange of the Energy Institute at Haas.


Improving Sales Offers for Improved Stoves Reply

By David I. Levine

A successful salesman in Cambodia, let’s call him Mr. Bun, had a problem: The owner of his favorite noodle shop would not buy his fuel-efficient cookstove, even though the new stove would save the restaurant money on fuel and reduce unhealthful smoke.  The shop owner explained, “I don’t have the money to buy it,” though Mr. Bun suspected that the owner was also concerned the stove might not save much money or might not cook well.

“No problem,” Mr. Bun replied. “Take the stove for a free trial. My two sons and I will come for noodles each morning.  Noodles cost you less than the stove saves you each day. That way you can use the money you save on fuel to pay for the stove over time.

Mr. Bun’s “noodle contract” meant the noodle shop owner could get the efficient stove without needing a big up-front payment and he could quit providing the free breakfasts if the stove did not meet his needs or if it broke.


The Promise of Microgrid Solar for Rural Off-Grid Villages 3

By Mark Topinka

Currently almost 25% of the world’s population, about 1.5 billion people in Southeast Asia, Sub-Saharan Africa, and the Middle East, lack any access to electricity.  A power grid is one of the most fundamental and taken-for-granted elements of our modern infrastructure, and missing it has a profound impact on the ability of a population to make progress towards poverty alleviation and basic economic development.   The introduction of even a limited source of electrical power to these communities can have immediate and significant economic, educational, and health benefits — enabling better education for children and higher productivity for working adults by providing high-quality, non-polluting lighting; improving health through refrigeration, lighting, and power for local health clinics; and enabling economic, poilitical, and communication advantages by providing cell-phone charging options, a technology which is accelerating advances in myriad ways across the developing world.

Fig 1: over 400 million people, or 30% of the population in India currently have no access to electricity.  The numbers in parts of Southeast Asia and Sub-Saharan Africa are even more stark.  (taken from http://meragaopower.com/market/)

Fig 1: over 400 million people, or 30% of the population in India currently have no access to electricity. The numbers in parts of Southeast Asia and Sub-Saharan Africa are even more stark. (taken from http://meragaopower.com/market/)

Coming from a very different end of the solar industry spectrum, one where the emphasis is on ever larger-scale and ever more ruthless cost-reduction, I was initially somewhat skeptical about the unsubsidized viability of off-grid rural solar.  After learning more, I now believe that solar-photovoltaic (PV) panel based microgrids could be an outstanding solution for providing the first wave of electrification for these communities.  Often the nearest established electric utility grid for a rural village is prohibitively far away and costly to connect to, and the only realistic option is for local generation.   In these cases, solar panels provide a scalable, clean, reliable, renewable, and increasingly cost competitive source of electricity for these communities.  And thanks in part to some recent developments in the solar industry, namely that solar-PV panel prices have fallen faster than anyone predicted (roughly 70% in the past 5 years) the economic conditions for microgrid solar have never been better.