By Jason Crawford, Regional Manager, New Southern Energy Kenya
Global demand for renewable energy sources including solar, biogas and other green energy sources is expected to rise, as the world adapts to climate changes and the need for sustainability. According to Bloomberg New Energy Finance, by 2030, renewable energy will account for 65% of the $7.7 trillion in power investment in this sector. Kenya is part of this boom with a vibrant and competitive solar energy industry accelerating access to renewable energy.
Over the last decade, the solar energy sector in Kenya witnessed significant growth in capacity. Starting at a modest 3 MW in 2012, the capacity gradually increased to 7 MW in 2013 and further surged to 16 MW in 2014. The following years showed a steady upward trend, with the capacity leapfrogging from the 30 MW’s range in the early 2010’s to a capacity now exceeding 200 MW in commercial and industrial installations alone.
Accelerating access to renewable energy does not only provide a solution for unreliable and expensive traditional energy supply, but is also fundamental to economic growth and prosperity in the country. Dependable energy will help businesses prosper and improve quality of life. However, it is essential that this solar boom is implemented ethically and with honesty and transparency in all levels of the value chain.
Widespread corruption
Kenya achieved an impressive 5.5% growth rate last year, and, according to Reuters, this is expected to exceed 6.3% for 2024, which is remarkable. Sadly, news reports on the country are not all positive, with a recent headline summarising the business landscape as a “a nation of bribes.” Another recent headline “Energy firm bosses arrested over irregular solar tenders in rural electrification” shared an all-too familiar tale.
Unfortunately, the growing solar market has attracted individuals looking to exploit the increased adoption of solar energy, with frequent cases of irregularities in procurement being exposed. Earlier this year, in the 2024 National Trade Estimate Report on Foreign Trade Barriers, the US alleged that a massive bribery scheme by top Kenyan officials is making it difficult for American builders to secure major contracts in the country. This struggle is not theirs alone. It affects the entire industry, including local businesses.
Last year, the public procurement administrative review board was forced to nullify a multi-million shilling contract that had been fraudulently awarded for a solar PV plant in Nairobi. Additional to the winning tender failing to explain the design aspect of the system, it was also found that the bid included fraudulent experience. This is absolutely tragic in a nation that is so well poised for economic expansion, has a digitally connected workforce and youthful market, ready for growth.
Discussions surrounding the ethical challenges posed by bribery, off-book transactions, kickbacks, conflicts of interest and cronyism somehow take a backseat when the chase is on to secure major installation contracts, and it should not be this way. There is far more benefit, wealth and shared value created by transparent contracts that are fairly awarded, and solar systems that are built according to prudent quality standards.
Harmful outcomes of solar corruption
Corruption in the solar energy sector in Kenya is causing several detrimental outcomes:
Reduced investment: Corruption deters both local and international investors, reducing the capital available for solar energy projects.
Increased costs: Corruption leads to inflated project costs due to bribes and kickbacks, making solar energy projects more expensive than necessary.
Substandard Installations: Bad practices result in the use of low-quality materials and substandard installations, leading to frequent breakdowns, and simply put, systems that don’t last.
Delayed projects: Bribery causes significant delays in project approvals and implementation, as it inevitably gets exposed.
Unequal access: Corruption leads to the unfair distribution of solar projects, where only certain people benefit.
Erosion of public trust: Continued corruption undermines public confidence in both the government and private sectors involved in solar energy projects.
Environmental impact: Poorly managed projects due to corruption can lead to environmental degradation and hinder efforts to promote sustainable energy.
Stunted innovation: Corruption stifles innovation, as unjust entities block new entrants or more efficient technologies to maintain their illicit gains.
Look out for unethical practices
To maintain integrity and in order for solar installations to be implemented with maximum benefit across the value chain, it is imperative to uphold ethical procurement standards. We can all play a role in holding each other accountable, by leading conversations with honesty and by negotiating fairly.
In medium-to-large-scale solar installations, for example, specific requirements must be met, addressing various aspects such as regulatory approvals, grid impact studies, roof- and/or ground assessments, environmental impact assessments, public participation, and award advertisements.
If you’re offered a price significantly higher than that of other market-related suppliers, it’s the best practice to take a closer look. This often points to off-book transactions or kickbacks.
When pitching for large projects, solar EPC companies must demonstrate a proven track record with relevant experience and up-to-date KYC documents and licenses. This ensures that the company involved has the experience, dexterity, and safety procedures in place to ensure effective and prudent implementation.
Conclusion
The recent protests in Kenya have showed us that Kenyans are no longer willing to accept corruption and the majority of people want to create a society that is equitable for all. Tenders are designed to provide fairness but can only do so if we all play by the rules. Together, let’s create an energy future for Kenya that is sustainable, fair and equitable for many decades to come.
