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The Situation Of Solar Energy Market In Kenya And Nigeria
- Aug 10, 2018 -

Energy scarcity has hampered the development of African manufacturing, which in several sectors is largely underpowered. Because of low production capacity, Africa is heavily dependent on imports. Because of the price advantage, most of the imported products come from East Asia and South Asia.

With the increasing laying of solar energy equipment, African solar energy industry (micro solar energy, small household solar energy, small grid solar energy) is developing rapidly. At present, Africa is trying to cope with the huge economic losses caused by dependence on imports. As one of the largest solar markets in the world, this makes the situation in Africa particularly severe.

Maximizing the potential of solar energy and increasing its utilization will continue to depend on imports until power supply improves substantially enough to support manufacturing in African countries. Currently, African countries are calling for simplified import procedures for solar energy products to facilitate trade between the two sides. However, the current frameworks differ in markets in Kenya, Nigeria, Ivory Coast and South Africa.

Solar energy market in Kenya

In 2014, the Kenyan government abolished VAT on all solar imports, which would undoubtedly stimulate the import market. This is also one of the main thrust of Kenya's leading position in the use of solar energy. The import of solar energy products in Kenya is also duty-free. Although this contradicts economic policy (which affects the country's solar manufacturing industry), Kenya's zero-import tariffs and zero-value-added tax policies on solar products can make solar equipment affordable to many people. Policymakers argue that the increase in solar power usage has eased the power gap, allowing manufacturing to get more power.

More electricity means less autonomous generation costs, which in turn reduces the overall cost of manufacturing products (solar and non-solar), thus driving the green economic growth cycle. In early 2011, Kenya reduced import tariffs on raw materials for the production of solar energy equipment. This act aims to improve the competitiveness of domestic products. Tariff reduction is a change in the current 25% tariff on such products.

In order to implement appropriate solar value chain standards, the Kenya Energy Management Council has set qualifications and standards for manufacturers, distributors and contractors, which will help reduce the negative impact of substandard products and services and provide an enabling environment for the development of high-quality imported products.

Solar energy market in Nigeria

Nigeria, also one of Africa's largest solar markets, has a slightly smaller market structure and relatively less regulation. The use and laying of solar energy equipment in Nigeria has not reached Kenya's level, and the framework for certification and training in the value chain is still being fine-tuned. Nigeria, together with several development agencies, particularly Gesellschaft fU R International Zusammenarbeit, is developing most of the solar market support frameworks, certification and skills acquisition modalities that will help improve the import market.

Adverse market conditions will lead to substandard solar products (inverters, batteries, solar photovoltaics, etc.). The difference between regulation and policy limits the development of the private sector in the solar energy and the wider market. In response, the private and public sectors set up the Nigerian Renewable Energy Association (REAN) in 2016 to promote and cooperate multilaterally in the field of solar energy in Nigeria. The solar products imported to Nigeria are not applicable to zero import duties. Although the policy's restrictions on imports may not be obvious, it has raised market prices and hindered the use of solar energy by consumers, especially low-income people.

The Nigeria Standard Organization (SON) is responsible for the import of products. Some solar practitioners argue that standards bodies do not have the capacity to regulate import standards in the emerging solar equipment market. In manufacturing standards, foreign manufacturers can certify with the agency of the Nigerian Standards Organization before importing.

This is expected to further optimize the market, especially for improved and low-risk imports, as regulators and private companies work together to optimize solar power generation and provide more power to countries such as Nigeria and Kenya, which seems to be the best choice for regions lacking key technologies and manufacturing capacity.

Because of the lack of electricity supply and inadequate policy, the development of manufacturing industry in Africa is difficult. The countries represented by Nigeria and Kenya optimize the market by optimizing the import and export process, reducing and exempting tariffs. The standardization of the market has also provided a favorable environment for the imported products.