Review of Solar PV Market Development in East Africa

While the diffusion of solar home systems in Kenya has been market-based for some years, the diffusion of PV in most other Sub-Saharan African countries has been driven by government and donor-supported projects aimed at serving specific needs for electricity while at the same time creating a national niche market for PV. This practice is rapidly changing and, as in industrialised countries, there is evidence of a transition towards more market-based diffusion and private-sector involvement for PV systems for private consumers, institutions and villages. This transition has been facilitated to varying degrees by conducive enabling frameworks comprising innovative financing schemes, exemptions from VAT and import taxes, standardised power-purchasing agreements and feed-in tariffs. Few analyses have so far been conducted on the effects of such measures. This paper aims to contribute to understanding these effects by reviewing the development of markets for solar PV in Kenya, Tanzania and Uganda, focusing on how the differences in market development have been explained in the literature. The paper finds that, although Tanzania and Uganda are rapidly catching up, Kenya is still leading the development of PV markets not only in terms of installed capacity and market volume, but also with regard to local industry and PV business development. The paper concludes by drawing attention to particular factors that have been used in the literature to explain disparities in market-development trajectories in the three countries.

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