Kenya Power's #ticker:KPLC planned move to the solar business is a step in the right direction, but it won't in itself solve the electricity distributor's major problems.
The main reason customers are switching to solar is the distributor’s inefficiency and high cost of power.
Besides the high initial cost of installing solar, customers have discovered that it is cheaper and more reliable especially for rural households who sometimes go for weeks without power in case of a hitch.
The utility firm is also stuck with expensive power purchase agreements, which require it to pay contracted diesel power producers for idle electricity.
The cost of these contracts are, of course, eventually passed to the electricity consumers.
Now, the utility firm — eager to cash in rather than lose out on the millions of solar kits being mounted on the roofs of homes and business premises around the country — plans to instal panels in private homes and office blocks with the promise of cheap uninterrupted electricity.
Under the arrangement, Kenya Power will scout for customers seeking to have solar panels installed on their rooftops and contract private firms to do the job under a design-build-finance and operate (DBFO) model.
Kenya Power would then sell the generated power at a discounted rate to the owners of homes and office blocks hosting its solar plants.
The decision will see the company get some new revenue streams and keep customers who are fleeing, denying the firm much needed revenue.
But this should not be another ploy by the power utility firm to strangle other small firms in the sector out of business.
Many companies and startups have entered the solar business, employing thousands of Kenyans while at the same time giving clients cheaper energy.
The company should look at some successful power distributors and grid operators in the world and replicate without upsetting the market.
Kenya Power can pick a thing or two from Australia’s power utilities and grid operators who have for close to 10 years gone big on solar.