East Africa's largest solar power plant in northern Kenya is set to add cheap power to the national grid for onward sale to homes and businesses.
The Rural Electrification Authority (REA), which is developing the plant, has signed the power purchase agreement (PPA) with Kenya Power to sell electricity from the Sh13.7 billion solar plant at Sh12 ($0.12) per kilowatt hour (kWh) -- about Sh8 cheaper than diesel-generated power.
The 55-megawatt solar farm in the north eastern town of Garissa will be fed to the national grid and is expected to produce enough power to light up 625,000 homes.
"Construction will start anytime from now after we signed a 25-year PPA with Kenya Power on Wednesday," REA chairman Simon Gicharu said at a meeting in Nairobi with officials from China -- the financier.
China Jiangxi is the contractor of the solar firm using a Sh13.7 billion ($135.7 million) loan from China's Exim Bank.
The REA had in March announced that construction would start in July but suffered delays, partly because of prolonged talks for the PPA with Kenya Power.
Solar experts reckon that Kenya has a high potential to generate solar energy given high radiation levels from the sun throughout the year.
The project is set to wean Garissa off its reliance on expensive thermal electricity and boost economic activity.
The solar farm will sit on 85-hectare parcel of land with 200,200 solar panels and is expected to be the largest in East and Central Africa. It will be located 20km from Garissa town and is expected to create 1,000 jobs during the construction period.
The plant is also expected to cut Kenya's carbon emissions by an estimated 43,000 tonnes per year for trading in the global carbon market.
The State agency said solar energy offers Kenya the shortest route to lighting off-grid towns that have for long relied on expensive diesel generators to produce electricity.
Kenya has more than 300 days of sunshine per year, double Germany's -- which is the global leader in solar energy production with an installed capacity of more than 40,000 megawatts.
Kenya's total power capacity stands at 2,333 megawatts, with solar power accounting for less than one per cent. The country relies on a mix of hydropower priced at Sh3 per unit, geothermal (Sh7) while thermal tops Sh20 per unit.
The government in 2013 set an ambitious plan to install additional 5,000 megawatts to the grid by end of next year from renewable sources such as geothermal, solar and wind farms. Kenya targets to connect all homes to power by 2020.