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Kenya requires solar panels in new homes

by AlertNet correspondent | Thomson Reuters Foundation
Wednesday, 3 November 2010 17:45 GMT

p>NAIROBI (AlertNet) - Kenyan home buyers face paying more when purchasing homes following a government directive to require solar energy panels in all new home construction.

The directive, part of a broader national climate change strategy announced in June, aims to expand the country's use of renewable energy sources. Climate change has become a particular concern in Kenya following worsening droughts in the country.

To ease the costs associated with mandating solar power use, the government in June reduced the value-added tax on the purchase of solar energy products from 26 percent to 16 percent, and eliminated import duties on solar products.

But the cost of equipping a typical $40,000 to $100,000 new house with solar power still ranges from as little as $650 to as much as $3,000, construction firms say, and that is driving up home prices, particularly as demand for new housing remains strong.

Kenya's construction sector has grown rapidly over the last seven years as the country's middle class Â? now estimated at 17 million, according to recent census figures Â? continues to expand. Kenya's economy is expected to grow by more than 4.5 percent this year, according to World Bank estimates.

LOWER POWER BILLS

Lucy Murimi, 32, who owns four restaurants around Nairobi and recently bought a new five-bedroom townhouse in a plush Nairobi suburb, said she paid 25 percent more for her home than a similar house without solar energy would have cost.

Still, she is confident the investment will pay off in both lower power bills and more consistent electrical service.

"One thing for sure is that there will be an advantage of this directive in the long term, such as that electricity bills will be less," she said. "Power shortages which occur quite often will not affect home owners since solar energy will become an alternative."

But Nairobi home buyers and economists say home prices in some areas have risen by as much as 50 percent as a result of the new solar directive, though they attribute some of the hike to developer greed rather than the cost of solar systems.

Builders and landlords say they will have little choice but to pass on the rising costs to their buyers and tenants.

"It is true that the costs of purchasing the homes have increased. However, in the long-term, (buyers) will save a lot of money on their monthly electricity bills," said John Karanja, for 20 years a self-employed builder, home seller and landlord.

Karanja said he believes the directive will make a substantial difference in holding down Kenya's growth in carbon emissions with the country's real estate industry expected to continue strong growth in building.

According to a recent study by the National Environmental Management Authority (NEMA), greenhouse gas emissions from Kenyan homes account for 13 percent of the country's total carbon emissions.

SOME RESISTANCE

Not all builders and landlords are as supportive of the new directive as Karanja. Some object particularly to government suggestions Â? not yet a mandate Â? that existing houses also should be retrofitted for solar energy.

"We do not see the reason we have to put up solar panels. We find it bothersome. The cost of purchasing the equipment remains expensive despite many tax incentives," argued Mathenge Njuguna, a landlord who owns houses for rent in Nairobi and Mombasa.

"While many developers have charged high prices for the sale of homes, I myself cannot afford to charge highly as I may not find suitable customers, as the competition in this sector is high. I may end up going at a loss," Njuguna said.

The use of solar energy is quickly gaining popularity in Kenya, particularly in rural areas without connections to the existing electricity grid. The country has become East Africa's solar energy leader, officials say.

Kenyan energy officials, eager to encourage wider use of green energy technology, are reportedly attempting to persuade senior Kenyan officials to eliminate all taxes on solar products.

Gitonga Njeru is a science journalist based in Nairobi.

Our Standards: The Thomson Reuters Trust Principles.

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