Modelling the Impact of Solar Power Expansion on Generation Costs in Kenya

Climate change and increasing greenhouse gas emissions are driving the global transition to clean energy, with solar energy experiencing the fastest growth among renewable sources in 2024. Solar PV for energy generation in Kenya is gaining momentum as the country moves towards achieving 100% clean energy by 2030. As solar PV penetration in the grid grows, it is necessary to evaluate its impact on system costs to inform policy decisions on capacity expansion options in the Least-Cost Power Development Plan (LCPDP). This study investigates the effect of large-scale solar PV expansion on electricity costs using the Open-Source Energy Modelling System (OSeMOSYS), a modular, bottom-up capacity expansion model. Four scenarios were developed to assess different levels of solar PV penetration: business-as-usual (BAU), moderate-solar-PV expansion (MSPV), high-solar-PV expansion (HSPV), and very-high-solar-PV expansion (VHSPV). The results indicate that, while overall solar PV expansion significantly contributes to decarbonising Kenya’s electricity mix by displacing fossil-based generation, it also increases annual investment obligations and, consequently, total system costs. The system-levelised cost of electricity (LCOE) is shown to rise by 0.2%, 5.7%, and 14.0% under MSPV, HSPV, and VHSPV, respectively, compared to BAU. Analysing the various cost components against sustainability indicators reveals that the least-cost scenario is BAU while the most favourable scenario based on sustainability indicators is VHSPV, which performs best across technical, environmental, and institutional dimensions but less favourably on economic and social aspects, thereby highlighting a trade-off between sustainability and cost minimisation, at least in the short term.