In March, the Energy and Petroleum Regulation Authority (Epra) released newly approved electricity tariffs following the submission of a retail tariff application (RTA) for the 4th Tariff Control Period by Kenya Power.
That was a shot in the arm for the e-mobility sector as a special tariff for charging electric vehicles was approved in an effort to tackle climate change and sustainability.
But the adoption of electric vehicles (EVs) in Kenya will remain at a nascent stage if other measures are not deployed and then merged with this new tariff.
The uptake of EVs in the country is still low and under the projected numbers. National Transport and Safety Authority (NTSA) put the number at 350 (0.0001162 per cent) of the three million cars driven by Kenyans. Roam, a technology-enabled electric mobility company, estimates Kenya’s electric motorcycles at 700 and charging stations 20.
This is too low for the country’s EV ownership target of five per cent of registered vehicles by 2025. Considering the power tariffs, several approaches call for urgent action to promote e-mobility.
First is investments in EVs, such as favourable tax incentives. In 2019, the National Treasury reduced excise duty on 100 per cent of electric motor vehicles to 10 per cent and the income duty on green energy vehicles from 35 per cent to 25 per cent.
The 90 per cent renewable energy dispatch, favourable e-mobility tariff and removal of the 15,000 units per month consumption cap will attract substantial EV investment by foreign players.
Secondly, there is a need for collaboration in developing the charging infrastructure. So far, companies like Kenya Power have demonstrated efforts to drive knowledge in this field. The power utility says its current infrastructure can support the switch to EV with the capacity to accommodate 100 per cent of electric two-wheeler vehicles and over 100,000 public service vehicles (PSVs) and private cars.
Thirdly, more financial institutions should come on board to finance the EVs being acquired by multiple players such as schools, government parastatals, private companies and, most importantly, saccos. The Shell Foundation report of January 2022 on financing the transition to EV in Sub-Saharan Africa says scaling e-mobility in the continent will require financing for consumers, assemblers and importers, and for charging infrastructure.
Kenya is one of the seven African countries set to benefit from a Sh129.3 million ($1 million) African Development Bank grant to boost the shift to EV.
Lastly, there is a huge need to increase regulations on the standards for importing EVs, spare parts and batteries to ensure Kenya is not a dumping site. Consumer awareness and behaviour also require enhancing to give adequate information about the benefits , incentives and sustainability merits of EV.
McKinsey Centre of Future Mobility data show the global EV market is expected to hit 80 per cent of sales across all segments by 2050. Now is the time to activate and merge these measures with the new power tariffs and promote the e-mobility industry.
That will go a long way in reducing air pollutants and air pollution-related health issues and boosting environmental sustainability and developing green energy for universal access to clean energy.
Mr Lovstrom is the CEO of Roam. [email protected].