*3.2. Economic Barriers*

The main economic barrier for PV integration has been the high upfront cost and an unwillingness of banks to fund such investments [35]. The higher construction costs have previously made financial institutions more likely to perceive renewables as risky, lending money at higher rates and making it harder for utilities or developers to justify the investment. Perceptions of the (high) costs associated with solar PV can still be a barrier even if prices have come down considerably in recent years.

There have been efforts towards establishing the economic viability of solar PV in different regions of the world. A study focusing on the Middle East and North Africa regions concluded that rooftop PV systems were competitive with other energy producing plants in the region [33], however development has not followed suit. Nevertheless, a study in the Kenyan context confirms this. In [36] the authors used a levelised cost of energy evaluation and established that solar power in combination with other renewable energy generation technologies is competitive in relation to non-renewable energy. In spite of the high insolation levels, solar PV has mainly been used for off-grid application such as solar lanterns because of the high upfront investment costs of grid-connected solar PV systems [37]. However, currently, solar PV has been highly incentivized and prices have dropped significantly thus making it a viable option compared to diesel-fuel generators that are expensive to run [38].

Cost comparisons and competitiveness of solar PV with the conventional fossil fuels to electricity production are among the most significant barriers for adoption of solar PV in Kenya both for the utility company and for individual investors [17]. From the perspective of both the national utility company Kenya Power and Lighting Company (Nairobi, Kenya) and independent power producers, large-scale PV electricity generation without a well-functioning energy storage system maybe too expensive considering the fact these companies are also required to maintain the grid infrastructure and manage other running costs [31].

To mitigate these challenges, the incumbent could consider selling or leasing out PV energy storage systems, provide financing and grid connections or build a service relationship with individual investors. Once the domestic market grows, the installation costs will become cheaper; this could further be facilitated by training and certification of solar PV installers at the national level [39].
