Kenya Renewable Energy Association (KEREA) have said that the proposed 16% VAT on solar equipment in the Finance Bill 2025 would lead to job losses and will also make solar power unaffordable to many. The proposed tax will put clean, affordable energy out of reach for Kenyan households and threatens over 10,000 jobs nationwide.
According to GOGLA, the global association for the off-grid solar industry, the tax hike risks shrinking Kenya’s off-grid solar market by 20% in the next 12 months. This would roll back a decade of progress in expanding electricity access, especially in remote and underserved communities.
“This is not merely a theoretical concern,” said Patrick Tonui, Head of Policy and Regional Strategy at GOGLA. “When VAT exemptions were previously withdrawn in 2020 and 2021, the off-grid solar market contracted by 20%. Reintroducing VAT now risks repeating that experience — dampening demand, reducing tax revenues, and making solar less accessible for the households and enterprises that need it most. Kenya has made remarkable strides in expanding energy access. Preserving those gains requires policy choices that continue to prioritise affordability, job creation, and inclusive growth.”
Kenya’s solar sector supported an estimated 30,000 jobs in 2024 and contributed over Ksh. 4 billion in taxes. Reinstating VAT could force solar companies to scale down their operations, resulting in the loss of 10,000 jobs, often those serving rural communities with limited employment opportunities.
Off-grid solar kits remain a lifeline for the one in three Kenyan households that still live beyond the reach of the national grid. Today, over 3 million households rely on off-grid solar products to light their homes, power businesses, and support farming.
GOGLA and the Kenya Renewable Energy Association (KEREA) are urging lawmakers to maintain VAT exemptions on solar equipment in the 2025 Finance Bill.
“Kenya has made strong progress in expanding energy access, especially in underserved regions through initiatives like the Kenya Off-Grid Solar Access Project (KOSAP)” said Cynthia Angweya-Muhati, CEO of the Kenya Renewable Energy Association (KEREA). “Electrification in these regions remains well below the national average, with some counties as low as 15 percent. Reintroducing VAT could make solar unaffordable for those who need it most and risk slowing progress toward universal access.”
KOSAP, backed by the World Bank, was designed to reduce costs and bring solar to counties historically left behind, including West Pokot, Turkana, Marsabit, Isiolo, Wajir, Garissa, and others. The VAT proposal risks undermining these efforts.