There is an apparent contradiction between inclusive development and low carbon development, as it seems that in order to give people access to electric energy, it is necessary to employ widely used 'old' technologies, instead of investing in innovations that may be less productive at first. However, the paper defends that there are synergies between pro-poor growth and low carbon technologies. In order for poor countries to benefit from the use of such technologies, it is essential for them to build capabilities and ensure an adequate level of absorptive capacity. This involves not only market mechanisms, but also policy interventions, public and private resources, as well as an active participation of local actors. Moreover, besides investing financial resources in innovative activities for low carbon development, it is necessary to invest adequate time for the outcomes to flourish. The authors criticize the current policies for LCD in developing countries. It is argued that an exaggerated emphasis is given to the hardware element, in detriment of the software element of innovations (socio-technologies, tacit knowledge). Moreover, the mechanism of CDM is largely employed, however it places emphasis in profiting from reducing carbon emissions, and therefore is not concerned with developing local capabilities and innovation systems. The paper presents the case of the introduction and development of SHS (Solar Home Systems) market in Kenya. In short, the first PV panels were introduced by a volunteer of the Peace Corps in his private home, in 1985. He had prior working experience in the solar energy industry in the USA. After the installation of another panel in a local school, locals became interested in having the solar technology in their homes. This lead to the foundation of Energy Alternatives Africa (EAA), a company that pioneered the development of solar technologies by using resources from donor agencies. This company became an important player in the local market. It was not until recently that the Kenyan government became interested in supporting this technology
