Creation of the right framework and clear policy critical in Kenya’s renewable energy deployment and usage
Creative financing, technological advancements, scalability in renewable energy sources have the potential to propel Kenya’s energy market, according to a 2018 report by global law firm Hogan Lovells.
The report, “Africa and Renewables: Wholesale Change or Short-term surge?” has been compiled with input from the firm’s partners and many of its clients, spanning infrastructure, energy, finance, and private equity.
It also highlights the challenges posed by producing and accessing renewable energy in Africa, and how these can be overcome to achieve potential and scale.
Following the release of Kenya’s development master plan “Kenya Vision 2030” there has been a big drive to diversify the country’s energy mix.
Commenting on the report, Dubai-based ENRG partner and co-author Sohail Barkatali, and member of Hogan Lovells Africa practice said “It is important to understand the unique challenges facing the African energy market, challenges like physical geography and the rapid pace of change in its urban landscape. However, it is also important to understand that this is a unique time for opportunity in Kenyan energy – creative financing, technological advances, and scalability in renewable energy sources are creating opportunity the likes of which we have never seen before.”
According to the report, one of the most common challenges to renewables deployment across Africa is centered around procurement strategies. Many developers find themselves spending a lot of time, energy and money developing sites that are essentially remaining in the air because of uncertainty on whether they would be awarded a project or if their proposals would even be considered. Equally, administrative delays and bureaucratic intransigence can also upset even the best of programs.
Creative financing is one of the solutions outlined to address the development of renewable energy in Kenya.
“Financiers and governments are increasingly looking at innovative financing solutions to get projects off the ground. Private equity is also featuring more heavily in the financing of renewables projects in Africa,” said Barkatali.
Technological advances have an impact on the renewables sector. Information technology and data will certainly shape the energy landscape in the future.
The development of clear fiscal policies designed to support the renewables sector remains an important aspect for ensuring continued participation. These include tax breaks and exemptions such as waiving import duties on capital equipment during construction, tax holidays in relation to income tax as well as incentives to support the creation of local industries around the renewables sector.