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 titled “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.
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