Challenges hindering independent power producers in East Africa

Access to investment capital is a key challenge for renewable energy project developers since the cost of money in East Africa is so high-Izael Pereira Da Silva, interim deputy vice chancellor for research and innovation, Strathmore University.

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Challenges hindering independent power producers in East Africa

Although various independent power producers (IPP) have made a sortie into East Africa’s renewable energy market,they still confront many challenges that governments in the region must tackle to guarantee the prompt exploitation of clean energy technologies.

“Access to investment capital is a key challenge for renewable energy project developers since the cost of money in East Africa is so high,” said Izael Pereira Da Silva, interim deputy vice chancellor for research and innovation, Strathmore University.

Strathmore university happen to be the first institution and renewable energy project developer to sign a power purchase agreement (PPA) with state-owned Kenya Power Company, user for the commercialization of East Africa’s biggest grid-connected rooftop solar PV power system with 0.6 MW capacity comprising of 30 inverters and  2,400 solar panels.

Also read:Japanese renewable energy firm Koyo opens office in Tanzania

“The private sector investors in this renewable energy market experience monetary loss and much aggravation when tailing PPAs, licensing to be an IPP, and the consent from local authorities, the offtaker and energy regulatory bureaus,” Da Silva said.

A combined report released in September by the United Nations Industrial Development Organization and Renewable Energy Policy Network for the 21st Century (REN21) said that between 2010 and 2015, East Africa engrossed $4 billion of investment in utility-scale renewable energy, which is lower than 10 percent of all investments in renewables for Africa in the six years. Kenya engrossed the peak amount at $3.3 billion in renewable energy investment, based on the report.

The report said that “fiscal limitations, insufficient infrastructure and a lack of public buy-in have put at risk Kenya’s capability to meet its 2016 objective on new renewable energy generation capacity.”

The report gave the case of the collapse of the 60.8-MW Kinangop wind farm project, “which would not be executed since funds had dwindled, and the Lake Turkana wind project, which will not be completely operational when it goes live in October 2016 owing to insufficient electricity transmission infrastructure.”

The 2015 Draft National Energy and Petroleum Policy for Kenya, which draws the state’s national energy sector policy and strategy, does not put out new objectives for renewable energy, the report said.

According to Da Silva, the region’s renewable energy market is also illustrated by lack of information about renewable energy technologies by possible clients with “many learned people, for example, still believe that solar energy is not dependable, not a chief electricity source and is simply for charging cell phones and calculators.”

He said leveling up renewable energy technologies in East Africa has been hindered by severe shortage of appropriate professionals skilled in renewable energy.

Also read:Construction of East Africa’s largest solar farm to start in earnest

“There are extremely few establishments in the nation capable of training technicians and engineers in renewable energy and yet those skilled and licensed are mostly based in Nairobi,” he said.

Da Silva said governments in East Africa should obligate themselves “to equal the pace of investors” by ensuring “decline of real and alleged risks for lenders prepared to finance renewable energy projects.”

‘Let’s find some flourishing stories on renewable energy project investments in East Africa and more funding institutions would consider bringing their money into this region,” he said.

He blamed the bureaucratic practices of getting consent for the renewable energy projects as a barrier to IPPs willing to stake their funds in the region’s market.

“We most likely need to embrace the use of information technology in easing the licensing procedures so that one could pay all the necessary fees at some point without passing through many corrupt officers, he said

Land availability is a chief obstacle for renewable energy projects especially in Kenya, according to Da Silva.

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