Alternative Risk Transfer and Performance of Power Projects in Kenya

International Journal of Research and Scientific Innovation (IJRSI) | Volume VIII, Issue XII, December 2021 | ISSN 2321–2705

Alternative Risk Transfer and Performance of Power Projects in Kenya

Amolo Elvis Juma Amolo, PhD¹, Charles Mallans Rambo, PhD^2*, Charles Misiko Wafula, PhD^3*
1Lecturer PhD, University of Nairobi, Kenya
²Associate Professor PhD, University of Nairobi, School of Open and Distance Learning, Kenya
³ Senior Lecturer PhD, University of Nairobi, School of Open and Distance Learning, Kenya
*Corresponding author

Abstract: Renewable energy development has been underexploited in Kenya due to investor’s negative perception of the projects’ high investment risk which has depressed private capital penetration. The purpose of the study was to establish the extent to which Alternative Risk Transfer influence performance of hydroelectric energy projects in Kenya. The study adopted pragmatism paradigm, mixed method approach and descriptive survey design. Structured questionnaires and interview guide were used to collect quantitative and qualitative data from a census of 94 participants. Validity test of 0.775 and a reliability coefficient of 0.781 were obtained after pretesting of the instruments amongst 10% of the participants. Descriptive statistic and inferential statistic of Correlation and Regression was done at a significance level of 0.05 and thematic content analysis of qualitative data for triangulation. The hypothesis test results for H0: Alternative Risk Transfer does not significantly influence performance of hydroelectric energy projects in Kenya was rejected since P=0.000<0.05.Therefore the study concluded that Alternative risk transfer significantly influence performance of hydroelectric energy projects in Kenya. It is recommended that Project management and policy makers should integrate alternative risk transfer products to improve performance of hydroelectric energy projects through targeted policies to boost investors and lenders confidence. Further research should be carried out on the determinants for adoption of Alternative risk transfer in power projects in Kenya.

Keywords: Alternative Risk Transfer, Performance of projects, hydroelectric energy Projects

I. INTRODUCTION

In spite of Kenya having an estimated hydropower potential of about 9,000MW for large and small hydros, only 848.8 MW has been exploited (Ministry of Energy, 2020) due to financial constraints. Financial markets play a role by stimulating private investments into the projects to bridge the scarcity in public resources (Rezec and Scholtens, 2017). However, the negative investor’s perception of high investment risk impedes credit access (OECD, 2013). Thus, utilization of Alternative risk transfer to de-risk renewable energy projects is essential as it ensures risk securitization, risk standardization and non-indemnity trading, funding risk transfer and financial reinsurance in various forms (Cummins, 2008).

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