FINANCING SUSTAINABLE ENERGY PROJECTS IN AGRICULTURE

Abstract

Agriculture remains the source of livelihood in Africa. However, this sector is plagued by high level of wastage in food chain. In Kenya it is estimated that close to 50% of Kenya’s agricultural produce, be it crop, fish or even livestock is lost in post-harvest maneuvers. This is largely due to poor post-harvest processing and storage. These are energy intensive which compound the situation. Energy challenge is multi-faceted ranging from technology to financing and accessibility. This paper looks at energy financing and analyses the various options available for the agricultural sector in Kenya. The paper further compares financing approach in the developed countries and the lessons learnt and opportunities. The results of this study show that project finance is the preferred model of financing among REP financiers, while REP developers mainly prefer corporate finance. Based on the cost of implementation, project finance is mostly only a viable option for financing large-scale REPs, which as the results of this study show, delivers minimal benefits for sustainable economic development. This is mainly because large SEPs are mostly gridconnected. It is recommended that in developing countries, public institutions and legal systems should consider having the stability, ability, and reliability over the medium to long term to put in place and enforce laws and private sector regulation in general, as well as supportive incentives for renewable energy in particular.