Risk Management Practices and Performance of Renewable Energy Projects in Nairobi County

Abstract

For effective management process an inclusive evaluation of all the phases of project life cycle should be included. Thus, decisions that are made at each stage should be clear of the risks which may be encountered. Taking risks is an everyday and a common occurrence to the extent that we tend to ignore some. However, with projects there is no luxury of ignoring the risks since projects are unique in nature and a prone to the risk from the beginning to the end. In the renewable energy industry increase in economic activities and the rise in population has led to high energy in demand. The high energy costs are supplemented by the unreliable supply infrastructure. ‘The challenges that are faced in the renewable energy has affected its adoption in Africa and Kenya in particular. These challenges form part of the risks in the renewable energy sector, this study aimed to investigate the influence of Risk management practices on the performance renewable energy projects in Nairobi County. The study specifically targeted to examine the influence of risk management planning; determine to what extent Risk identification; on the performance of renewable energy projects in Nairobi County. The study was guided by the theories of: Prospect Theory and Stakeholders Theory. The study targeted renewable project in Nairobi County. That is 67 projects for Wind, Solar, and bio-energy in Nairobi and 15 registered renewable companies. A census was applied as the number of respondents 149 comprising of project managers and project representative. Questionnaire was the main tool for collecting primary data. A pilot study was conducted on a 10% of the sample. The study conducted both descriptive and inferential analysis. The study used regression model to establish the relationship between risk management practices and performance of renewable projects in Nairobi County. The study established that there was significant positive correlation between the risk management process and performance of renewable energy projects in Nairobi County. The study also found positive relationship between the independent variables (Risk management planning and risk identification). Risk management practices has a strong correlation with performance of renewable energy. Risk management process explained 79.6% of performance of energy projects in Nairobi County. The study also established that risk management planning significantly influence on performance of renewable energy projects. Risk identification also had a positive significant influence on performance of renewable projects. Risk identification had the highest influence at 67.7% followed by risk management planning at 55.5%. The study recommends enhancement of risk management practices to ensure improvement of performance of renewable energy projects. The study findings will be useful to the project practitioners, researchers and policy makers.