The Insurance Regulatory Authority (IRA) has introduced a new initiative aimed at fostering investment in geothermal energy projects across East Africa. The newly launched Geothermal Risk Underwriting Facility is designed to utilize local insurance capital to mitigate risks associated with renewable energy projects, thus encouraging private sector investment in the sector.
IRA Commissioner-General Godfrey Kiptum highlighted that the facility is a collaborative effort backed by East African insurers. It aims to provide coverage for early-stage development drilling risks, which often pose significant barriers to investment in geothermal energy projects. This initiative marks a significant step towards de-risking the sector and promoting sustainable energy development.
Kiptum addressed these developments at a geothermal development and investment forum, which focused on overcoming financing challenges, risk management, regulatory frameworks, and technological advancements. The forum provided a platform for discussing strategies to advance geothermal energy in the region.
Currently, Kenya generates approximately 985 megawatts of geothermal power, with an estimated potential of around 10,000 megawatts. This facility will support the realization of this potential by offering technical capacity development for East African insurance sector stakeholders, enhancing their ability to underwrite and manage risks associated with renewable energy projects.
Chrispin Lupe, head of the Geo-Exploration Directorate at the Ministry of Energy and Petroleum, emphasized that the facility will also assist regional governments by providing advocacy and technical support to adapt regulatory frameworks. This will ensure that they effectively address the unique needs of the renewable energy sector.
The introduction of this facility represents a crucial advancement in supporting geothermal energy development in East Africa. By addressing early-stage risks and fostering a supportive regulatory environment, the initiative aims to unlock significant investment opportunities in the renewable energy sector.
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