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Author(s): Sitati Olando, Mary Nywaira Mwenda (Ph.D.), Reuben Wambua Kikwatha (Ph.D.), Charles Mallans Rambo.

Volume/Issue: Volume 7 , Issue 4 (2024)

Abstract:

Investments in Geothermal Energy Development Projects (GEPs) are still considered high-risk and capital-intensive with unpredictable completion even amidst the adoption of Public Private Partnership (PPP) financing models particularly in Sub-Sahara Africa (SSA). Numerous project completion bottlenecks affecting timely project completion have been documented lately; these challenges have caused delayed delivery of critical path milestones, project stalling, and even outright project failures. Recent empirical studies focused more on developed countries' longitudinal secondary databases covering the wider energy sector, with minimal attention paid to the situation of GEPs in developing countries. Anchored on the positivism and pragmatism foundations, this study examined the mediating influence of delivery capability on the relationship between PPP financing structure and the completion rate of GEPs in Kenya. Using a census survey design, data from 48 geothermal energy projects (project managers and implementation team leaders) and key informants was collected and analyzed using mixed methods. Data triangulation and diagnostic tests were performed. The results and findings revealed that while PPP financing structure alone explains 43.9% of the variance in project completion rates, the inclusion of delivery capability substantially increases the explained variance to 66.1%. Both PPP financing structure and delivery capability have statistically significant effects on project completion rates, with delivery capability (β = 0.579) having a stronger isolated effect compared to the PPP financing structure (β = 0.326). The reduction in the PPP financing structure coefficient from the first to the second model suggests that some of its effect is shared with or mediated by delivery capability. The study concludes that completing PPP-financed geothermal energy projects requires an integrated approach that considers both PPP financing structure and project delivery factors, particularly emphasizing building agile project management capabilities of public and private developers. Specific government support measures and industry recommendations are provided to enhance the success of geothermal energy PPP projects mainly in the SSA region.

Keywords:

Delivery Capability; Public-Private Partnership (PPP); Financing Structure; Project Completion; Geothermal Energy Development Project (GEP); Mediating Effect.

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