'Never before have the conditions for private investment in renewable energy in Mozambique been as favorable as they are today'
Never before have the conditions for private investment in renewable energy (RE) in Mozambique been as favorable as they are today. The government is pursuing ambitious energy policy goals such as electricity access for the entire population by 2030, and a freshly passed new electricity law provides an improved legal framework for Independent Power Producers (IPP) and renewable power generation.
The new independent regulator, the Energy Regulatory Authority (ARENE), has started its work and is increasingly fulfilling the important role of fostering private sector investment while ensuring consumer protection. A recent milestone of ARENE’s work has been a new regulation for the off-grid sector. A Public Private Partnerships law regulates private sector participation in markets that were previously limited to state-owned enterprises. These significant sector reforms of the past years provide more transparency and fairness, allow more competition in the energy sector and create momentum.
German Development Cooperation, implemented through KfW for Financial Cooperation (FC) and through GIZ for Technical Cooperation (TC), is supporting the Mozambican government with several programmes to further advance the reform process and fill it with life.
GET FiT Mozambique (FC) aims at installing a total amount of 130 MW dispatchable renewable energy such as solar PV plus storage and small hydropower plants, each project of a range of 4 to 15 MW. Building on experience from Uganda and Zambia, GET FiT intends to unlock private investments in RE projects by reducing risks, improving attractiveness of the investment environment, increasing institutional capacity, and building a track record of successfully implemented projects. The programme’s comprehensive toolbox finances a tariff top-up, grid integration, an off-taker guarantee and technical support.
As with the twin programme PROLER, financed by EU and managed by AFD, projects under GET FiT will be selected through a two-stage reverse public auction process which shall allow for lower tariffs. GET FiT also has an off-grid component which seeks to install mini grids with a total capacity of 3 MW on the basis of solar PV plus storage, split into 10-16 projects. Implementation of the programme has just started.
Since 2016 the global EnDev programme (TC) has supported companies to provide sustainable energy access to more than 2,3 million Mozambicans though grid densification, village mini grids based on hydropower plants, solar lanterns, solar home systems and improved cookstoves.
Green People’s Energy (TC) encourages productive use of energy in SMEs, social infrastructure, capacity development in renewable energies for the private and public sector, as well as the development of specialized curricula for higher and technical education and training of the energy workforce.
GET.invest (TC) advises private developers on RE investment projects and access to financing while GET.transform (TC) provides technical advice to set up attractive policy and regulatory framework conditions for decentralized energy development.
The Mozambican energy sector is in a permanent process of transformation that is pointing in the right direction. Together with numerous measures by other multilateral and bilateral donors, the activities of German Development Cooperation are primarily aimed at further expanding the high 80% share of renewable energies in the country's energy mix in a climate-friendly way.
The potential for RE in Mozambique is immense - for domestic electricity supply as well as for electricity exports to neighbouring countries.
Julia Crause
Energy Sector Coordinator for German Cooperation in Mozambique &
Country Director, KfW Maputo Office