Mozambique Mocuba viability gap funding

Delivering affordable power

Challenge

At just 24%, Mozambique has one of the lowest electrification rates in southern Africa. Despite strong economic growth in the past decade, high levels of poverty persist. The Government of Mozambique is committed to increasing access to power and has invested in improving energy services. However, power cuts are frequent and rural customers rely on expensive and polluting diesel generators. The key to securing reliable access to power lies in developing additional generation capacity and affordable tariffs.

Solution

Seeking to address Mozambique’s energy shortfall, Scatec Solar, government utility Electricidade de Moçambique (EDM) and Norfund established Central Solar de Mocuba (CESCOM SA) to develop a 40MW on-grid solar power plant in the country’s Zambézia region. Mocuba will be the first utility scale solar IPP in Mozambique and one of the largest of its kind in sub-Saharan Africa outside South Africa. Connecting to existing infrastructure, the new facility will distribute power to Mocuba, Pelane, Lugela and Maganja de Costa. Working with the IFC, EAIF provided $16.9m of long-term debt. Despite this support, a gap remained between costs and anticipated revenues which TAF was able to bridge by providing viability gap funding. TAF’s involvement was crucial to the financial viability of the project as it enabled CESCOM SA to negotiate affordable tariffs for EDM, which will keep prices down for customers.

Impact

“Viability gap funding from PIDG’s Technical Assistance Facility… directly reduced the tariff to be paid by EDM as off-taker, and thus the end user.”
Mikkel Tørud, Scatec Solar CFO

The Mocuba plant will increase the power generation capacity of northern Mozambique by up to 40%. The initiative is expected to demonstrate the potential of solar power as part of Mozambique’s future renewable energy mix, stabilising the national grid and reducing the country’s dependence on hydropower. The price of electricity from the Mocuba plant is forecast to be at reasonable levels for the Mozambique market, helping to support the government’s strategy to incentivise the development of small and medium-sized businesses in the Mocuba area.

 

Malawi Grid and new entrant studies

Research to maximise the impact of energy

Demand for power in Malawi outstrips current supply, a shortfall which is expected to worsen as the country’s mining and manufacturing industries expand. InfraCo Africa is exploring opportunities to become involved in the early-stage development of power plants in Malawi. However, in order to understand the best way to develop the country’s power sector and the relative costs and advantages of different generation technologies, the Electricity Supply Commission of Malawi (ESCOM) requires focused information to plan and diversify its installed power generation capacity. $124,000 of TAF grants will fund two studies, exploring Malawi’s national grid capacity and the potential for new technologies and power plants to connect to the grid. TAF’s research will build ESCOM’s internal capacity and drive private sector investment into Malawi’s energy sector in the future.

pidg data

download pdf

Annual Review 2017

Annual Report
2017