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An X-Ray Into the Future of Renewables in Mozambique

An X-Ray Into the Future of Renewables in Mozambique

Hidroeléctrica de Cahora Bassa is beginning to take renewables more seriously in its production priorities. The Energy Fund announces new expansion investments and the Mozambican Renewable Energy Association speaks of the possibility of the country becoming one of Africa’s most respected suppliers. The path is promising, but not without challenges…

National and international experts in the energy sector gathered in early June this year, at the 8th Mining, Oil and Gas Conference and Exhibition of Mozambique (MMEC 2022), and among the various topics discussed they talked about what is, should and will change in terms of renewables.

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Making a kind of framework in the panel that had as its theme “Finding the Future: Renewable Energy in the Electrification of Mozambique”, Ricardo Costa Pereira, president of the Mozambican Renewable Energy Association (AMER), began by lamenting the fact that, although the African continent contributes less than 2% in greenhouse gas emissions, countries already pay a bill ranging between 3% and 9% of their GDP because of the effects of climate change.

“So, renewable energy will be the way to, in a fair way, make the energy transition… and we can be ourselves (Mozambique) the example in Sub-Saharan Africa of making this path in a sustainable way and that this sustainability means profit for the companies working in this area. We have, now, a unique opportunity to do things together”, emphasized the responsible. Also according to AMER’s president, in the last few years there has been a paradigm shift in the approach to the energy market, which is favorable to the country. For many years, renewables were not competitive: the technology was very complex, financing was not available, and the adaptation of technologies was very complicated.

But today all these elements are available and there are advances that allow companies to invest with security in different projects, and proof of this is the Program for Renewable Energy Auctions in Mozambique (PROLER) and all the others that are being conducted by the National Energy Fund (FUNAE). Realizing these opportunities, AMER, an organization created in 2017 that now has nearly 50 national and international members, has been working with the Government and the private sector to highlight renewable energy, in order to move towards the full exploitation of a potential that “is not only sufficient for the country but for all of Sub-Saharan Africa,” according to Ricardo Costa Pereira.

Renewable energies will be the way to, in a fair way, make the energy transition… and we can be ourselves (Mozambique) the example in Sub-Saharan Africa…

HCB will no longer be the same

At the moment the Hidroeléctrica de Cahora Bassa (HCB) supplies hydroelectric power to the public company Electricidade de Moçambique, but in the future it intends to play a major role in the supply of clean energy, in response to growing public demand and the adoption of renewables by an increasing number of companies.

But that’s not the only reason why the company is assuming a new position. In his intervention, Rafael Abrão, HCB’s executive director, recalled that in 2016, after a record production of electricity in previous years, there was a period of drought that forced the company to reflect on the hydrological risk, that is, when there is no longer enough water to generate power. In that year, faced with the possibility of not meeting its commitments to clients, HCB had to rethink its strategic plan concerning the diversification of sources to minimize the hydrological risk.

Taking this lesson into account, HCB is currently working with a consultant that provides support in the field of clean energy. “The objective of this consultant is to help us to identify possible renewable sources, namely hydro, solar, geothermal, among other sources, that will help us to contribute to the diversification of energy in the country”, revealed Rafael Abrão.

The responsible calls attention, however, to the need for reflection on how to integrate renewable energy into the network. “For small systems, maybe we don’t have big problems, and therefore it’s possible to make this integration through simple solutions. But when we talk about large systems, photovoltaic for example, there is a need for a visit to the grid code to see how we can accommodate these sources without harming existing systems,” he argued.

The path to self-sufficiency: Mini-grids and residential solar

Because the adoption of renewables is irreversible, the National Energy Fund (FUNAE) launches, this June, a funding opportunity for initiatives to expand residential solar systems, worth about 26 million dollars.

Details on how this instrument will work are not yet available, but the idea is to support investors in the sector to expand their capacity with a view to achieving universal access by 2030, according to the respective PCA, António Saíde. For a faster expansion of off-grid energy – which is where renewables come in, being more concentrated in the Center and North of the country – FUNAE has been betting on the development of mini-grids, which are localized structures of generation and distribution for a local consumer. It also uses the approach towards residential solar systems. In other words, for areas where the grid doesn’t cover all the inhabitants, FUNAE goes looking for answers for coverage.

António Saíde mentions a study commissioned by FUNAE, which indicates that in order to achieve universal access, the national electricity grid will expand coverage from 44% to 68%, with the remaining 32% off-grid. And in the off-grid context, mini-grid coverage is expected to be around 13% and residential solar solutions will make up 19%. “In rural areas, residential systems are quite an answer to the energy demand”, stressed the responsible.

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Of a national energy access rate of 44%, only 6% is in rural areas, according to Energy Fund data, so “there is a lot of work to be done to address this gap.”

At this moment, the company directs its intervention in the rural areas, where, according to data presented by FUNAE’s PCA, 65% of Mozambicans are concentrated. Of a national rate of access to energy of 44%, only 6% is in rural areas, so “there is a lot of work to be done to respond to this gap,” explained FUNAE’s CEO.

Challenges and Opportunities

The ambition to grow in the renewables field is not without obstacles. The task of summarizing what can be expected in this path fell to Piergiorgio Evangelista, CEO of Renco Mozambique, an Italian company that bets on building power plants, being also involved in the construction of TotalEnergies’ base in Afungi, Cabo Delgado.

Starting with the opportunities resulting from investment in renewable energy, the responsible referred to the possibility of encouraging energy autonomy for companies located in remote areas and energy storage and backup solutions. He also understands that mini-grids for remote areas have the potential to create a competitive environment so that such opportunities are not left only to non-profit cooperation projects, as has been seen. In the field of expanding existing projects, the advantage lies in the possibility of reducing the timeframe for financing and implementation, and in taking advantage of the lessons learned from pioneering projects.

For Piergiorgio Evangelista, the obstacles include the limited attention of the domestic banking sector to renewable energy initiatives, the high risk perceived by investors and financiers in certain geographical areas, international logistics, and rising input costs.

At the conference, which brought together several individuals from the energy sector, several other themes were raised with the view that the country is well positioned in the global context.

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