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Energy Transition in Mozambique at a Critical Juncture

Energy Transition in Mozambique at a Critical Juncture

  • Ernesto Gouveia Gove Jr. • Head of Corporate and Investment Banking Sector Specialists at Absa Bank Mozambique

Mozambique is at a crucial point in its energy trajectory, with a wealth of resources including hydro, solar, wind, coal and natural gas. Notable initiatives include the Mphanda Nkuwa hydroelectric project and the Cahora Bassa dam, both recognised as potential sources of economic electricity not only for Mozambique, but also for the region.

The International Energy Agency (2022) emphasises the lasting importance of hydropower in improving the flexibility of Africa’s energy systems. By 2020, hydroelectricity contributed 16 per cent of the continent’s electricity production, with the majority (90 per cent) of generation located in sub-Saharan Africa, particularly in nations such as Angola, the Democratic Republic of Congo (DRC), Ethiopia, Mozambique and Zambia. Looking ahead, in the Southern African region, hydroelectricity is expected to make up a quarter of total flexible supply capacity by 2030, almost doubling its capacity to almost 80 GW.

The Mozambican government is embarking on more adaptive policies and market-orientated reforms aimed at addressing performance challenges and fostering the overall development of the energy sector. In line with trends in several sub-Saharan African nations, the restructuring of Mozambique’s energy sector remains an ongoing process, characterised by a significant state presence.

Mozambique must align its policies and regulations to foster the growth of energy storage infrastructure

The country’s electricity generation potential, relative to many southern African nations, positions it as a potential regional energy hub, offering attractive opportunities for investment, thus catalysing socio-economic advances.

Driven by ambitions for sustainable development and poverty alleviation, Mozambique is facing substantial challenges in ensuring reliable, affordable electricity for its population. This underlines the need for an in-depth examination of Mozambique’s energy landscape, delving into its potential, current state, obstacles and opportunities in realising universal electrification and fostering sector sustainability. Addressing the role of energy storage solutions and the country’s lithium and graphite potential emerge as central to propelling Mozambique to the forefront of battery manufacturing, thereby revolutionising its energy sector and fuelling economic growth.

Policymakers remain steadfast in their efforts to tackle persistent issues related to inadequate access to electricity and the reliability of supply, which have hampered the continent’s development progress. According to the Africa Energy Outlook (2019), approximately 600 million Africans, almost half of the population, had no access to electricity in 2018. In addition, around 80 per cent of businesses in sub-Saharan Africa faced regular electricity outages, resulting in significant economic losses.

With the continent setting ambitious renewable energy targets, Mozambique must align its policies and regulations to foster the growth of energy storage infrastructure while ensuring supply stability. Critical policies, such as feed-in tariffs and grid modernisation initiatives, are indispensable for encouraging investment in energy storage technologies. By cultivating a favourable environment for the public and private sectors, Mozambique can accelerate projects and address transmission constraints. For greater efficiency of both off-grid and on-grid investment allocations, energy storage solutions are key and offer pathways for power switching, frequency stability and improved electricity quality, which are crucial for meeting market demands and ensuring energy security.

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To effectively address these challenges, the country must prioritise investment in infrastructure, including grid extension projects and off-grid solutions through concerted efforts between the public and private sectors. In addition, the country’s vast natural gas reserves present a competitive advantage, acting as a catalyst for industrial development, improved livelihoods and a transition to clean energy. Collaboration with international partners and strengthening governance frameworks are imperative to attract investment and mitigate environmental and social impacts associated with mineral extraction and energy projects. Empowering the private sector to invest in renewable energy initiatives can boost innovation and economic growth in various sectors.

Mozambique’s vast lithium and graphite potential places the country in a privileged position in the battery manufacturing landscape, offering unique prospects for economic growth and technological advancement. With global demand for lithium-ion batteries skyrocketing, Mozambique has the potential to emerge as a key player in the battery supply chain. Strategic partnerships with international investors and advances in battery manufacturing technology can further enhance Mozambique’s position in the global market, boosting industrialisation, job creation and export revenues.

In short, Mozambique is at a crucial moment in its energy evolution, equipped with abundant resources, ambitious goals and transformative opportunities. By effectively addressing barriers to energy access and reliability, harnessing the potential of renewable energy sources and leveraging its lithium and graphite resources, Mozambique can unlock its full energy potential and spearhead sustainable development and prosperity for its economic agents.

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