The energy transition in Mozambique is a topic of growing relevance, not only for the creation of sustainable development in the country, but also as a strategic component in regional and global geopolitics.
The discovery of vast natural gas reserves in Cabo Delgado has put Mozambique on the map as one of the main players in the global gas market, and the country is thus in a transition phase between exploiting fossil resources and identifying and developing the potential of renewable energies.
As far as renewable energies are concerned, Mozambique also has enormous potential, standing out in sub-Saharan Africa due to its geographical position. Solar energy is particularly promising, given that Mozambique receives an annual average of around 2,500 hours of sunshine. Wind energy also has great potential, especially along the country’s extensive coastline.
And no less important is hydroelectric power, which is already playing a significant role, particularly with the Cahora Bassa dam, one of the largest in Africa, which in 2023 produced more than 16,000 GW/h.
Determinants of the transition
This energy transition is influenced by various factors, one of which is the social and demographic environment. In Mozambique’s case, a young and growing population can drive demand for energy and, at the same time, provide a dynamic workforce for the renewable energy industry.
In this way, investing in infrastructure and improving education, combined with the expansion of gas and renewable energy projects, can bring sustainable growth that will increase wealth levels.
The transition is influenced by factors such as the social and demographic environment
Another important factor is obtaining capital to implement this energy transition. In order to attract foreign investment, Mozambique must continue to guarantee a stable political and regulatory environment that continues to transmit confidence, which includes the management of gas resources in a transparent and responsible manner, in line with the global energy transition policy, developing policies that incentivise renewable energies. This diversification of the energy matrix could make the country more attractive to investors concerned with energy sustainability and resilience.
In addition to foreign investment, there is funding approved at global level. In 2022, the G7 publicly committed to investing 600 billion USD by 2030 in infrastructure. With the commitment to: i) increase infrastructure and enable access to finance; ii) support the effective management of minerals critical to the energy transition; iii) expand access to energy and support the productive use of energy; iv) strengthen institutional frameworks and capacities and; v) help accelerate and strengthen sustainable and resilient development in Africa.
The African Investment Bank and the World Bank also provide various lines of credit for investment projects in the sector. It is important to note that these global commitments to the energy transition, as well as the needs of international financial institutions to fulfil significant ratios in sustainable investments, make investments in renewable energies in Africa very attractive, both because of the reduced carbon footprint (compared to investments in fossil fuel energy) and because of the positive impact on populations.
Opportunities in sight
All these factors represent opportunities for economic agents in Mozambique, both in the public and private sectors, who will benefit from the creation of an economic environment favourable to foreign investment through risk mitigation strategies such as: i) the development of a lasting legislative and regulatory framework favourable to investors; ii) the development of public-private partnerships; and iii) the signing of implementation agreements between project companies and the government.
To summarise, we can see that Mozambique is in a highly prominent position in terms of the energy transition, due to its geographical position and available natural resources, which, if used sustainably, could make the country one of the world’s largest renewable energy producers.
To achieve this goal, it is necessary to balance all the different factors mentioned above to make Mozambique an attractive country for attracting foreign investment within a long-term strategy for implementing the various projects that are part of the energy transition, thus placing the country as a strategic global component in this transition and making a decisive contribution to its sustainable growth.
