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Total Focus on Renewables and Gas is the Cheapest Way to Meet Mozambique’s New Electricity Demand

Total Focus on Renewables and Gas is the Cheapest Way to Meet Mozambique’s New Electricity Demand

Wallace Manyara – Business Development Manager, Southern and Eastern Africa Region, Wärtsilä Energy

To meet growing energy needs and increase access to electricity for the entire Mozambican population, the country is expected to be able to produce 1.3 GW of new energy capacity in the next decade. In this context, an additional 2 GW would be required to support the planned development of the Beluluane Industrial Park in Maputo province.

The challenge facing policy makers today is to identify and develop an optimal energy mix at a lower total cost to meet the growing demand. In this regard, a recent study by Wärtsilä shows that investing in a renewable energy and gas mix could save $2 billion and 25 million tons of CO2 by 2032, compared to a scheme that adds new coal-burning capacity.

Working in cooperation with EdM (Electricidade de Moçambique) to help the country develop its long-term electricity plan, Wärtsilä has examined what an optimal expansion of the power system would look like with competing technologies and available fuels under different demand growth scenarios.

With its huge coal reserves and the development of its immense gas fields, Mozambique has great potential for power generation. The country also has impressive, low-cost, but untapped wind and solar resources. The problem lies in knowing which energy mix will be the most economical.

Using an advanced Plexos power system modeling tool, which applies a chronological model to integrate the distribution challenges of intermittent and low-cost renewable energy production, Wärtsilä quantifies the benefits at a system level of different generation and storage technologies to find the lowest-cost solutions.

The models consider existing power capacity, committed capacity additions, including the 450 MW Temane plant due to come online in 2024, as well as candidates for capacity expansion, including coal, gas and renewables.

The cost of solar photovoltaic power generation has fallen sharply in the last decade, making it the lowest cost source of energy, especially in southern Africa. The cost of wind farms has also dropped significantly

The different scenarios modeled clearly show that investing in new coal-burning capacity would not only lead to higher emissions and costs, but would also slow down investment in renewable energy. The arguments made are as follows:

First, any coal-fired power plant, with the exception of the combined cycle gas turbine power plant currently under construction in Temane, would provide the country with significant baseload capacity without the flexibility to integrate cheap renewables into the grid.

The cost of solar photovoltaic power generation has fallen sharply in the last decade, making it the lowest cost source of energy, especially in Southern Africa. The cost of wind farms has also dropped significantly. However, for the power system to fully benefit from these low-cost sources, flexible alternatives are needed that can adjust output quickly in response to intermittent renewables, to keep the system balanced and avoid power outages.

Coal-fired plants and gas turbines are designed to operate most efficiently at full capacity, producing a stable baseload, and are therefore ill-suited to adjust their output in response to fluctuations in supply and demand. Thus, relying on these technologies to balance the grid is inefficient, leading to higher operating and maintenance costs, lower margins, and higher emissions.

Lower emissions and lower costs with flexible gas engine technology

Advanced power system modeling shows that gas-fired power plants are best suited to support renewable energy due to their flexibility. Consisting of multiple generating units, which can be started instantly, they offer a wide range of power supply availability without sacrificing efficiency.

When considering an entire fleet of assets, such flexible power plants can not only unlock the full potential of renewable energy assets, but also offer the lowest levelized cost of energy (LCoE) and reduced CO2 emissions.

The model shows that investing in renewable energy, along with flexible gas capacity and energy storage, is the optimal energy mix to support demand based on moderate growth projections. By 2032, a focus on flexible renewables, supported by gas, would save 25 million tons of CO2 emissions and $2 billion in total costs compared to a coal-based scenario. To provide the additional 2 GW of electricity to serve the Beluluane Industrial Park, the optimal cost solution would combine 1 GW of wind and solar capacity with 2.6 GW of new baseload and flexible gas projects.

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In addition, installing low-cost solar PV and wind farms coupled with supporting flexible electricity generation from its gas resources respects the reality of the country. Off-grid renewable projects and energy storage systems would support electrification in rural and more remote areas of Mozambique and strengthen the country’s underdeveloped transmission and distribution grid.

A marked shift away from coal

The last decade has seen significant changes in the energy sector driven by the energy transition. There is clearly a lot of pressure from markets to move away from coal.

In an industry where assets are built to last over 20 to 30 years, the economics of new coal-fired plant developments are becoming less attractive. This is a very strong argument for flexible gas capacity as part of the optimal cost path to massive renewable energy integration.

Wärtsilä has modeled regional energy systems in South Africa, Namibia, Botswana, and Zambia. All of these countries plan to close old coal plants and install significant amounts of renewable energy over the next decade, and flexibility is key to supporting these plans.

Decisions made today to build the right energy mix will have a significant impact on the transition to cleaner energy, not only for Mozambique, but for Southern Africa as a whole. Today, Mozambique is a net exporter of coal and gas.

By using its vast natural gas resources to develop its national flexible capacity electricity grid, Mozambique will have a unique opportunity to meet its national goal of providing universal access to electricity and become a major exporter of flexible energy to promote renewable energy development throughout the region.

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