SEFA poised to foster private sector participation in renewable energy in Mozambique

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The Sustainable Energy Fund for Africa (SEFA) has approved a USD 740,000 technical assistance grant to the Government of Mozambique to enhance the enabling environment for private investments in the country’s promising renewable energy sector. Specifically, the new SEFA grant will support the implementation of the country’s feed-in tariff regime for small/medium renewable energy projects, through the provision of standardized power purchase agreements, guidelines for grid connectivity and investor guidelines for prospective developers. The grant will additionally lay the foundations for a mini-grid regulatory framework, with special focus on designing a tariff structure and corresponding technical and environmental regulations, as well as providing capacity-building and awareness-raising activities for national and local representatives.

Abundant renewable energy sources in Mozambique still remain untapped in a country where only 33% of the population has access to electricity. The country’s significant hydro potential, mainly along the Zambezi River, is estimated to be approximately five times the actual installed capacity; the largely untapped solar potential is promising across most of the territory; there is large biomass potential from agricultural waste, in particular from rice husk in Quelimane; there is considerable wind resource in the southern parts of the country; and geothermal energy has good prospects in the northern provinces given their proximity to the East African Rift Valley.

After the approval, Joao Duarte Cunha, SEFA Coordinator at the African Development Bank (AfDB), stated: “this SEFA project will play a key role in unlocking investments in small-scale renewables, particularly in rural areas where needs are greatest. This will certainly improve energy access for households and businesses while reducing dependence from large-scale hydro and upcoming coal and gas projects”.

This operation supports Government of Mozambique’s long-term objective of increased energy access to 50% by 2024 and Sustainable Energy for All (SE4ALL) objectives focusing on universal access to modern energy services and doubling the share of renewable energy in the global energy mix by 2030. It is also aligned with the AfDB’s Country Strategy Paper for Mozambique (2011-2015) focused on enhancing private sector competitiveness through infrastructure development and the Government’s Poverty Reduction Strategy (PARP 2011–2014), the national Green Economy Action Plan (GEAP) and relevant strategies for the Energy Sector, including the National Strategy for Renewable Energy.

About the Sustainable Energy Fund for Africa (SEFA): SEFA is a multi-donor facility established to unlock private sector investments in small to medium sized clean energy projects in Africa, operating through three components: (i) grants to facilitate the preparation of renewable energy generation and energy efficiency projects towards bankability (ii) equity investments to bridge the financing gap for renewable energy generation projects and; (iii) support to public sector in improving the enabling environment for private investments in sustainable energy. SEFA is endowed with contributions from the Governments of Denmark, United States and the United Kingdom, and is hosted and managed by the Energy, Environment and Climate Change Department of the AfDB.