Germany’s KfW Development Bank plans to invest up to $21 million to support the development of solar photovoltaic (PV) and hydroelectric power plants in Mozambique.
Supported by the EU and the German Federal Ministry for Economic Cooperation and Development, the investment comes as part of the Global Electricity Transition Feed-in-Tariff (GET FiT) program, which aims to improve electrification in the southern African country.
The program will provide incentives for Independent Power Producers (IPPs) to participate in the expansion of renewable energy in Mozambique.
The first phase of the GET FiT program, which has already seen the mobilization of $26.3 million, will promote private solar projects and the construction of solar PV systems. Phase two, which will be supported through EU funding, will see the development of small-scale, private hydropower plants.
“Hydropower has a huge potential in Mozambique to generate climate-friendly energy,” stated KfW Development Bank Portfolio Manager, Marco Freitag. “If reliable energy is provided, this also contributes to economic development.”
Poised to receive tariff subsidies, the KfW Development Bank’s $21-million investment is expected to enable the entry of IPPs into Mozambique’s energy market. What’s more, the program will support the connection of hydropower plants to the country’s national grid, with specific focus being placed on the northern and central areas of Mozambique, where approximately 80% of the population lives in energy poverty.
The program will also develop standardized contracts and approval processes for private investors, expediting entry procedures into Mozambique while reducing costs and allowing for favorable electricity tariffs.
“The EU investment can mobilize additional private capital of about EUR 60 million ($63.2 million),” Freitag added.
With an installed hydroelectric capacity of approximately 2,200 MW, roughly 80% of Mozambique’s energy is derived from hydropower. Under the GET FiT program, an additional 25 MW of power is expected to be installed through the development of various renewable projects.