Mozambique’s first utility scale renewables project with battery storage to begin construction following financial close
A 19MW solar electricity plant to be built in the Niassa province of Mozambique reached financial close on 20th December 2021. The Emerging Africa Infrastructure Fund provided US$19 million to Central Electrica de Tetereane SA (CET), the owner and operator of the new facility. EAIF is the sole lender.
CET’s majority shareholder is Globeleq, the London-based business that specialises in the African power sector. The project was co-developed with Source Energia a diversified renewable energy business focused on the development and operations of large and small scale on- and off-grid projects in Lusephone Africa. CET has entered into a power purchase agreement with EDM, Mozambique’s national electricity utility. EDM holds 5% of CET’s equity.
Located in the (northern) Niassa region of Mozambique, near the city of Cuamba, the new plant is the first utility-scale solar project in Mozambique to include battery storage. It will deliver up to 7 megawatt hours of energy, with the aim of boosting solar output during the evening peak demand. This will contribute to grid stability and displace thermal generation, avoiding emissions, which in turn supports Sustainable Development Goal 13, which focuses on climate mitigation. The introduction of battery technology is seen as opportunity for the operator, the national power utility, manufacturers and lenders to learn and apply lessons on battery storage that can benefit Mozambique and battery storage initiatives across Africa.
Creating a commercially viable facility that introduced battery storage presented a financial challenge.
In order to improve the commerciality of the project whilst maintaining tariffs at an affordable level, PIDG TA provided a US$$7 million Viability Gap Funding (VGF) grant to CET. The grant funded project costs, including the battery storage unit. This is the first time PIDG TA has deployed a VGF grant to a solar project with a battery storage component. The storage element will serve as a template for future transactions. CDC Group, a shareholder in Globeleq, also provided a grant towards battery costs.
On behalf of the project owners, Mike Scholey, Globeleq’s CEO said;
“With the ongoing challenges due to the pandemic, I am proud our team has achieved financial close, and we can begin building the first solar and energy storage facility in the country. We fully support the Mozambican Government in their initiatives to support the Paris Agreement and provide its citizens with reliable and clean alternative energy options.”
CET’s plant is the second solar facility in Mozambique to benefit from EAIF support. Now in full production, the US$76 million 40MW Central Solar de Mocuba (CESOM) plant was loaned US$17 million by EAIF by way of an International Finance Corporation “B” loan.
Mozambique is one of the world’s poorest countries, with over 60% of people living below internationally recognised poverty levels. Three in every ten have access to electricity with considerable disparity between urban (73%) and rural areas (4%). The project will provide clean energy to thousands of people contributing to SDG 7 which focuses on delivering access to clean energy. It will also and support business development and job creation in Niassa, one of the country’s poorest provinces.