Germany’s KfW Development Bank plans to invest around EUR 20 million to help private power producers (IPPs) enter the Mozambican market under the GET FiT (Global Energy Transition Feed-in-Tariff) initiative.
Investors can receive tariff subsidies that are paid out over several years after the plants have been commissioned (results-based funding). In addition, the connection of hydropower plants to the electricity grid is supported by the program and the risk of the IPP-financing banks is mitigated by a guarantee facility. The program also aims to create standardized contracts and approval processes, thereby reducing costs for private investors and speeding up procedures. To create transparency and promote competition allowing for favorable electricity tariffs, project licenses will be awarded through an international public tender.
“The EU investment can mobilize additional private capital of about EUR 60 million,” Marco Freitag, KfW portfolio manager commented. The program will focus on the north and the center of the country, where almost 80% of the population lives and where electricity supply is inadequate and not very reliable. “If reliable energy is provided, this also contributes to economic development,” Freitag explains and emphasizes that GET FiT exclusively promotes electricity production from renewable energy sources – and thus makes an important contribution to climate protection. Mozambique generates 80 percent of its energy from renewable sources, with hydropower accounting for almost all of this share. In addition, the installed capacity of hydropower plants is to be more than doubled from currently around 2,200 MW to around 4,500 MW by 2030.
The installed capacity of the plants supported by GET FiT is expected to be between 4 and 15 megawatts. Before a power plant is built, appropriate studies are carried out to ensure that the impacts on nature and the environment remain acceptable and are adequate with regard to the benefits for the population. In total, 25 megawatts of power are to be installed in Mozambique through the projects. Depending on the location of the project sites, this can cover the average electricity consumption of more than 400,000 people per year.