The Mozambique government is embracing off-grid energy systems as a vital component of its strategy to achieve universal energy access by 2030, and hopes a new regulatory framework will encourage private sector investment to accelerate the development of renewable off-grid energy solutions in remote and rural areas.
The new regulations, launched in November, complement a decree from December 2021 that introduced regulation of off-grid projects. Until 2021, there had been no policy in place to standardise and oversee electrification projects built outside the national grid, preventing much-needed investment in the sector.
The new rules on concessions, technical and safety standards and mini-grid tariffs should make it easier for new actors to start and develop projects in the sector, and are designed to attract investment in solutions such as solar home systems and mini-grids, according to Mozambican Energy Regulatory Authority, Arene.
According to the African Development Bank, only 40% of Mozambique’s population currently has access to electricity, 36% through the grid and 4% through off-grid generation. The government’s target is for 100% access by 2030, with 68% of Mozambicans connected to the national grid, and 32% accessing energy off-grid, which is the responsibility of Funae.
Large energy projects, such as the planned 1,500MW Mphanda Nkuwa hydro plant, and the 450MW gas-powered power plant under construction at Temane in Inhambane, should mean that the country will be producing far more energy than it needs for its own consumption. But if greater efforts are not made to broaden distribution to rural and remote areas of the country, there is a risk these new energy projects will simply generate more energy for export, or for industrial use — which already accounts for over 85% of total electricity consumed in Mozambique — without benefiting poor households in rural areas.
However, it would be “very costly and logistically difficult to extend the grid to all of those areas,” of Mozambique, given the size of the country, and the remoteness of many of its villages, Joshua Kirshner, Associate Professor at the University of York and a researcher in the Community Energy Systems and Sustainable Energy Transitions in Ethiopia, Malawi and Mozambique Project, told Zitamar News.
While a decentralised off-grid approach is not a substitute for extending the grid, “100% grid access in Mozambique won’t be coming anytime soon, so decentralised off grid projects are needed,” he said.
As well as cutting the costs of investing in long-distance transmission lines, decentralised energy system can be more flexible and responsive to community needs, promoting “local solutions adjusted to the potential of each location,” Anabela Lemos, director of environmental group Justiça Ambiental (JA!), told Zitamar.
They are also an effective way of boosting local economies: “small-scale, socially-owned and community-based solutions end up not only providing clean energy but also creating local jobs,” she says.
Off-grid systems should be a component of Mozambique’s energy strategy
Mozambique is making progress with the grid extension and densification — connecting more homes to existing lines — “but current projections indicate that affordable off-grid solutions are critical in order to achieve the universal energy access target by 2030,” Javier Ayala, Mozambique’s energy sector lead at Dutch international development agency SNV, and programme manager at the off-grid initiative Brilho, told Zitamar.
“Mozambique has a large potential off-grid energy market with 20 million people in need of access to electrification, and this market remains virtually untapped,” Ayala added.
Founded in 2019, Brilho is a £29.3m ($35.5m) programme funded by the UK and Sweden’s development offices and implemented by SNV. One of Brilho’s cornerstones is a £18.1m ($22m) market development fund to de-risk businesses and stimulate private sector investment in off-grid solutions.
In the first quarter of 2022, the Brilho programme connected more than 80,000 homes in Mozambique to solar-powered systems, which the programme says generate enough energy to meet household needs. By 2024, the programme hopes to have provided a total of 1.9 million Mozambicans and 17,000 businesses with access to energy via off-grid solutions.
According to Funae’s electrification roadmap, which has not been made public but has been seen by Zitamar, the country’s two most populous provinces, Nampula and Zambezia, are expected to rely most heavily on off-grid solutions to increase energy access, benefiting around 2 million households.
The document showed that $1.8bn is needed to supply Mozambique’s off-grid solar home systems target of powering 7.2 million households by solar energy by 2030. Funae wants to raise these funds through a mix of debt, equity investment, and grant funding.
Over the course of 2022, Mozambique’s international donors have announced a number of packages worth millions of dollars aimed at increasing the use of renewable off-grid sources in the country. Funae’s chairman António Saíde announced in June a $26m package for off-grid projects, supported by the World Bank, which is expected to benefit 300,000 people over the next four years. In early December, the European Union unlocked €15 million to fund up to ten projects in the sector.
Environmental and climate benefits
On top of being a low carbon source of energy, decentralised renewable energy systems might be more resilient to extreme weather events, which are expected to become more common with climate change. Mega energy projects, environmental groups say, are more vulnerable to being impacted by climate change. Mphanda Nkuwa, for example, could face operational difficulties as rainfall levels become more unstable in the Zambezi river.
“These [off-grid] systems are more climate resilient because they can still be functional when the large grid network is knocked down,” Kirshner said. During the last rainy season, when Storm Ana hit Mozambique and neighbouring countries in January this year, off-grid energy systems in Malawi continued functioning while parts of the national grid went down due to flooding and damages to the Kapichira dam.
In October, at the start of Mozambique’s rainy season, around 5,000 people were left without power in Manhiça, Maputo province, due to trees falling on power lines following a storm.
Furthermore, decentralised energy systems running on renewable sources can offer more value in the long run, compared to mega projects such as hydroelectric plants, experts say, because it is easier to improve their capacity and performance as technological advancements come about.
Justin Muhl, associate at TMP systems, a consultancy developing tools to improve the efficiency of projects in the development sector, told Zitamar that renewable energy technologies are generally a lot easier to develop and have room for further innovation, and “this potential to improve is a huge advantage,” Muhl said.
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