Climate-friendly electricity generation:
Press Release from 2019-09-04 / Group, KfW Development Bank
KfW programme creates incentives for private sector involvement in Mozambican energy sector
- EUR 25 million for GET FiT programme
- Government's target: electricity for the entire population by 2030
- Much lower electricity tariffs expected
On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW signed a EUR 25 million grant with the Mozambican Ministry of Economics and Finance for the GET FiT (Global Energy Transfer Feed-in-Tariff) programme in Mozambique today. The aim is to facilitate market access for private investors seeking to become involved in electricity generation from renewable energy sources. The GET FiT programme will promote investments in photovoltaic systems including battery storage of up to a total of 32 megawatts. It provides various instruments for this purpose:
First, top-up payments designed to cover costs will be made to investors to close the financial gap for collecting the existing feed-in tariff. Furthermore, the costs for connecting the solar power systems to the electricity grid are covered and the electricity off-take risk borne by the private electricity suppliers is mitigated by a guarantee facility. The programme also creates standardised contracts and approval processes that cut costs and speed up procedures. To create transparency and achieve favourable electricity tariffs, the individual solar power projects are put out to international and public tender.
“We are convinced that it is possible to generate private investment in electricity production and low electricity tariffs through public international tenders and competition, and by creating favourable market conditions – even in one of the poorest countries in the world, including Mozambique. This is also good for the end customer who has to pay the electricity bill,” said Dr Joachim Nagel, member of KfW Group's Executive Board.
The project supports the Mozambican government in its efforts to supply the entire population with electricity by 2030. Only just under one third of the population currently has access to the electricity grid. The GET FiT programme focuses on the north and centre of the country, where 77% of the population lives, and the electricity supply is particularly inadequate and unreliable – one of the main obstacles to economic development.
KfW is already financing successful GET FiT programmes in Uganda and Zambia.
Mozambique has large reserves of oil, gas and coal, but also an untapped hydropower potential of 18,000 megawatts and good conditions for electricity generated from solar, wind and biomass. The GET FiT programme only provides funding for electricity generation from renewable energy sources. It thus contributes to a higher share of renewable energy in Mozambique's energy mix and to climate-friendly development.
While solar power systems are widespread in Africa, the field for innovation is now in the area of storage solutions, where progress is being made. Battery storage capacity makes it possible to make electricity available as needed, even when the sun's rays are already low in the evening hours after 5 p.m., but when demand for energy is highest.