Challenges and Opportunities for the Nano/Mini-Grid Sector in Mozambique

From energypedia
Revision as of 08:43, 2 September 2022 by ***** (***** | *****)


Introduction

This article provides an overview of opportunities and challenges for nano/mini-grid development in Mozambique and is targeted at private sector, donor organisations, NGOs, Government bodies and other stakeholders who are interested in getting a deeper understanding of the nano/mini-grid market in Mozambique.

For an overview of the stakeholders involved in the market, click here.

For an overview of the market size and potential growth, click here.

For an overview of the policy and regulatory framework, click here.

Challenges

The following list presents challenges the private sector has faced up until the end of 2021. The publication of the new Regulation for Energy Access in Off-Grid Areas is expected to ease these obstacles with a new and detailed regulatory framework.

  1. Due to the newness of the Regulation for Energy Access in Off-Grid Areas, it is yet to be put into practice and its impacts are yet to be measured.
  2. The current market is highly reliant on donor funding and for a sustainable market development, the private sector needs clear tariff regulations, clear grid extension plan and schedule, technical standards and other framework conditions.
  3. Lack of subsidies for solar/hybrid minigrids “if subjected to uniform tariffs”, as opposed to subsidies coming only from donor agencies and being limited.
  4. Limited amount of incentive programs for private sector, expected to grow after the publication of the new Regulation for Energy Access in Off-Grid Areas.
  5. There is no technical or quality standards for mini-grids in Mozambique. Depending on the donor programmes, they require the mini-grid operators to adhere to different international standards.
  6. Lack of coordination between grid expansion and mini-grid planning, as it was the case of the electrification plan for Titimane[1][2][3].
  7. Rural electrification projects with stand-alone grids have no concrete strategies for grid arrival, making the future of the project uncertain[4]. EDM master plan have some suggestions for areas for grid arrival but not the timeline making it uncertain for developers.
  8. Although a Power Purchase Agreement (PPA) offers long-term stability to a mini-grid developer, the negotiations to sign the PPA tend to be long and complicated, causing the cancellation of projects even before starting the construction phase[4]. This is especially challenging for smaller mini-grids that also have less capital assigned for administrative/bureaucratic activities.
  9. The current status of mini-grid regulations in Mozambique represents a high risk for interested players from the private sector to develop mini-grid projects. A mini-grid investment requires a clear and specific regulatory framework due to a high CAPEX and intensive long-term investments[5].
  10. Limited distribution network for mini grid materials and accessories in remote rural areas[6]. Long distribution cabling required for remote areas[7].

Opportunities

  1. With the new Regulation framework for mini-grids and the revision of the Electricity Law, Mozambique is on a positive track to provide clear framework for mini-grid operators, especially on concessions, grid interconnection, environmental impact and other aspects.
  2. With the growing interest from donor organisations, there are different funding calls to support mini-grid operators in Mozambique.
  3. There is a higher interest from already established solar companies to expand their existing business in Mozambique. To overcome the difficulties in both the supply and demand side, there is a need to pilot new business models for mini-grids[6].
  4. The creation of a Results-Based Facility (RBF) as a platform for private-sector participation in energy service delivery. This project has the objective of attracting the private sector to participate in the off-grid market in high-poverty incidence zones[6].
  5. There is strong evidence of sustainable mini-grid projects operating in other countries that struggle with the same issues as rural Mozambique, such as Rwanda, South Africa, Cape Verde, and Tanzania, one of the leading African countries in operating mini-grids. These case studies provide a collection of lessons learned and guidance on similar projects to be done in Mozambique[8].
  6. There is strong evidence of rapid electrification rates in other developing countries such as Gabon, Swaziland, and Kenya that could serve as an example for Mozambique[8].

Further Information

References

  1. ↑ edp.com. ‘Mozambique: Titimane’. Accessed 18 January 2022. https://www.edp.com/en/mozambique-titimane.
  2. ↑ ‘IRENA Innovation Weeek 2015-Day 2_DeeSpdive Session on Smart Mini and Micro-Grids_UNEP Project (CEMG).Pdf’, accessed 30 January 2022, http://innovationweek2016.irena.org/outcomes/Deepdive1/IRENA%20Innovation%20%20Weeek%202015-Day%202_DeeSpdive%20session%20on%20smart%20mini%20and%20micro-grids_UNEP%20project%20(CEMG).pdf.
  3. ↑ ‘Ainda Este Ano: Niassa Poderá Ligar Mais de 25 Mil Consumidores de Energia Eléctrica | EDM - Electricidade de Moçambique’, accessed 30 January 2022, https://portal.edm.co.mz/pt/website-mobile/article/not%C3%ADcia/ainda-este-ano-niassa-poder%C3%A1-ligar-mais-de-25-mil-consumidores-de.
  4. ↑ 4.0 4.1 ‘EEP_MiniGrids_Study_DigitalVersion.Pdf’, accessed 10 August 2021, https://eepafrica.org/wp-content/uploads/2019/11/EEP_MiniGrids_Study_DigitalVersion.pdf.
  5. ↑ AMER Mini-Grids Sessão A. Accessed 12 August 2021. https://www.youtube.com/watch?v=rrLYseQua7Y.
  6. ↑ 6.0 6.1 6.2 ‘Mozambique Energy for All ProEnergia Project.Pdf’. Accessed 14 June 2021. https://documents1.worldbank.org/curated/pt/594061554084119829/pdf/Mozambique-Energy-for-All-ProEnergia-Project.pdf.
  7. ↑ Pranab Baruah and Brendan Coleman, ‘Country Brief: Mozambique Off-Grid Solar Power in Mozambique: Opportunities for Universal Energy Access and Barriers to Private Sector Participation’, n.d., 24.
  8. ↑ 8.0 8.1 Miguel M. Uamusse et al., ‘Access to Sustainable Electrification: Possibilities for Rural Mozambique’, ed. Ahmed Zobaa, Cogent Engineering 7, no. 1 (1 January 2020): 1765688, https://doi.org/10.1080/23311916.2020.1765688.
Retrieved from "https://energypedia.info/index.php?title=Challenges_and_Opportunities_for_the_Nano/Mini-Grid_Sector_in_Mozambique&oldid=393694"