Renewable energy can end power deficit, but . . .

Nelson Gahadza EXPEDITING the adoption of renewable energy will be crucial in Zimbabwe’s efforts to increase the production of clean power to close the electricity supply gap that can undermine faster economic growth, experts and industry players say. Zimbabwe’s National Development Strategy 1 (NDS1) regards energy as a key enabler in the acceleration of the […]

Renewable energy can end power deficit, but . . .

Nelson Gahadza

EXPEDITING the adoption of renewable energy will be crucial in Zimbabwe’s efforts to increase the production of clean power to close the electricity supply gap that can undermine faster economic growth, experts and industry players say.

Zimbabwe’s National Development Strategy 1 (NDS1) regards energy as a key enabler in the acceleration of the country’s modernisation and industrialisation agenda, as well as sustainable socioeconomic growth.

To address the power shortages in the country, the Government is facilitating the development of several electricity generation projects, most of which are financed through extra-budgetary funds, loans and the private sector.

In terms of NDS1, providing access to reliable and low-cost energy is in line with the Government’s intention to drive economic growth and stability.

In an interview, renewable energy entrepreneur Mr Prechard Mhako said adopting renewable energy was crucial in Zimbabwe’s fight against the impact of climate change over and above the attendant economic benefits.

“The forests have the potential to offset thousands of tonnes of carbon dioxide each year. As our mining, agriculture and industrial sectors continue to grow, it is imperative to diversify and expand our energy portfolio to include more renewables.

“This will not only help mitigate climate change but also ensure energy security for the country,” he said.

Mr Mhako said solar energy represented the most accessible investment opportunity, with the potential for generation of approximately 1 gigawatt of electricity through independent power producers (IPPs).

“The challenge lies in matching these projects with ready, willing and able investors.”

Hydropower is increasingly becoming vulnerable to climate extremes, as evidenced by recurring episodes of droughts that result in low water levels in Kariba Dam, one of the biggest sources of electricity for Zimbabwe.

The water body might experience its lowest level on record this year as a result of the El Niño-induced drought.

The reduced power output from Kariba Dam, one of the country’s two major electricity generation facilities, will likely increase the strain on the national grid capacity, which in the past has resulted in long periods of load-shedding.

Ageing infrastructure at coal-fired plants like the Hwange Power Station, Zimbabwe’s single largest source of electricity, as well as occasional grid system failures due to resource constraints, also contribute to the limited and unreliable supply of energy in the country.

Mr Mhako noted that wind, on the other hand, is a largely untapped resource for energy production, and to fully harness its potential, Zimbabwe needs to invest in research and feasibility studies on its capabilities.

He said IPPs in Zimbabwe often struggle to reach financial closure due to perceived country risks but pointed out that the Government has made strides by offering guarantees against some of the investors’ concerns.

“However, my suggestion is for them to relax the requirements needed to secure these guarantees. This would enable more IPPs to access the necessary financial support, thereby encourage greater private investment in the renewable energy sector.

“We have also seen encouraging tax incentives on the importation of solar goods, which is positive. Streamlining the approval process and providing tax incentives for renewable energy projects would further accelerate the shift to sustainable energy sources,” said Mr Mhako.

Global renewable energy is projected to surpass coal power by 2025, and nuclear energy will account for nearly half of the world’s power generation by 2026.

According to the International Energy Agency forecasts, in 2023, they accounted for less than 40 percent of global energy sources.

The United Nations has pointed out that transition to clean energy will be key to limiting global warming to 1,5 degrees Celsius.

In Africa, several countries have adopted renewable energy policies that are at different stages of implementation, as they transition from fossil fuels, which have contributed significantly to climate change.

Zimbabwe, on its part, has two energy policies, effectively setting the tone for the development and sustainable generation of renewable energy.

The National Renewable Energy Policy and the Biofuels Policy of Zimbabwe seek to promote optimal supply and utilisation of clean energy for socio-economic development.

The policies also seek to promote investment in renewable energy production by providing specific incentives, while establishing market-oriented measures and regulatory instruments for the sector in Zimbabwe, covering solar, hydro, wind, geothermal and biomass areas.

Investment analyst Mr Batanai Matsika said what is mainly impacting the raising of green energy funding were issues involving tariffs.

The biggest off-taker for the projects is the Zimbabwe Electricity Transmission and Distribution Company (ZETDC).

“I am working on a number of these projects; there are green energy projects doing capital raising for IPPs and the major issue is around the tariffs because most of these projects’ off-taker is the ZETDC, the national grid parastatal.

“But the way most of these power purchase agreements (PPAs) are set is that the tariff is set in US dollar terms but payable in the local currency. So, there is a currency risk around most of the projects and that is why they are pushing for USD-based PPAs because it then takes away the currency risk,” said Mr Matsika.

According to the Zimbabwe Energy Regulatory Authority, renewable energy technologies now dominate the licensed power projects, in line with the country’s quest for cleaner and more sustainable power supplies by the year 2025.

Zimbabwe has no shortage of sunlight, which positions the country well for the push for green energy use.

The country’s installed capacity of renewable energy, excluding large-scale hydropower, is expected to increase from about five percent in 2017 to about 27 percent in 2030.

Mr Victor Utedzi, the director of African Transmission Corporation, which has developed several clean energy projects in Zimbabwe and the region, recently said, for the country to meet some of the green energy targets, which entails the establishment of small hydropower plants, photovoltaic (PV) solar and wind plants, substantial investments are required.

He said local financiers should take the opportunity to fill the renewable energy gap, which has the potential for returns in the long run. According to a Zimbabwe Power Company energy production update, IPPs are feeding an average of 55MW into the national grid.

Diversified financial services group Old Mutual Zimbabwe has been a key player in driving investments in the green energy sector.

The group’s investments in energy are mainly from renewable sources, and the company is targeting generating over 42MW of energy for the national grid through its existing and new projects.

In an interview earlier this year, group chief executive Mr Samuel Matsekete said, in addition to existing projects, the group had a number of new ones that will be brought to the market over the next six months and beyond.

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