HomeBusiness DigestGovt mulls US$14 billion renewable power projects

Govt mulls US$14 billion renewable power projects

CABINET has adopted an ambitious renewable energy project to be developed over a 10-year period at an approximate cost of US$14 billion, through which Zimbabwe will produce up to 2 100 megawatts per day by 2030.


According to a new national renewable energy policy document seen by the Zimbabwe Independent, the government is seeking to invest heavily in solar, gas and wind energy generation projects.

The policy document, presented to cabinet a fortnight ago by Energy and Power Development minister Fortune Chasi, also seeks to give national project status to all renewable power projects to facilitate their exemption from customs and excise regulations.

This would, in turn, allow developers to import certain renewable energy systems used in power generation plants at competitive rates.

The policy document also seeks to ease the regulation of power production to allow for independent power producers to participate in small hydro power plants, biogas and solar, who will sell electricity to the Zimbabwe Electricity Supply Authority (Zesa).

Zimbabwe is grappling with a huge power deficit which has seen Zesa resorting to rolling out massive load shedding, crippling the last remaining factories and mines.

Local generation capacity falls far short of the required 2 200 megawatts, which also stands above the country’s installed capacity of 1 900MW. Currently, the country’s five hydro and thermal power plants produce about 1 300MW.
Zimbabwe is importing power from Mozambique and South Africa.

Chasi confirmed the development in an interview.

“We have received huge expressions of interest from reputable investors from around the world and this gives us optimism that programme will give us the results we need,” Chasi said.

“The national energy policy seeks to provide an overall framework for optimal supply and utilisation of energy in general and ensure access to modern energy services for the country’s socio-economic development. It is an initiative aimed at securing the long-term energy needs of the country in a sustainable way.

“So basically, the policy was developed by my ministry to promote and drive investment into the sector by overcoming a number of barriers that currently exist in the energy sector. The whole undertaking should cost around US$14 billion spread over the next 10 years.”

According to the document, the policy is in line with guidelines set by the United Nations Convention on Climate Change (UFCCC) and seeks to respond to the demand-supply ratio, grid absorption capacity and the ability of utilities to pay for renewable electricity.

The country currently relies mostly on non-renewable fossil fuels like wood, coal and petroleum which are globally condemned for their high emission of greenhouse gasses that severely damage the environment.

“The policy aims to achieve installed renewable energy capacity of 1 100MW (excluding large hydro), or 16,5% of the total electricity supply by the year 2025 and 2 100MW (26,5%) of total electricity supply by year 2030,” the policy document reads.

“Other additional alternative energy programmes include institution and domestic biogas, mini solar grids and solar water pumping systems. These targets will enable the country to meet the current and projected energy supply deficit as well as meet the greenhouse gas emissions reduction objectives.”

The targeted main source of funding is the cash-rich insurance sector.

“The policy aims to promote investment in the renewable energy sector by providing specific incentives. It recommends providing national project status to all renewable energy projects,” the document states. “The ministry will recommend renewable energy projects on a case-by-case basis to the ministry responsible for finance for according prescribed asset status so as to unlock insurance and pension funding.”

It further recommends the setting up of a separate fund to be administered by the Infrastructure Development Bank of Zimbabwe (IDBZ).

“The policy recommends to explore both domestic and foreign financing resources. The policy also recommends the setting up of a separate fund called Green Energy Fund of Zimbabwe,” the document reads. “This fund will be used in promoting, developing and extending financial assistance for setting up of projects relating to new and renewable sources of energy and off-grid sources. It shall be managed by the IDBZ. It also encourages renewable energy projects to tap funding from pension funds, insurance funds and bond markets through prescribed asset status mechanism among others.”
However, the government has been criticised for coming up with excellent development plans which are either never implemented or are often derailed by bureaucratic corruption.

The botched 100MW Gwanda solar power plant is one good example. The tender for the establishment of the plant was given to Wicknell Chivayo’s company Intratrek, which did not have a track record in undertaking projects of that magnitude.

As a result, the project hit snags and is yet to deliver, despite Chivayo having been given US$5 million in advance payment.

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