The Zimbabwean Government has proposed incentives to accelerate nearly 1,000 MW of privately owned solar energy projects. The overall project, worth about $1 billion, is a drive toward the country’s target of generating 1,100 MW of renewable energy by 2025. This has recently slowed down due to the lack of investments from private project developers.
The Finance Minister of Zimbabwe, Mthuli Ncumbe, said the proposed projects come at a time when Zimbabwe scrambles to plug an electricity deficit that endangers and compounds its economic woes. The country is currently producing a third of its total peak power demand of 2 GW.
Zimbabwe is undergoing up to 18 hours of daily power cuts as its main Kariba hydroelectricity plant is cutting power generation due to its low water levels. The aging thermal power plants of the country are prone to frequent breakdowns, impacting businesses and household activities.
The power tariffs in this Southern African country have also failed to keep track of inflation, which was 255% in last month. Many of the independent power producers (IPPs), which require foreign cash to finance the development of solar energy projects, were unable to remit dividends and service foreign loans since there is a current shortage in the country’s foreign currency.
The Finance Minister has announced the guaranteeing of viable tariffs and power purchase agreements (PPA) to diminish the concerns of the IPPs. According to Ncube, a bankable government agreement with an economic tariff is an important element for the successful implementation of solar power projects.
The Finance Minister also said that the Reserve Bank of Zimbabwe would also guarantee the payment of dividends and foreign loan repayments to investors in the energy sector. The guarantees would cover a total of 27 independent solar power projects with sizes ranging from 5 MW to 100 MW, with a cumulative capacity of 1,000 MW.
