Mozambique Renewables: Europe grants €4M for renewables auction mechanism design

A €4 million fund will be used to support an initiative launched by the French Development Agency and the country’s power utility Eletricidade de Moçambique, E.P. (EDM). 

The European Union will provide the government of Mozambique with €4 million in funds to support the initiative Projeto de Promoção de Leilões para Energias Renováveis (PROLER), which is aimed at creating a regulatory framework and an auction mechanism for the development of large-scale solar and renewable energy projects.

In a press release published by several Portuguese media outlets, the local government said that the initiative is being implemented by the French Development and Mozambique’s state-owned power provider Eletricidade de Moçambique, E.P. (EDM), and that the EU funds will be allocated through the Africa Infrastructure Trust Fund.

More details on when and how the new auction scheme may be implemented were not revealed.

With this new cash injection, the African country can move forwards with its renewable energy plans, which received another strong push in late September, when the World Bank announced it had approved a $150 million loan for EDM. The funds, the company said, will be used to reinforce its grid as well as to increase the capabilities of its transmission and distribution network. This improvement of the grid is expected to increase the reliability of power supply, the government said, but it may also be the required step to open the country’s grid to a larger integration of solar and renewable energy power plants.

In Mozambique, there is currently also a large-scale solar project under development by Norwegian solar developer Scatec, Norway’s development finance agency Norfund, and power utility Electricidade de Moçambique (EdM). Power generated by the installation will be sold to EdM under a 25-year PPA. The plant will be constructed close to the city of Mocuba, Zambezia province, and represents the country‘s first step towards solar deployment.

The government of Mozambique, on the other hand, is also supporting off-grid solar in rural areas. In mid-September, Mozambique’s Fundo de Energia (FUNAE), a public institution under the Ministry of Mineral Resources and Energy, said it will provide $500 million for an electrification program based on hydro and solar energy, as well as PV microgrids.