Support to the development of a low carbon Public Private Partnership for the generation of electricity in Mozambique

Developing the access and supply of electricity in the country are the upmost objectives of Electricidade de Moçambique (EDM), the State-owned Mozambican utility. It is responsible for generating, transporting, distributing and commercialising electricity in the whole country to more than 1.3 million of consumers. In line with the National Strategy for Renewable Energy 2011-2030, Mozambique and EDM are willing to develop renewable energy projects in the country to meet the fast-growing demand in poorly-supplied areas of the country and to sell energy to the neighbouring countries.

The Project will provide Technical Assistance to the Mozambican authorities at the level of EDM and the Ministry of Mineral Resources and Energy, and will help structuring adequate tools to attract private financing: design and implementation of a new PPA scheme and of the off-take risk guarantee mechanism. These tools should enable EDM to structure its participation to some of these strategic power generation projects. In this regard, it is a crucial step for EDM and Mozambique that will enable them to actually face the above mentioned challenges.

The global objective of the project is to support the Government of Mozambique and Electricidade de Moçambique (EDM) in the implementation of a sustainable energy strategy, compliant with the total reduction of about 76.5 MtCO2eq in the period from 2020 to 2030, as indicated in the INDC of Mozambique.

By encouraging the diversification of the national electricity mix, the project will also help to reduce vulnerability to climate change (droughts and their consequences on hydropower production essentially).

 The Technical Assistance from EU-AITF will be used to support EDM in their capacity to develop PPPs and work together with private partners in this scheme. In particular, the grant will help to:

- Identify and launch feasibility studies for the implementation of solar and wind farm projects in Mozambique.

- Structure new financing schemes allowing EDM to attract private investors to develop renewable energy projects at lowest cost.

- Establish the necessary legal framework and procurement process to facilitate the development of PPPs. An analysis of the existing legal and regulatory framework has shown that it currently results in increased cost for renewable energy projects.

- Strengthen EDM's overall project management skills.