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IPPs now producing 135MW as ZERA cancels 8 licences

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IPPs now producing 135MW as ZERA cancels 8 licences. This comes as continent-wide challenges remain in driving private sector participation in building generation, transmission, and distribution capacity. These include a challenging financial ecosystem for commercial capital, in which commercial banks are often crowded out by multilateral banks on both loan tenure and interest rates.

The Zimbabwe Energy Regulatory Authority (ZERA) says only 19 independent power producers (IPPs) are operational from the 88, which have been licenced to date while eight licences were cancelled for failed take off.

Processes related to project selection, negotiation of Power Purchasing Agreements, securement of land and the provision of Letters of Support remain inconsistent and difficult to navigate, leading to increased costs and time delays, especially for private off-grid IPPs.

The Zimbabwe Stock Exchange tried to set up a board to afford independent energy companies to raise capital in 2019 but currency issues, as well as the economic viability of tariffs, were a hindrance. CEO Justin Bgoni, however, said the project would be resuscitated in 2021 with an offer to list on the Victoria Falls Stock Exchange, which would enable companies to raise money in hard currency.

According to ZERA, the IPPs have a current output of 134.77 megawatts up from 130MW generated by 13 independent producers in 2018. The country’s power utility, Zimbabwe Power Company, is currently producing around 980MW-1200MW against a national demand of 1 500MW.

Of the total IPPs, 65 projects were licensed as of 2017 though only five of those independent power projects are operational. According to the statistics availed, the majority of operational IPPs are located in Manicaland Province while others are shared across the country. They are mainly hydro, solar and ethanol-powered.

These include but not limited to Hauna Power Station; Claremont, Duru and Nyamhingura mini hydros, Green Fuel, Pungwe B and C Power Stations, Nottingham Estate, Riverside Power Project, Kupinga Renewable Energy in the eastern region as well as Hippo Valley Estates and Triangle Estates in Masvingo Province. Some of these projects have attracted solid local and international funding.

Manicaland’s mountainous terrain has been cited as conducive for off-grid and micro hydro mini-grids. “Ten of the operational IPPs are located in Manicaland, two in Masvingo, three in Harare, namely Econet, Standards Association of Zimbabwe and Schweppes; one in Mashonaland East, two in Mashonaland West and one in Matabeleland South,” said ZERA chief executive officer Edington Mazambani.

Mazambani said the output of IPPs in the eastern region is 51.18MW while that of those in other parts of the country is 83.59MW. Mazambani said eight licences had been withdrawn due to failure to implement projects in terms of Section 51 of the Electricity Act (Chapter 13 :19).

He acknowledged that most IPPs were struggling to take off after licensing – a setback he attributed to the capital-intensive nature of the projects. However, take-off times vary depending on technology and the time that it takes the project developer to reach financial close.

“The main challenge has been access to finance. Investment in the power sector requires huge sums hence the IPPs are yet to secure firm funding for their projects,” Mazambani said.

Harava Solar Park – a 20MW plant was anticipated to start feeding into the national grid at Dema substation in August but was not spared by similar setbacks. “We got delayed due to Covid-19 and foreign currency, but we are slowly progressing,” said Harava Solar co-founder and chief executive officer Ainos Ngadya without giving timelines.

Source – Bulawayo24

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