Zimbabwe is set to introduce feed-in tariffs (FITs) in an effort to boost greater private sector power generation from renewable energy sources.
The move comes as the southern African country struggles to meet growing energy demand. According to Zimbabwean newspaper The Standard, energy demand in the country is currently at between 1,900 and 2,200 GW while actual power generation stands at 1,119 MW.
Developed by the Zimbabwe Energy Regulatory Authority (ZERA), the new policy structure would make it mandatory for energy companies responsible for operating the national grid to purchase electricity from renewable energy sources.
ZERA Chairman Canada Malunga said last week that the FITs would apply to renewable energy technologies such as solar power, small hydropower plants, biomass, bagasse and biogas. The program will provide a guaranteed purchase price for a fixed duration, ensuring an appropriate return on investment for developers.
ZERA is currently reviewing relevant operational and capital costs of current renewable energy projects and determining the appropriate tariff levels and structures, according to The Standard report.
The Zimbabwe Electricity Transmission and Distribution Company, a subsidiary of Zesa Holdings, is currently the most prominent national grid operator in Zimbabwe.
Patson Mbiriri, permanent secretary for Energy and Power Development, said the adoption of the FIT program was a government response to stimulate renewable energy use in the country.
"Our tariffs should be based on costs. This is on the assumption that it is better to have [renewable] power than have none at all," he said, quoted by The Standard.
"Government is committed to supporting renewable energy proposals and projects with minimal bureaucracy. The extent to which tariffs are affordable is the extent to which the economy is moving," he added.
The government identified biomass, hydropower and solar as the short to medium-term strategy to address the energy deficit.
Zimbabwe’s tariff regime is set at an average of US$0.09 per unit.
More than a dozen African nations are currently implementing or investigating renewable energy procurement mechanisms, among them South Africa, Kenya, Botswana and Namibia.
While the advantages of the FIT program may include reduced costs and a lower financial risk for private investors, it also means consumers will be burdened by a higher retail price for electricity. In addition, The Standard notes that there may be poor back up service in remote rural areas, limited local experience and expertise with some technologies, lack of awareness and inadequate funding for the sub-sector.