Financing closes for Mozambique’s first large-scale PV project

Mozambique’s first utility-scale solar project will deliver electricity to the national grid under a 25-year power purchase agreement (PPA) with state owned utility, Electricidade de Mozambique. Debt financing for the project is provided by the International Finance Corporation and the Emerging Africa Infrastructure Fund.

Scatec Solar estimates the project’s total cost at US$76 million, with $14 million funded through equity, a $7 million grant and $55 million raised through project debt. The company is providing EPC and O&M services, and is a 52.5% equity partner in the project. Other partners in the project are KLP Norfund Investments (22.5%) and Electricidade de Mozambique (25%).

The International Finance Corporation provided project debt of $19 million, while a further $19 million came in the form of a concessional loan from the Climate Investment Fund. The Emerging Africa Infrastructure Fund provided a $17 million syndicated loan – to be managed by Investec Asset Management, which is part of the Private Infrastructure Development Group (PIDG), as well as a direct grant of $7 million.

“EDM is very pleased that the Mocuba Solar IPP project has reached financial close through a well-structured public-private partnership between EDM, Scatec Solar and Norfund, and with excellent support from IFC and EAIF as lenders, as well as the Government of Norway,” said EDM's Chairman and CEO, Mateus Magala. “Experiences gained with the Mocuba project is invaluable in shaping Mozambique's renewable energy future.”

Mozambique has so far benefited mainly from off-grid solar and microgrid system’s bringing power to the country’s more remote regions. It has plans, however, to modernize its grid to allow access more renewable energy projects to connect, and to initiate an auction mechanism for renewables with the help of the EU.