Scatec Solar, KLP Norfund Investments and Electricidade de Mozambique (EDM) have closed debt financing and initiated construction of a 40 MW solar plant in Mozambique. The project debt financing is provided by IFC and the Emerging Africa Infrastructure Fund.
This is the first large scale solar plant to be built in the country and represents an important step in realizing Mozambique’s ambition to increase renewable power generation in its energy mix.
The partners signed a Power Purchase Agreement (PPA) for the solar plant in October 2016. The PPA secures the sale of power from the plant over a 25-year period to the state-owned utility Electricidade de Mozambique (EDM).
The 40 MW plant is located close to the city of Mocuba in the Zambézia Province, and is expected to deliver 79,000 MWh per year of much needed electricity to the northern regions of Mozambique. The plant will deliver power to the national grid and produce enough energy to serve about 175 000 households.
The project costs are estimated at US$ 76 million, funded through equity of US$ 14 million, a grant of US$ 7million and project debt of US$ 55 million. Equity partners are Scatec Solar (52.5%), KLP Norfund Investments (22.5%) and EDM (25%). Scatec Solar will deliver EPC services, as well as O&M and Asset Management services to the power plant.
“Closing debt financing for the Mocuba solar power plant is another great achievement for Scatec Solar and our partners. The project is an excellent example of how private public partnerships can deliver renewable energy and support economic growth” says Scatec Solar CEO, Raymond Carlsen.
IFC provided project debt of US$ 19 million on its own account together with a concessional loan from the Climate Investment Fund of the same size and a syndicated loan of US$ 17 million from the Emerging Africa Infrastructure Fund (EAIF), managed by Investec Asset Management, which is part of the Private Infrastructure Development Group (PIDG). In addition, EAIF is directly providing a US$7 million Viability Gap Funding grant for the project raised from the Technical Assistance Fund of the PIDG.
The project is a result of strong partnership between the governments of Norway and Mozambique. The Norwegian government has provided economic support as well as technical expertise to the energy sector in Mozambique for several years.
Scatec Solar is a leading developer and owner of large scale solar in emerging markets.