Game-changing generation assets for Mozambique

Mozambique

Samir Salé, country and business development director of Globeleq, talks to The Energy Year about fast-tracking renewables projects in Mozambique and the potential of solar generation and battery storage in the country’s energy mix. Globeleq develops, operates and builds utility-scale power plants in Mozambique and across Africa.

What were the keys behind Globeleq’s fast rise in Mozambique’s energy sector?
Globeleq entered the Mozambican market in 2021 and, in just three years, our Mozambican business is on track to become our second-largest globally, behind Côte d’Ivoire. Achieving the financial close for the 450-MW Central Térmica de Temane (CTT) gas project was a major win, allowing us to begin construction in 2022. This project, valued at USD 650 million, is part of a larger value chain investment of about USD 2 billion.
We prioritise building trust with our partners and delivering on our promises. We focus on strategic partnerships with utilities such as EDM, recognising that a sustainable electricity sector is crucial for our long-term success.
Our solar power plant in Cuamba was inaugurated in September of 2023. It marked another milestone for Globeleq and Mozambique, as it was the first IPP to integrate a utility-scale energy storage system. Storage capacity helps EDM meet demand peaks and manage the network efficiently, so we are excited about Cuamba’s role in the generation mix and are exploring other battery storage deployment opportunities.

Do you expect energy storage systems will become more prevalent in years to come?
Globeleq sees battery storage as a key technology for Mozambique’s future. Storage costs are expected to continue decreasing, so those systems will become more competitive and will be able to contribute more.
Globeleq envisions a future where industrial customers can install solar generation capacity and battery storage to meet part of their needs while continuing to rely on the EDM network for the remainder. This hybrid approach would enhance both sustainability and operational resilience by providing backup power in case of disruptions.

How does Globeleq help Mozambique’s energy transition goals and EDM’s operations?
Globeleq collaborates with EDM on two key objectives. First, to ensure that Mozambique has reliable and cost-effective power generation capable of meeting its 2030 electrification goals. Second, to establish Mozambique as a regional power supplier of choice.
South Africa has a critical shortage of electricity, and Zambia and Zimbabwe also require power. There is a significant opportunity for Mozambique to increasingly become a power exporter. One of the big challenges of Mozambique is its size and shape, which make the transportation of electrons across the country quite expensive. Exporting electricity would bring foreign currency that can support investments in domestic transmission and distribution infrastructure.
The Naamacha wind farm project, located near the grid’s edge and close to power-hungry Eswatini and South Africa, will be a strategic addition towards this goal. Wind generation peaks during the morning and evening, which aligns perfectly with the periods of highest electricity demand. Having generation in that area will allow EDM to sell power at a high price during peak periods.

Namaacha will be the first grid-ready wind facility in the country. Did you face difficulties in securing funding?
We use standard project finance arrangements in our projects. Our experience has been that many financiers struggle to find appropriately structured renewables projects to fund, so there is funding available. Namaacha, being the first wind farm in Mozambique, attracted significant attention from potential lenders.
What was more challenging was finding the right scale and network integration approach. Since wind power is intermittent, EDM needed to be reassured that its network could receive and efficiently dispatch intermittent power.
In addition to the grid integration studies, we also conducted a demand study, negotiated a tariff with EDM, agreed to it with the lenders and negotiated a concession with the government, among other things.
We expect to reach a financial close by Q1 2025 and hope to start construction then. Construction will last about 24 months, so we should be in operation by Q1 2027. A new transmission line will be linked to the project and a substation will be upgraded to receive the power, so the project will also reinforce the grid. It all ties in with our objective of strengthening EDM’s network.

What is the impact of the Mocuba solar plant as the latest addition to your portfolio in Mozambique?
Globeleq seeks a balanced portfolio that incorporates both gas-to-power and renewable energy sources. The Mocuba solar plant presented a good opportunity for expansion because it was already operational and EDM’s experience with the facility was positive. We are working with EDM to potentially double Mocuba’s generation capacity and add battery storage, strengthening the grid in Mozambique’s central region.
Solar technology has become commoditised. Each plant needs to be optimised for the irradiance and terrain at the site, but they all have similar technology, such as inverters and trackers, to seek optimised production. The more you commoditise the technology, the cheaper it becomes and the easier it is to maintain, and we expect to benefit from this process going forward.

What are the key factors that need to be present for renewables projects to succeed in Mozambique?
For projects to be successful, there needs to be a clear path to revenue generation, which greatly facilitates bankability, and a stable business environment free of shocks from unexpected regulatory changes, land ownership disputes or abrupt changes to licensing requirements. Mozambique’s investment climate needs to remain predictable, not just in the electricity sector, but also across industries such as tourism, logistics and agriculture that will drive demand for electricity as the economy grows.
Mozambique is not the lowest-cost location to do business, but it is fairly predictable, and we can see the government’s efforts to try and improve the country’s investment appeal. The country is on a steady path of improvement, and that’s why we continue to push for Mozambican projects for our portfolio when other countries such as South Africa, Kenya and Tanzania are also competing for capital.
Fruitful partnerships also help projects succeed. We have benefited from a supportive ecosystem of stakeholders such as EDM, the Ministry of Energy and Mineral Resources as well as the energy regulator to jointly look for solutions to ensure sustainable investments in the electricity sector.

Where do you see Globeleq in Mozambique in the next five years?
Globeleq aims to double its Mozambican portfolio. Once CTT is complete we envision a second phase to double its capacity. A second development phase will also anchor the extension of the Temane transmission line connecting Maputo, via Temane, to central Mozambique.
In the next three years, we hope to see Temane and Namaacha in operation and reach the financial close on the Temane expansion. By then, we would like to have a second battery storage project under way. We have gone from zero to three assets in three years. In five years, let’s hope we can double that.

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