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Scatec Solar and Norfund sign agreement for Mozambique solar plant

Scatec Solar and Norfund sign Power Purchase agreement in Mozambique. (Image source: APO)

Scatec Solar and Norfund have signed a power purchase agreement (PPA) for Mozambiques first large scale Solar Plant

Scatec Solar and Norfund's PPA secures the sale of solar power over a 25-year period to the state-owned utility Electricidade de Moçambique (EDM).

In addition to the new 40MW plant in Mozambique, the company operates 200MW of solar power through plants in South Africa and Rwanda and has new projects under development in Mali, Nigeria and Kenya.

The agreement was signed at a ceremony in Maputo in the presence of Børge Brende, the Norwegian minister of Foreign Affairs; Letícia Klemens, the Mozambican minister of Mineral Resources and Energy; and Dr. Mateus Magala, chairman & CEO of EDM.

The project is the first large scale solar plant to be built in the country and represents an important first step in realizing Mozambique’s ambition to increase renewable power generation.

The plant is located close to the city of Mocuba in the Zambézia Province and is expected to deliver 77,000MWh of electricity per year to the northern regions of Mozambique. The plant will also deliver power to the national grid and produce enough energy to serve about 175,000 households.

A shareholder agreement was also signed between KLP Norfund Investments AS, Scatec Solar and EDM as part of the deal. The required project investment is estimated at US$80mn.

Scatec Solar (52.5 per cent), KLP Norfund Investments (22.5 per cent) and EDM (25 per cent) will provide equity, while the International Finance Corporation (IFC) and the Emerging Africa Infrastructure Fund intend to provide project finance debt. The parties are targeting financial close and a start to the solar plant construction in the first quarter of 2017. 

Scatec Solar CEO, Raymond Carlsen said, “This is an excellent example of how private public partnerships can deliver renewable energy and support further economic growth in Mozambique. EDM and the government of Mozambique have demonstrated strong leadership in taking this project forward and it paves the way for further investments in renewable energy in the country.

Norfund CEO, Kjell Roland added, “Access to reliable energy is a prerequisite for development. Only 3 per cent of the world’s electricity is generated in Africa, although 15 per cent of the world’s population lives here. Clean energy is a focus investment area for Norfund, and we appreciate being a partner in this first independent solar power producer project in Mozambique together with EDM and Scatec Solar."

The Norwegian government has provided economic support as well as technical expertise to the energy sector in Mozambique for several years.

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