Renewable energy firm Centragrid, which became only the second Zimbabwean company to feed solar energy into the national grid last year, plans to upgrade its Nyabira plant to 25 megawatts by October 2021.
The plant, built by China’s Sinohydro 35 kilometres west of Harare, started sending 2.5MW – its current output – into the grid in August 2019.
“The next phase that we’re now going into is to expand this from 2.5MW to 25MW, using the exact same design that you see here,” Centragrid founder Victor Utedzi said at the solar farm on Monday.
“We are pushing so that within the next two to three months we should start construction, and once we start, it’s just nine months, then we’re done.”
Victor Utedzi, Centragrid founder and director.Utedzi says Centragrid will spend US$30 million, raised locally and offshore, to bring the plant to 25MW capacity.
He said although the Nyabira project had been spared the full impact of the foreign currency crisis, since contractor Sinohydro accepted local funding, imported essential machinery and equipment still required foreign currency.
Centragrid was also limiting its funding options for the expansion project to local sources as the forex crisis limits local businesses’ capacity to repay external loans.
Currency swap
Zimbabwe signed a currency swap deal with China in January, following the visit of Chinese foreign affairs minister Wang Yi.
“The beauty about what we have is that we have a contractor who is prepared to take local financing, which is a very uniquely attractive position, for us. I don’t think it’s available for everyone, but it’s important for us.”
The currency swap arrangement makes it easier for Chinese businesses to move their funds out of Zimbabwe through a match-and-swap mechanism with investors looking to inject funds into the country.
Part of the first block of Centragrid’s planned 25MW Nyabira solar plant, which is already producing 2.5MW of power and feeding the national grid.“To date, we have fed more than 2.1 gigawatt hours of electricity into the national grid. That’s a lot of electricity for a lot of homes,” Utedzi said.
“What it actually means is that in your homes, at your children’s school, your church, creche, factory, wherever, clinics, a part of that electricity that comes from the national grid is actually coming from this power plant.”
London-listed PGI Group’s Nyangani Renewable Energy was the first independent power producer to feed solar power into the national grid, when its 2.5MW Mutoko plant went live in January 2018.
Zimbabwe, which for years has seen under-investment in power generation, is currently producing just over 1,000MW, about half of its peak demand.
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The government is currently pushing for renewable energy projects such as solar plants, which have a quick turnaround time and whose costs continue to fall.
The control room at Centragrid’s Nyabira solar power plant.As at December 2019, solar plants accounted for 40 of the 74 independent power projects licenced by the Zimbabwe Energy Regulatory Authority (Zera), with potential to generate 1,191MW.
Forex may dim solar projects
While Utedzi praised Zimbabwe’s licencing conditions, he remains concerned that Zimbabwe’s foreign currency shortages might dampen interest in the sector.
“One drawback is that most of the equipment that goes into a plant like this we’ve got to import. Even if we finance with local money, there’s still need for a mechanism to convert that money into US dollars and not just converting, but at market rates, so that you can purchase goods outside,” he said.
“If you’re going to finance from foreign sources, there’s need for a long-term mechanism for repaying that money. These are challenges that are of a national nature, that we must have a discussion about as a country so that we come up with a solution as a country. If we fail to solve these things, we will continue to import power from neighbouring countries. When you import power, you’re also exporting jobs.”
