To speed up green energy projects, Govt has granted tariff guarantees to these 10 IPPs

Under construction: 5MW Mutirikwi hydro plant, funded partly by Old Mutual

The government has granted tariff guarantees to ten independent power producers, with a combined potential of 271MW, as it moves to speed up the implementation of green energy projects.

Zimbabwe has licensed over 100 IPPs, with the capacity to generate a potential 8,000MW. However, IPPs – including coal power producers – are currently contributing just over 2% to grid power. The low success rate is because investors fear losses from low tariffs and the country’s currency crisis. Under its energy support programme, announced in 2022, government hopes to ease investor fears by giving them an economic tariff, allowing them to charge in US dollars, and making it easier to repatriate profits.

The ten producers have been given a tariff of US 9 cents a kilowatt hour. The projects are Mutorashanga Indo Africa Solar with a capacity of 10MW, Guruve Solar Energy Project (5.5MW) De Green Rhino Solar (50MW), Equinox Solar (10MW), Murombedzi Solar (10.5MW), Great Zimbabwe Mini Hydro (5MW), Par Valley Energy (50MW), Acacia Energy (50MW), Energywise Vungu Solar (30MW) and AF Power (50MW).

Many of the projects are already under construction. Apart from concessions on tariffs, the companies will also be guaranteed buyers for their power.  

“Government is willing to support all the local IPPs through a back-to-back liquidity support structure whereby the IPPs can have an arrangement with relevant exporting private off-takers to off-take power, which will enable seamless servicing of the obligations,” the Ministries of Energy and Finance said in a recent joint statement.

Zimbabwe has engaged the Africa Legal Support Facility, an agency of the African Development Bank, to develop implementation agreements.

In 2022, ZESA executive chairman Sydney Gata accused the Ministry of Finance of being slow to issue guarantees to IPPs. Currency risk, he said then, was one of the major factors hurting investment.

“Banks will not come to the table. How can I lend in US dollars to buy equipment that is sold in US dollars to produce electricity that will be sold in local currency?” Gata said.