At the COP28 climate summit in Dubai, Zimbabwe has signed an agreement with UK-backed Africa GreenCo meant to ease the risks that have kept energy investors away from Zimbabwe.
Power utility ZESA also separately announced supply deals with a Swedish company for the building of solar infrastructure to replace its coal-fired boilers, and another contract with a Dubai company to make cables in Zimbabwe.
While Zimbabwe has licenced independent power producers with projects of a potential 7,000MW, investors have stayed away due currency uncertainty and tariff risks, ZESA executive chairman Sydney Gata said at a press briefing in Dubai on Sunday.
Under the System Operations and Wheeling Agreement signed between GreenCo and ZESA, GreenCo will provide up to 18 months’ cash cover for energy investors. If there is default by ZESA or other involved offtakers, GreenCo will step in to cover that risk, Gata explained.
“What GreenCo has come to do is to assist both ZESA and Government by providing a mezzanine guarantee structure where they will issue commercial securities to assist IPPs to reach markets.”
Cathy Oxby, GreenCo’s Chief Commercial Officer, said: “As the role of utilities evolves, it is vital to put in place arrangements which enable new market participants to utilise the existing grid infrastructure while remunerating utilities fairly for the essential services they provide and the costs they incur in operating and maintaining the network.”
GreenCo is funded by InfraCo, part of the Private Infrastructure Development Group (PIDG), a venture jointly owned by the UK, Netherlands and other countries. Africa GreenCo’s model is to manage risks for investors by committing to buy power from IPPs and selling it to either private customers or trading it on markets in the regional pool, SAPP.
Also on the sidelines of COP28, Sweden’s Absolicon announced that it is to build a €4 million factory to make solar collectors in Zimbabwe. Sollar collectors are devices that collect solar energy to heat water, making steam to turn turbines. ZESA plans to replace its 1,400 coal-fired boilers with the new technology, says Gata.
“The plans for a production line in Zimbabwe show that the demand for renewable and secure energy supply is global,” says Joakim Byström, CEO of Absolicon.
ZESA also announced a US$70 million joint venture with the UAE’s QLV, owned by Sheikh Ahmed Al-Qassimi, to manufacture cables in Zimbabwe.