Page 5 - AfrElec Week 07

AfrElec COMMENTARY AfrElec
investment and technology comes with a “debt trap,” as critics have named Beijing’s policy of signing opaque investment contracts that expose African countries to heavy Chinese political influence.
Africa is a key target for China’s Belt and Road Initiative (BRI) to strengthen economic influence.
Renewables
As well as coal, Mozambique has other power options.
Nconsi itself has interests in solar renewa- bles and battery storage, and in October 2019 announced it would invest in an off-grid solar battery project.
Meanwhile, US DFI Power Africa is sup- porting 100 MW of solar and 120 MW of wind capacity, as well as long-range domestic and export power lines.
Other donors such as the IFC (60 MW) and the French Development Agency (80 MW) are also backing renewables. The IFC backed Mozambique’s first 40-MW utility-scale solar project, which opened in August 2019.
Gas
Another option for Mozambique is to use its gas riches.
Meanwhile, the country’s IPP-run gas-fired thermal power plants (TPPs) run on the coun- try’s current gas production, which is otherwise exported by pipeline to South Africa.
EDM owns and runs on an IPP basis the 106-MW Central Termica de Maputo and the 175-MW Central Termica de Ressano Garcia (CTRG), in which SASOL has a 49% stake. These are supplied by gas production at the Pande and Temane fields.
The country has also signed on to Karadeniz Holding’s pioneering, but short-term, 48-MW Powership floating power solution.
Elsewhere in Mozambique, the country’s LNG industry is advancing, and while most production is earmarked for export, some may be diverted to domestic buyers such as power generators.
For example, South African gas developer
Gigajoule aims to develop the Central Termica de Beluluane (CTB) near Maputo, and intends to source LNG from international markets until domestic production, for example at Total’s Mozambique LNG project, comes online.
In October, ExxonMobil-led MRV awarded the $9.2bn EPC contract for the 15.2mn tpy Rovuma LNG project. Production is forecast to start in 2025.
The country also has the Total-run Mozam- bique LNG and Eni’s Coral South LNG schemes in the offing. This could give Mozambique an LNG output of 31.38mn tpy, equivalent to about 10% of current global production capacity.
Looking ahead
Coal stands as one of many fuels for Mozam- bique’s gas-fuelled energy boom.
As well as meeting domestic demand, the country’s power generators will be looking in the long term at the export potential offered by South African Power Pool (SAPP) and even the East African Power Pool (EAPP).
However, the global investment community has begun 2020 by making grand declarations against fossil fuels emissions, with BlackRock CEO Larry Fink claiming that climate risk is investment risk.
Meanwhile, the cost of renewables is falling, and in some Asian countries is already under- cutting coal. This means developing countries such as Mozambique are facing the danger that they will lock themselves in to 25-year PPAs that will quickly become far more expensive than renewables.
Ncondezi has not yet announced the tariffs it will offer EDM, but the dynamics of the global solar market mean that it will not be able to com- pete with solar or wind in the long term.
“China is pushing its out-of-date coal power technology on developing nations,” said Simon Nicholas, energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA). Coal technology will prove to be more and more costly, he said.
“Mozambique needs to invest in technolo- gies of the future, not those of the last century,” he urged.™
Week 07 20•February•2020 w w w. N E W S B A S E . c o m P5