One of Malawi’s first solar projects has reached financial close after attracting investment volume totalling US$67mn
Initial site works have begun in Nkhotakota, and construction of the first phase is targeted for completion by March 2020. Once complete, the project will add 46MW of clean energy to the local power supply.
Developed by UAE-based Phanes Group (PhanesGroup.com) in collaboration with responsAbility Renewable Energy Holding and the Overseas Private Investment Corporation (OPIC), the project was the result of the first Power Purchase Agreement (PPA) signed with Malawi’s national utility (ESCOM) in February 2019. This was Malawi’s first competitive tender in the power sector, and the PPA is projected to last 20 years.
Phanes Group and its partners were awarded the project in May 2017 following an international tendering process which attracted bids from 21 companies globally. Phanes Group will work closely with its partners throughout the development of the project: responsAbility is supporting with the provision of equity financing, while also taking on the role of co-developer. OPIC is contributing to debt financing, and Natsons is the local development partner.
“This project will empower underserved communities in some of Africa’s poorest regions through access to affordable, reliable, and diversified energy,” commented Tracey Webb, OPIC vice-president for structured finance and insurance.
The Nkhotakota project is part of a push by the Malawian government to use solar power to strengthen the country’s electricity infrastructure. Currently, only 15 per cent of the population has access to power, and the national capacity is estimated at 362MW. The new capacity added will make a significant contribution to the government’s target of increasing power access to 30 per cent of the population by 2030.
The project will also move Malawi away from its traditional reliance on hydropower, which currently comprises more than 95 per cent of the country’s energy mix. This has left the country vulnerable to droughts, particularly considering a recent drop in the water level of Lake Malawi which has threatened the region’s supply of power. The new plant will address this challenge and play a critical role in securing Malawi’s daytime electricity supply.
