Mozambique’s $80 Billion Energy Plan to Tap Zambezi’s Power

Antony Sguazzin
·3 min read

(Bloomberg) -- Mozambique is seeking to become one of Africa’s biggest hydropower producers and launch a green hydrogen industry.

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The government plans to add 14,000 megawatts of hydropower capacity, with the bulk of that developed between 2030 and 2040, the government said in a 60-page Energy Transition Strategy seen by Bloomberg. A hydrogen program will be set this year, it said in the document, which hasn’t been released publicly.

The proposal is a blueprint of how one of the world’s poorest nations wants to harness its green-energy potential to boost growth and industrialize what, half a century after attaining independence from Portugal, remains a largely impoverished agrarian economy.

“Mozambique has vast energy assets,” said the government, which puts the cost of the transition at $80 billion by 2050. “The strategic use of these energy assets can accelerate the transition to a middle-income industrialized economy.”

The energy transition plan, while ambitious, bears similarities to those announced by South Africa, Senegal, Indonesia and Vietnam, which have collectively attracted funding pledges of $47 billion from some of the world’s richest nations.

At the heart of the proposal is the Zambezi River, Africa’s fourth longest. Already the country operates the 2,075 megawatt Cahora Bassa power plant on the river and a group led by TotalEnergies SE and Japan’s Sumitomo Corp. is building the 1,500 megawatt, $5 billion Mphanda Nkuwa dam.

In the decade to 2040, Mozambique aims to add 9,000 megawatts of hydropower and more the decade after, by attracting investment into plants, similar to the model it has followed with Mphanda Nkuwa, according to the document.

The government, which repeatedly stressed the need for private investment as it can’t fund the programs itself, also wants to establish industrial parks to use the clean energy.

Billions of dollars in expected revenue from natural gas projects in the north of the country are anticipated to transform the economy, but construction has been delayed by an Islamist militant insurgency. Companies including Eni SpA and TotalEnergies are developing or already operating projects worth about $30 billion.

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Such an expansion would allow Mozambique to compete with Ethiopia and the Democratic Republic of Congo in the provision of power from hydro resources. Ethiopia built a giant hydropower plant on the Blue Nile, while Congo has long proposed constructing Grand Inga, which would potentially be the world’s biggest hydro project.

One of the initial steps is to keep the 1,150 megawatts it sells to South Africa from Cahora Bassa when that contract ends in 2030.

While exports won’t be completely halted, the aim will be for Mozambique to use as much of its own resources to drive development and electrification, with 51% of its people having access to power now compared with 26% in 2017. Any export deals agreed to will be shorter and at better terms, the government said.

The southeast African nation also wants to extend its electricity grid, which in its current state prevents hydropower from Cahora Bassa reaching the capital, Maputo. An expansion would allow it to connect solar and wind plants. Initial costs are estimated at $2.54 billion.

Overall the target is to add 7,500 megawatts of solar power and as much as 2,500 megawatts from wind.

Other programs to decarbonize the economy include discouraging the use of firewood and charcoal for cooking by connecting more people to the grid and making liquefied natural gas easily available. Public transport will be switched away from diesel to cleaner alternatives.

By detailing its plans, Mozambique is joining several African nations trying to attract investment into renewable energy. South Africa and Uganda are among those that have drawn up programs to transition their energy industries away from fossil fuels.

--With assistance from Matthew Hill.

(Updates with gas investors in 9th paragraph)

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