This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 10/16/2019

Overview

 2016e2017f2018f2019f2020f
Total Generation TWh16.6116.0616.5517.1517.44
Total Consumption TWh14.315.217.518.519.6
Total Capacity MW4185.24185.94530.96036.4-
Total Exports MW338.7----
Total Imports MW223.5----
Source: BMI and Mozambique National Institute of Statistics

Mozambique has the largest power generation potential of all Southern African Countries; it could generate 187 gigawatts of power from its coal, hydro, gas, and wind resources, excluding solar.  Most of the power currently generated is from hydroelectric projects.  However, coal, gas, and renewable energy sources are changing the power sector and are expected to play a significant role in the future, with natural gas power plants expected to provide 44% of total energy generation in the next decade. 

Despite Mozambique’s huge potential for generation capacity, only 34% of the population has access to electricity.  This is due to an underdeveloped power distribution network and the bureaucracy involved in developing new power projects.  Energy demand will be driven by industry and business, as the majority of the population cannot afford current tariffs, despite the fact that they are highly subsidized.  To mitigate the cost of expanding the grid to rural areas, the Government of Mozambique has made rural electrification development a priority led by the Mozambique Energy Fund Institute (FUNAE), which focuses on smaller off-grid projects of less than 10MW.

Electricidade de Moçambique (EDM) is the sole utility in the country.  Despite two tariff increases in the last two years, EDM is still selling power at a loss and hopes to have a cost reflective tariff by the end of 2019.  At present, EDM is forced to subsidize tariffs to poor residential consumers, a strategy deemed unsustainable.  According to national statistics a third of EDM’s customers, who are concentrated in the city of Maputo and the surrounding province, generate 65% of EDM’s revenue.  EDM is making major structural and operational changes in order to finance its own generation projects.  This transformation could bring major opportunities for U.S. companies that provide automation technologies and other ICT solutions. 

The first Independent Power Projects (IPPs) in Mozambique came online in 2015.  These projects have paved the way for future IPP negotiations and, more recently, the standardization of tendering documents.  Given EDM’s weak financial capabilities, IPPs will likely rely on development banks for financing.

The largest power generation plant in the country is the Cahora Bassa hydro dam, operated by the government-owned Hidroelectrica de Cahora Bassa (HCB).  This is the second largest dam in Africa with a capacity of 2,075 MW.  HCB sells 65% of its existing generation to South Africa, and the remaining 35% is sold to the northern regions of Mozambique and to Zimbabwe.  HCB’s operations are located on the Zambezi River in Tete Province.

Mozambique recently commissioned several gas thermal plants, the latest of which is the Gigawatt 120MW plant commissioned in 2015 under a Power Purchase Agreement (PPA) with EDM.  According to BMI Research, gas-based generation is expected to increase by 18.1% annually through 2025. Mozambique’s first utility-scale solar power plant, a photovoltaic plant with a capacity of 40MW, was commissioned in Zambézia Province in 2017.  There are numerous other greenfield opportunities for both solar and wind projects

Mozambique has frequent power shortages mainly due to extreme weather events, forcing EDM to resort to expensive emergency power solutions.

Power Africa
Launched in 2013, Power Africa is a market-driven, U.S. Government-led public-private partnership to double access to electricity in sub-Saharan Africa. It offers private sector entities tools and resources to facilitate doing business in Africa’s power sector. In 2016, the Electrify Africa Act institutionalized Power Africa. Learn more about the full Power Africa toolbox or other opportunities offered by Power Africa.

Leading Sub-Sectors
Supply of equipment and services:
  • Turbines, engines
  • Generators
  • Cables and electrical components
  • Substation components
  • Power converters
  • Transmission line components
  • EPC services
  • Financing and insurance services
  • Solar panels and wind turbines
  • Grid management software
Opportunities
Mozambique’s domestic energy demand is increasing steadily and is expected to continue rising as the country industrializes.  The Southern African Development Community (SADC) member countries are expected to have higher demand for power that could be met with Mozambican exports.

Transmission
  • The CESUL Back Bone is a priority transmission project that would run from the center to the south of the country and then into South Africa.  The project will consist of two high voltage lines, one 400KV AC line and a 550KV DC line, at an estimated cost of USD2.1 billion.  This project has been broken down into three phases, the first of which consists of a 800km line from Maputo city to Inhambane province.  
  • The Mozambique-Zambia Interconnector will link the Mozambican and Zambian grids with two 400KV HVAC lines at an approximate cost of USD313 million.
Hydro
  • HCB (Hydroelectric Cahora Bassa) plans to expand the existing dam for an additional capacity of 1,250MW.
  • Mphanda Nkuwa Dam will be located downstream from Cahora Bassa on the Zambezi River and will have a capacity of 1,500MW. This project is dependent upon the success of the CESUL Transmission Project.  Thus, the dam may only be viable in the next five years.
  • Lupata Dam, also located on the Zambezi River, will have a capacity of 416MW.  This project is also dependent upon the success of the CESUL Transmission Project.
  • Pavua Dam, located on the Pungué River in the center of Mozambique, will generate up to 120MW.  This project is currently undergoing feasibility studies.
Thermal Coal
  • Ncodenzi: Phase 1 will have a capacity of 300MW, Phase 2 could increase output to 1,800MW.
  • Moatize: Planned capacity of 1,800MW.
  • Benga: Planned capacity of 1,500MW.
Thermal Gas
  • The Temane Plant will have a capacity of 400MW,

Web Resources
Electricidade de Moçambique (EDM – Mozambican utility)
Government Portal
Ministry of Mineral Resources & Energy
Mozambique Investment Promotion Center
FUNAE – Mozambique National Energy Fund
Power Africa

 

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