Government has engaged Africa Legal Support Facility (ALSF) and international consultants to come up with an implementation agreement of renewable energy projects in a bid to attract investment into the sector, a senior official has said.
The implementation agreements set out terms on, which Governments provide incentives and assistance to the prospective projects awarded to investors.
The Government agreement will address issues to do with political risks, payment default risks and general Government support such as provision of land to renewable developers, Energy and Power Development secretary Eng Gloria Magombo said.
Zimbabwe, seeking to boost renewable energy capacity to 1 100 MW or 16,5 percent of overall electricity supply by 2025 and 2 100 MW or 26.5 percent of total supplies by 2030 in line with climate goals, needs huge capital inflows to reach the target.
Through a grant from the African Development Bank, Government also seeks a standard power purchase agreement document which deals with power off take and technical issues.
“The Ministry of Energy together with Ministry of Finance and Economic Development, the RBZ and other Government departments are working with African Legal Support Facility and international consultants are working on two major critical documents; the standard Power Purchase Agreement and the Government Implementation Agreement,” Eng Magombo told Business Weekly in an interview.
“The target is to finalise the key drafts by end of June 2022.”
ALSF is an international organization hosted by the African Development Bank in Abidjan, Côte d’Ivoire.
It was established on December 2008 by the African Development Bank at the request of African countries and became operational in 2010.
Since 2003, African Ministers of Finance had been calling for the establishment of an institution that would provide legal assistance to African States, particularly, Heavily Indebted Poor Countries (HIPCs), to meet the challenge of litigations with creditors and the negotiation of complex commercial contracts.
The ALSF was therefore established to provide legal and technical capacity to African countries. The ALSF’s mandate focuses on providing practical, “hands-on” support during the negotiation of contractual arrangements between governments and investors.
The ALSF empowers governments with the necessary knowledge and resources to ensure balanced, fair and equitable outcomes, to ultimately improve good governance and environmental and social stewardship.
Eng Magombo said while there was growing interest in the renewable energy sector, particularly solar, concerns have been raised over currency convertibility risks, viability gaps and potential losses investors could suffer due to sub-economic tariffs.
Globally, investments in renewable energy continue gaining momentum despite global uncertainties, the latest data by the International Renewable Energy Agency shows.
By the end of 2021, global renewable generation capacity amounted to 3 064 gigawatts (GW), increasing the stock of renewable power by 9.1 percent, the report says.
Although hydropower accounted for the largest share of the global total renewable generation capacity with 1 230 GW, IRENA’s Renewable Capacity Statistics 2022 shows that solar and wind continued to dominate new generating capacity.
Together, both technologies contributed 88 percent to the share of all new renewable capacity in 2021.
Solar capacity led with a 19 percent increase, followed by wind energy, which increased its generating capacity by 13 percent, the report says.
“This continued progress is another testament to renewable energy’s resilience. Its strong performance last year represents more opportunities for countries to reap renewables’ multiple socio-economic benefits.
However, despite the encouraging global trend, our new World Energy Transitions Outlook shows that the energy transition is far from being fast or widespread enough to avert the dire consequences of climate change,” says IRENA director-general, Francesco La Camera.
To achieve climate goals, renewables must grow at a faster pace than energy demand. However, many countries have not reached this point yet, despite significantly increasing the use of renewables for electricity generation, says the report.
While it has the least carbon footprint, Africa is being hit the hardest by its effects. The continent is responsible for about three percent of global greenhouse gas emissions — a tiny proportion given that the richest 10 percent of the global population are responsible for emitting over half of the carbon emissions.
Despite that, more than 35 African countries, Zimbabwe included, and over 1 000 corporates have committed to emissions cuts in line with the goals of the 2015 Paris Agreement on climate change, which seeks to keep global warming below two degrees Celsius and strive for a ceiling of 1,5 degrees by 2030.
Investments in renewables would be driven by off-grid home systems, and mini and huge solar and wind plants.