Project

Scaling up Pro-poor Renewable Energy in Mozambique

At a Glance

Start Date Q1 2017
Funding Source Core
Approved Budget USD 1 667 000
Status Active
Thematic Area
  • Sustainable Energy

Project Rationale

Mozambique’s strong economic performance of annual 7.2% growth over the past decade has been fueled by foreign direct investment in agriculture and infrastructure. Economic growth, however, has not been equitable with a relatively unchanged national poverty rate that sees 39% of the total population living in rural poverty.

In 2013, the Government of Mozambique (GoM) adopted the Green Economy Action Plan which consists of three key pillars: sustainable infrastructure; efficient and sustainable use of resources; and strengthening resilience and adaptability. These pillars serve as entry points for green growth. The country’s abundant natural energy resources represent a significant opportunity for the GoM to address the country’s persistent energy challenges and to utilize resources sustainably to deliver benefits for the whole population.

At present, approximately 45% of the population has access to electricity, with biomass representing 80% of total energy consumption. Therefore, addressing institutional and financial barriers to increase energy supply and access remains a high priority. While much work has been done to improve electricity transmission to grid-connected locales, off-grid rural communities continue to face low rates of electrification and therefore limited access to markets and employment opportunities.

Building on 2015-16 Work

GGGI is currently in the process of completing its scoping work in Mozambique through continuous consultation with stakeholders. Indicative interventions for GGGI are focused in the areas of national/sub-national energy planning, renewable energy financing, water data management and resource planning, as well as long-term green growth analysis and planning. In 2016 GGGI will also scope the potential for supporting the establishment of the National Sustainable Development Fund (FNDS), with the mandate to promote and finance programs and projects that support sustainable, harmonious, and inclusive growth. The FNDS will be dedicated to funding development projects particularly in rural areas.

Delivery Strategy

PROJECT OUTPUTS FOR 2017-18:

  • Undertake an assessment of the green growth potential of Mozambique and submit to government
  • Develop policy recommendations to scale up adoption of renewable energy-based community energy plans in off-grid areas and submit to government
  • Design a financing instrument to support scale up of renewable energy-based community energy plans and submit to a financier
  • Deliver two capacity development events on sustainable community energy planning

PROJECT OUTCOMES FOR 2017-18:

  • Government adopts and pilots policy recommendations to scale up renewable energy-based community energy plans
  • Financing instrument to support scale up of pro-poor renewable energy investments is approved for funding and implementation
  • 70% of capacity development participants gain improved knowledge or skills on sustainable community energy planning

Planned Results

GGGI’s interventions aim to support the GoM in implementing its NDC goals and improving energy access for rural off-grid communities through improved implementation of renewable energy-based Sustainable Community Energy Plans (PCES), and design and adoption of a financing instrument aimed at scaling up pro-poor renewable energy. This will be done by delivering the following outputs:

Assessment of the green growth potential of Mozambique conducted and submitted to government. GGGI will apply the Green Growth Potential Assessment (GGPA) tool to identify specific sectoral challenges and opportunities in the broader green growth context, and generate evidence-based analysis to identify quick wins and policy interventions. The GGPA will be continually enhanced to incorporate indicators reflecting poverty and social inclusion, and the revised methodology will be implemented through international benchmarking and consultations with key policymakers and stakeholders. Additionally, the experience GGPA piloting in Peru, Colombia, and Nepal will inform its application in Mozambique and support further refinement of the GGPA tool. Although the GoM has requested for technical assistance specific to the energy sector, the GGPA will support development of a CPF which will inform GGPI’s longer-term programmatic interventions and identify potential additional areas for support.

Policy recommendations to scale up adoption of renewable energy-based community energy plans in off-grid areas developed and submitted to government. GGGI will provide technical support to improve policy design and implementation of renewable energy-based Sustainable Community Energy Plans (PCES). This will entail a policy gap assessment of the PCES mechanism and investment environment for renewable energy projects, policy options and recommendations to attract private sector investment and climate finance through the mechanism. GGGI will also support the piloting of its recommendations by designing plans in one or two rural communities in collaboration with national and local government counterparts including the Energy Fund, FUNAE.

Financing instrument to support scale up of renewable energy-based community energy plans designed and submit to a financier. Building on the analysis conducted on the PCES, GGGI will develop a financial tool to incentivize public and private investment in renewable energy that will be specifically targeted at improving access to the rural poor. Potential incentives could include possible grants, price-setting policies, cost-reduction mechanisms, procurement instruments, renewable energy promotion schemes for Special Economic Zones (SEZ), and risk reduction instruments.

Capacity development events on sustainable community energy planning delivered. GGGI will deliver capacity development program aligned to the implementation needs of the PCES. A full needs assessment will be conducted as part of the scoping activities of 2016. Capacity development events may include South-South knowledge transfer with regional peers in Ethiopia, Rwanda, Uganda, and potentially Senegal, to share application of best practices on community energy planning and renewable energy investment incentive policies/schemes.

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