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In the past 5 years, how has the energy structure changed, and what are the main driving factors?

In 2009, Mozambique approved the new energy and renewable energy policy, and subsequently introduced regulations that stipulate tariffs on new energy and renewable energy. The regulation applies to independent power producers (IPP) that use renewable energy in projects up to 10 MW, and provides a model tariff that promotes the diversification of the energy mix through attractive tariffs and stimulates the use of renewable energy. Investment in the microgrid for power supply.

Mozambique has good conditions for hydropower and solar power projects throughout the year. Currently, despite the large amount of thermal coal, most of Mozambique's electricity comes from hydroelectric power plants. Currently, Mozambique does not use fossil fuels to generate electricity. Wind energy projects can only be implemented in certain places in southern Mozambique.

The main legislation that has contributed to the above trends includes:

What is the outlook for the energy and natural resources industry in the next 5 years? especially:

In 2020, the President of the Republic of Mozambique led the launch ceremony of the highly anticipated renewable energy initiative. This initiative is part of the promotion of renewable energy auctions (PROLER), which aims to achieve greater renewable energy production capacity at a lower cost for the benefit of end consumers. Through bidding under the public bidding system, the government intends to provide greater transparency and competitiveness in the field of renewable energy to attract domestic and international investors.

The development of the energy mix will be promoted through several key policy decisions:

Confidence needs to be injected into Mozambique's electricity market. This can be achieved in part by immediately approving the necessary additional legislation mentioned above. Especially for the Electricity Law, the government should take an ambitious approach. As it is, the draft bill proposes to liberalize micro-grids of only 1 to 5 MW, while Mozambique’s neighboring countries liberalize micro-grids of up to 100 MW. Within such a limited scope, it will not attract the investment that the country is seeking; the capacity of eligible projects needs to be expanded to avoid this outcome.

In addition, inadequate infrastructure for transmission and connection to the national grid may discourage investors in the power industry.

The expected role of renewable energy and/or new technologies

With the growth of new energy and renewable energy projects in Mozambique, it is expected that investment in energy projects and related infrastructure will increase, as well as new and more IPPs entering the market.

The launch of PROLER is the first milestone in extensive rural electrification, which is a government goal for the power sector.

What are the main investment opportunities in energy and natural resources in the next 5 to 10 years?

Distribution capacity is one of the biggest challenges facing the power industry. The solution is to build a better interconnection infrastructure. Given that the existing infrastructure includes many small transmission lines, this process requires a lot of investment. Some projects are already in progress, including the Temane transmission project involving the construction of 563 kilometers of 400 kV lines.

Mozambique's goal is to become the energy center of Southern Africa by producing hydrogen. The cheap energy used to produce hydrogen will be the real motivation for the long-awaited Mphanda Nkuwa Dam on the Zambezi River, which has existed since the colonial era.

As related projects are still in the early stages, the country has not yet effectively benefited from its natural gas assets. This provides opportunities for investment in the natural gas industry, including the use of natural gas and the implementation and management of LNG infrastructure projects.

Particular attention is paid to sustainability and carbon emission reduction. How will the energy and natural resource pattern change in the next 5 to 10 years?

No major changes are expected in terms of sustainability and reduction of carbon emissions. Mozambique has formulated corresponding basic policies and legislation, but the speed of implementation is still uncertain.

In the next few years, the country is expected to: (i) implement a series of new energy and renewable energy projects to achieve ProEnergia's goals; (2) as major gas projects are put into operation, domestic supply will be guaranteed and the number of gas-fired power plants will be increased; (iii) ) Increase financing and refinancing transactions through the issuance of green bonds or other green tools; (iv) Gradually consider and implement green hydrogen investment; (v) As South Africa gradually closes its coal-fired power stations, it will increase power exports to South Africa.

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