The demand for electricity in Mozambique is set to grow by 14% a year, while regional demand in the Southern African Power Pool (SAPP) will increase by nearly 1 500 MW a year between 2012 and 2020, according to new analysis by Frost & Sullivan.

Frost & Sullivan’s energy and environmental business unit leader Cornelis van der Waal says the higher demand could be serviced by over 5 000 MW of additional generation capacity which will come on line by 2020.

Mozambique’s two biggest new generation projects, Mphanda Nkuwa and the Cahora Bassa North Bank Expansion, in the Tete province, are estimated to come on line in 2019 and 2020 respectively.

However, the lack of a direct transmission line between the Cahora Bassa power station in the north and the State capital, Maputo, in the south, means that electricity first has to be exported to South Africa and then imported at an increased cost.

“The lack of adequate transmission and distribution infrastructure in Mozambique is one of the biggest restraints in the electricity industry.

A widely dispersed population often makes building this infrastructure financially unviable. Off-grid electrification, which allows isolated communities access to electricity, represents a solution to overcoming this restraint,” says Van der Waal.

Only around 18% of Mozambique’s population have access to the national electricity grid, with an additional 12% having access to electricity through off-grid electrification.

In addition, as a result of low electricity tariffs, utilities are unable to generate enough revenue to invest in maintaining and upgrad- ing electricity infrastructure, which makes the power generation market an unviable proposition for independent power producers (IPPs).

“The government of Mozambique is currently revising the electricity tariff structure; if the electricity tariffs are cost reflective, the market will attract IPPs to finance and build additional electricity infrastructure,” Van der Waal says.

He adds that, even though the electricity sector reform has not been completed, IPPs could approach the Ministry of Energy with proposals to finance and construct electricity infrastructure.