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Thursday, July 18, 2024

IPPs contribute 40 megawatts to the national grid

Story by John Nhandara

INDEPENDENT Power Producers are contributing just over 40 megawatts of power to the national grid, despite indications that there are more than 100 licensed power producers in the country.

More than 100 independent power producers licensed with a cumulative installation capacity to produce more than 8,000 megawatts are reportedly contributing less than 2% to the national grid.

This has seen stakeholders in the energy sector convening to seek ways of recapitalising and improving the production capacity of independent power producers.

“We want to understand the challenges, or how can financial institutions or the pension fund help to ensure that we have all the IPPS coming on board. It might mean we have to relook onto the way we are regulating the industry or the tariffs regime,” said Zimbabwe Energy Regulatory Authority (ZERA) board chairperson, Dr David Madzikanda.

ZERA chief executive officer, Mr Eddington Mazambani said, “We need to unlock the full potential of these IPPs. The main issues were currency convertibility and the issue of the off-taker. We are now talking to IPPS to engage with private offtakes so that they agree on the currency that gives them comfort. In terms of the credibility of the off-taker, we are saying the IPPs can sell to any off-taker who wishes to buy power from them.”

The need to unlock the full potential of IPPs through financing models such as private equity funds is suggested.

“We can come in as insurance companies and invest in equity or debt. What worries investors is when the deal is becoming lucrative and that’s why they want a part of equity quite a lot,” said the Insurance and Pensions Commission (IPEC) board chairperson, Mr Albert Nduna.

“We have since engaged the IPPs as consumers of energy. Which is five megawatts and above in terms of payment modalities that will enable the viability of them to produce power,” Intensive Energy User Group director, Mr Caleb Denga.

The independent power producers are currently operating small thermal power stations, mini hydro schemes, and small solar power projects.

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