K1.1bn kitty for solar projects
The solar sector has received a major boost with the launch of $1.5 million (K1.1 billion) results-based grants for solar home system companies.
The United States Agency for International Development (USaid), announced Wednesday that in support of the United States-led Power Africa initiative, it has launched the Solar Home System Kick-Starter Programme in the country to expand energy through solar home systems (SHS).
In the programme, Power Africa will commit $5 million of support, with $1.5 million going towards results-based grants for SHS companies in the country.
“We estimate that the programme will allow 100 000 to 150 000 households with access to power, bringing in up to $22.5 million of foreign direct investment into Malawi” said United States Mission director Littleton Tazewell in a media statement issued.
Starting soon, the programme will offer three pillars of support to successful programme applicants: results-based grant finance, operational support and access to working capital financiers.
“The SHS Kick-Starter Programmne aims to catalyse the increased investment and rapid growth in the sector over a three-year period,” the statement further reads.
Through building coalitions within the donor community, the programme will complement and amplify World Bank efforts to energise the SHS market in Malawi.
According to the statement, a wide range of partners are supporting the programme, including local financiers FDH Bank, Kuwa Capital, National Bank of Malawi and Standard Bank, international financiers Lion’s Head Global Partners and SunFunder) and awareness-raising institutions (SolarAid).
The USaid Southern Africa Energy Program, a is a five-year, 11 country program funded by USaid in support of the U.S. Government-led Power Africa initiative.
To date, Power Africa’s more than 150 private and public-sector partners have committed more than $56 billion to mobilise and organise international efforts to electrify Africa.
With a high population density, Malawi has one of the lowest per capita GDPs in the world. The country has the capacity to generate 439 megawatts (MW), though Malawi’s heavy reliance on large hydro is often constrained by drought and low water levels.
Currently, there is high potential for solar and new hydro technologies to enter into the power market.
With funding from US’s Millenium Challenge Corporation, Malawi’s energy sector has gone through important sector reform efforts recently, including the unbundling of the national utility, the Electric Supply Company of Malawi (Escom) and the establishment of the Electricity Generation Company of Malawi (Egenco).
The restructuring of the power market has so far seen strong investor interest from Independent Power Producers (IPPs) who wants to enter the market.
Power Africa (PA) is supporting 100 MWs of new solar PV generation to come online by the end of 2019.
