Malawi Energy Regulatory Authority (Mera) has threatened to revoke licences for independent power producers (IPPs) who fail to roll out during their specified period, saying the delay may affect further investments in the energy sector.
Mera chief executive officer Collins Magalasi said in an interview that failing to roll out in time could either prolong reliance on diesel-powered electricity or affect government policy of getting rid of blackouts by 2020.
“Aggreko generators were given two years after which they were supposed to pack and go so that we can accommodate IPPs by January 2021. This means that prices of electricity could go down as well but IPPs are yet to roll out despite signing power purchase agreements [PPAs].
“In the event that Aggreko goes, the country could be forced to reduce electricity supply. So, having IPPs not rolling out is challenging government policy of attaining 2.1 gigawatts of electricity by 2024 which could also necessitate some more investors like those in mining to be affected as their operations depend much on electricity,” he said.
Magalasi said it is for this reason that going forward, Mera is enclosing a condition in the PPAs in which IPPs will have six months from the day of signing the agreement to roll out or have their licences revoked to pave the way for other investors.
Mera figures indicate that to date, 20 PPAs have been signed in the areas of hydro, solar, wind and diesel power generation.
Electricity Supply Corporation of Malawi (Escom) chief executive officer Allexon Chiwaya said the country should have had one of IPPs operating by end of December last year, but none of them have done so and have pushed their roll out time to November this year.
He said their roadmap was to have IPPs operational by 2021, but there is a window shift of six months.
One of the IPPs, JCM Power, whose 60 megawatts (MW) Salima solar electricity project valued at $60 million is bound to miss its June deadline due to water logged soil on the project site, says the project should be operational between now and the end of the year.
The firm’s country director Phylip Leferink admitted in an interview that they will miss the June deadline, saying his firm informed the government through the Ministry of Natural Resources, Energy and Mining.
He said: “We are currently clearing and compacting the land in preparation for the installation of the solar panels. We are expecting containers of solar panels shipped from China to start arriving in the country this week. Project implementation took a while because the land was water logged to the effect that our vehicles could not reach the project site.”
Ministry of Natural Resources, Energy and Mining spokesperson Sangwani Phiri said the firm has been updating government on the delays and understood the water logged situation at the project site.
Energy expert Grain Malunga, who is also former minister of Natural Resources, Energy and Mining, said in an interview that once produced, the solar power will be consumed directly through the national grid.
“If these solar projects have storage systems then it will help a lot because during the day we will use solar power and at night we will be using installed capacity,” he said.
The projects are expected to fit into the national power grid because of power infrastructure built under the $350.7 million (about K257 billion) energy compact from the Millennium Challenge Corporation (MCC).