(Last Updated on August 24, 2022 by ZIMDAILY EDITOR)
HARARE – Building of large 500MW solar stations will now be moving forward as the Government is already negotiating a framework agreement with a major solar company based in the United Arab Emirates, Skypower Global (CAYMAN), with Cabinet yesterday approving the framework and pushing for the conclusion.
These stations will complement the existing and planned hydro and thermal power stations and are large.
A 500MW station is about half the size of Kariba South, and that station can only go flat out briefly each day during the most serious periods of peak demand, will generate more than Hwange Thermal is now outputting, is close to the 600MW coming on line by early next year at the Hwange Extension and is roughly a third of what Hwange will generate once the extension is commissioned and the six units commissioned in the 1980s have been thoroughly reconditioned and all necessary parts replaced.
As the thermal works now in progress largely fill the gaps that have emerged, the new solar stations will generate even more of the power needed to maintain high levels of economic growth and will boost the green percentage in Zimbabwe’s energy mix.
This framework agreement is aimed at using the major natural resource of tropical sunlight, and ensuring that economic growth can continue to accelerate with more businesses and homes connected to the grid.
The framework agreement is needed to allow Skypower Global and Zesa Holdings to negotiate a power purchase agreement as well as other ancillary agreements relevant to power generation. Skypower will build the stations, but needs a deal that Zesa will then buy the power at the agreed price.
Speaking after yesterday’s Cabinet meeting, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said the construction of the solar stations will be done in phases.
“Cabinet considered and approved the framework agreement between the Republic of Zimbabwe and Skypower Global of the United Arab Emirates as presented by Honourable Zhemu Soda, Minister of Energy and Power Development. In support of the initiative to promote investments, Government seeks to conclude a framework with Skypower Global.”
Minister Mutsvangwa said this initiative comes against the backdrop of already existing good relations between Zimbabwe and the UAE, as was enhanced through the Dubai Expo Engagement.
SkyPower has earned the enviable track record and global recognition as one of the largest and most successful independent power producers that develops, finances, builds, owns and operates large solar stations across the globe totalling 25 000MW. Some of these stations are in bilateral agreements and contract awards to be built in the Middle East, Africa, and South East and Central Asia over the coming years.
SkyPower has secured over 30 power purchase agreements representing billions of dollars’ worth of long-term renewable energy sales to leading utilities and governments around the world.
SkyPower is majority-owned by CIM, a transformative urban real-estate and infrastructure fund manager. Since
1994, CIM has sought to create value in projects and positively impact the lives of people in communities across the Americas by delivering more than $60 billion of essential real estate and infrastructure projects.
The Skypower Global framework agreement comes after the Hwange Electricity Supply Company, a joint venture set up to build and run the 600MW extension to Hwange Thermal Power Station, was recently allowed by Cabinet to enter into long-term contracts with coal suppliers, a move designed to allow the mines to get the long term bank financing they need to expand production.
Coal suppliers have been on shorter-term agreements, typically for one year with the Zimbabwe Power Company for fuelling the old sections of Hwange Thermal and the small thermals. But the suppliers need to unlock cheaper, long-term financing to invest in critical equipment such as conveyor belts and expand output to meet the demand of the new station.
Speaking after a Cabinet meeting in June, ICT, Postal and Courier Services Minister Dr Jenfan Muswere, who was standing in for Minister Mutsvangwa, said Cabinet had allowed Hesco — a special purpose vehicle set up by Zimbabwe Power Company, a Zesa subsidiary, and Sino-Hydro Corporation of China — to enter into long-term agreements with coal suppliers.
ZPC holds 64 percent of the Hesco shares while Sinohydro, the contractor, has a 36 percent stake.
Writing in his weekly column in The Sunday Mail recently, President Mnangagwa said the huge demand for coal required great investment that would ultimately require them to obtain long-term borrowing.
“Our coal miners and merchants are not sure they will cope with this expanded demand for coal. Why? Because rules governing our Procurement Regulatory Authority of Zimbabwe require that we work within year-long supply contracts, in the double sense of supplier choice and tariffs,” said President Mnangagwa.
“Yet coal miners and merchants require to invest in huge, costly equipment, both to extract thermal coal and to convey it to the Zesa Station. This requires huge capital outlay, much of it accessed through borrowing.