Shumba Energy gets P800m

Phumaphi said discussions were advancing with financiers and it was expected that agreements would be reached allowing the plant to be operational by the end of next year.

“We have ongoing discussions at the moment and it may happen that we do both phases at the same time,” he said. “However, the bigger the project, the more difficult it is to do at once. “Sometimes, it’s better to do it in phases and the advantage with solar projects is that with time the costs of panels on average are going down and it may be possible to have a cheaper second phase. “The demand for this power is there given the deficit in the region and the fact that several countries are load-shedding.”

By being the pioneering plant selling solar directly into the SAPP, Shumba Energy will be the first to test the pricing around renewable energy, at a time when nearly all the power available in the market is coal-fired. However, solar plant capital and operating costs have been sliding in recent years and in some regions are even lower than fossil fuels.

“The challenge we have is that sometimes there’s power that can be bought in the SAPP, but the prices are too high for the utilities to afford and they opt to load-shed.

“The cost of load-shedding is not just lost revenues to the utilities but the lack of productivity that happens in the economy and also the loss of future productivity because once a country does not have enough power, it loses future investments.

“The outlook on electricity tends to be myopic or simplistic like only looking at the cost of power and profits from selling it. There are knock-on effects of electricity shortage because you cannot have manufacturing, the service industry and others and this means you are losing jobs.

“In Botswana, every person with a job is supporting four or five people and these are the knock-on effects we have to look at.”