Foreign currency payments can unlock investment in green energy

ZIMBABWE needs to create conducive and flexible policies that allow investors to get their returns in US dollars to attract foreign investments in renewable power generation, UK Ambassador to Zimbabwe Melanie Robinson said on Tuesday.

She told participants at a virtual multi-stakeholder coalition pushing for low carbon development in Zimbabwe forum that currency stability and payment in US dollars was a critical factor that could attract British companies to invest in the renewable energy sector in the country.

“Getting the independent power producers investment policies right and making commitments to get IPP payments in US dollars is quite important for investors,” Robinson said.

“This will allow us to get investment in renewable energy power generation. We also need to raise the visibility of renewable energy initiatives to the public to help them understand their role in reducing carbon emissions and in protecting the environment.”

The Centre for Natural Resource Governance (CNRG) organised the virtual forum to help explore ways and strategies to promote the growth of the use of renewable energy in Zimbabwe.

Speaking at the same forum, Jeremiah Mushosho, a climate, environment and energy expert at UNDP Zimbabwe said private investment continues to play an important role in renewable energy development in the country.

“This goal can be achieved through foreign direct investment (FDI) but do the developing countries have the enabling environment to attract FDI? They also want to see a return if they want to invest in renewable energy.

“For Zimbabwe to catalyse investment in renewable energy, we need to address risks related to currency stability, land tenure security, specific policies for renewable energy investment, political risks and limited awareness on renewable energy funding.”

He said the involvement of private capital requires a favourable investment climate which guarantees a fair return for investors.

“UNDP is prepared to support Zimbabwe to develop its own de- risking measures to attract more investment into the renewable energy sector. How do we make sure that we ring fence exchange rate changes to make sure there is protection of currency return by investors is quite important.

“We need to unlock private sector investment. We need to throw our worms where we are going to catch the right funding for renewable energy development to promote access to clean and cheap energy.”

Zimbabwe is setting its sights on diversifying the country’s energy matrix to ease dependence on its main ZESA electricity grid and power imports from neighbouring countries through the uptake of renewable energy.

Despite the economic problems facing the country and the huge cost of investing in renewables, the country is making steady progress in terms of the uptake of solar energy by households, large corporates and mining giants.

ZERA has processed 39 solar power projects that have capacity to generate up 1,151.87MW, as the country moves to transform its renewable energy generation capacity.

The projects require an investment of over $2,3 billion.

The country has approved its National Biofuels Policy and National Renewable Energy Policy as it aims to cut carbon emissions by 33 percent by 2030 and meet its projected electricity demand of 11 500MW by 2030.

The country’s long term renewables target represents a big challenge that will dramatically alter the country’s energy landscape.