The African Trade Insurance Agency (ATI), under Regional Liquidity Support Facility (RLSF), has supported the construction of a 60 MW Salima Solar PV plant in Malawi.
To this effect, the ATI will give an amount of USD 4.4 million as a revolving liquidity guarantee that can be drawn following any payment delays by the national offtaker – Electricity Supply Corporation of Malawi Limited (ESCOM).
Construction equity was provided by JCM Power, the Dutch Development Bank FMO, and InfraCo Africa Limited.
Developed by JCM Matswani Solar Corp Limited, a Malawian Special Purpose Vehicle (SPV) owned by the Canadian Independent Power Producer (IPP) JCM Power and InfraCo Africa Limited, the Salima Solar PV plant is expected to start operations in August 2021.
This is the second project in the country to benefit from the RLSF initiative; the first project was Phase 1 of the Nkhotakota Solar Power Plant, with an initial installed capacity of 21 MW. When finalized, Salima Solar will be the first solar PV in Malawi to connect to the grid.
The energy generated, at an estimated annual average of 154 GWh, will be sold exclusively to the Malawian utility, ESCOM, under a 20 year Power Purchase Agreement (PPA).
The 60 MW Salima Solar PV plant is one of the most advanced projects in Malawi and will be instrumental for the country’s underdeveloped electricity sector which has an installed generation capacity of around 439 MW.
More than 90% of this capacity is drawn from hydropower plants on the Shire River in the southern region of Malawi. However, the effects of climate change- drought and low water levels- have constrained the heavy reliance on hydro.
Going forward, there is high potential for solar and new hydro technologies to enter the power market.
The restructuring efforts by the Government are geared at increasing the availability of reliable electricity supply in the country, case in point- the unbundling of ESCOM and the establishment of the Electricity Generation Company of Malawi (EGENCO).
More recently, ESCOM has been further unbundled with the introduction of Power Market Limited (PML), which will become the Single Buyer in the energy sector – taking over PPAs signed between ESCOM and IPPs.
Additionally, further efforts to restructure Malawi’s power market are underway, with strong investor interest and political will for IPPs to enter the market.
ATI’s CEO, Manuel Moses, noted “The Government of Malawi views the private investment as critical to achieving its goals for the power sector.
This is evidenced by ESCOM’s recent positive track record in meeting its payment obligations to Malawi’s only operational IPP in a timely manner as recorded by ATI’s Transparency Tool.
In addition to the two transactions that we have supported under RLSF, we look forward to providing similar support to eligible renewable energy IPPs in Malawi and indeed across the rest of the African continent.”
Also, JCM Power’s Country Director, Phylip Leferink said, “The Salima Solar project is positively changing Malawi’s energy landscape whereby JCM is firmly committed to continuing to play a pivotal role in further developing the country’s energy sector.”
In the same vein, Connor Dawson, InfraCo Africa’s Head of Asset Management, stated, “Salima Solar will be Malawi’s first grid-connected solar PV plant.
The revolving liquidity guarantee provided by ATI, under its Regional Liquidity Support Facility, will support Salima Solar, ensuring that it can deliver reliable access to clean electricity; powering future economic growth.”