SOLAR energy dominated the projects that were granted prescribed asset status by the Government during the first half of the year, according to the Insurance and Pension Commission (IPEC), as investments in solar power continue to gain momentum.
The Government granted prescribed asset status to investment projects worth nearly US$100 million, with 83 percent (US$83 million) being solar projects, IPEC, the regulator of pension funds and insurance firms, said in its 2022 second-quarter report.
Zimbabwe is boosting solar power and to lesser extent hydropower, as part of a Government strategy to reduce energy-related emissions by about a third by the end of 2030. Companies whose projects were granted the prescribed asset status are Zororo PA, US$45 million, Centragrid US$29,5 million and Equinox, US$9 million.
Other projects are Nhaka Life, a cattle-backed investment (US$10 million) initiative, Mangwana Opportunities Investments, a scheme to finance productive sectors of the economy (US$5 million), and Agrowth ($2 billion), which is meant to finance winter wheat cropping.
As of June 30 2022, IPEC had recommended six applications for prescribed asset status to the Ministry of Finance and Economic Development.
During the period under review, approved applications increased by three from the previous quarter.
At law, pension funds and insurance companies are required to invest at least 20 percent of their investment portfolio in prescribed assets.
Solar investments, even at household levels are gaining momentum in Zimbabwe. According to the preliminary 2022 Population and Housing Census report, 30 percent of households now use off-grid electricity.
The total number of people using off-grid power stood at about 1,1 million, almost a third of the households in Zimbabwe.
Analysts say failure by ZESA to invest in grid extension infrastructure and generation expansion has led to people, especially in the rural areas, investing in off-grid particularly solar.
In addition, ZESA, the country’s State power utility is also failing to connect new customers due to viability challenges, forcing people to install household solar systems.
In fact, several new urban communities are not connected and many households have resorted to solar systems for heating and lighting.
In 2019, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a unit of Zesa Holdings introduced the net metering programme, a scheme where households and businesses generating solar energy on their premises can feed excess power into the ZETDC network through a grid-tied inverter.
With authorities aiming to generate at least 2 100 MW of clean energy by 2030, of which 75 percent is set to come from solar power, the Government said it will commission an audit to ascertain the amount of power the households are producing.
Norsard Capital, which funded the first solar plant to deliver electricity onto the national grid said Zimbabwe presented a lot of investment opportunities in solar energy.
“There is abundant sunshine in Zimbabwe, which makes it an ideal location to build a lot of solar power plants; to harvest the sun for energy,” said Nathaniel Nyika, the chief investment officer of Norsard, at the signing ceremony of a Memorandum of Understanding (MoU) between his company and the IDBZ last Tuesday.