The African Trade Insurance Agency has issued a $67 million guarantee for the Nkhotakota solar power plant located in the homonymous district of the Republic of Malawi.
The 37 MW solar park is being developed by Kenya-based responsAbility Renewable Energy Holding and UAE-based renewable energy developer Phanes Group, which secured a 20 year power purchase agreement for the project in the 2019. It will be built in two phases of 16 MW and 21 MW, respectively, and will be the 2nd renewable energy project supported by the Regional Liquidity Support Facility created by the African Trade Insurance Agency to cover the risk of late payments from national supply companies.
Through the RLSF, African Trade Insurance Agency provides liquidity hedging for up to 10 years. Once completed, the project will provide electricity to nearly 150,000 Malawian households. The project is expected to be built at an overall cost of $67 million and to define a regional standard to reduce the country’s energy deficit.
The solar plant is part of Malawi‘s action plan to free the country from its dependence on hydropower, which currently accounts for over ninety per cent of its energy supply. Hydroelectricity makes the country accessible to frequent power cuts that often occur in times of drought.
With a population of roughly 19 million people, the landlocked nation has power generation capacity of about 363 MW, around 90% of which comes from hydropower with the remaining 10% from 23 MW of PV. Access to power in Malawi’s rural areas is presently only 5%, with 46% in urban areas. Overall, electricity connection is only 12% and the government aims to increase that figure to 30% by 2030.