Africa-Press – Nigeria. By Kingsley Jassi:
The country’s clean energy transition faces headwinds as the financial sector is yet to fully respond to calls to catapult the industry’s development.
This is according to the Renewable Energy Industry Association of Malawi (Reiama).
The current power sector compact indicates that Malawi needs an additional 848 megawatts of renewable energy by 2030 to add 1.1 million people and move the access rate from 25.9 percent to 70 percent.
With this requiring about $5.5 billion, the country’s renewable energy stakeholders in both the public and private sector have a huge task to mobilise resources, develop renewable energy solutions and create a sustainable ecosystem.
However, Reiama President Brave Mhone said after signing the partnership agreement in Lilongwe that much of the financing of renewable energy projects was foreign, challenging the local financial sector to step up and finance the energy transition.
“This partnership is a step towards addressing the financing gap that has existed in the industry and we will work closely with the bank to come up with mechanisms that will see firms getting financing,” Mhone said.
Meanwhile, the association has secured a partnership with NBS Bank in a deal described as a game-changer.
NBS Bank Head of Government Business and International Organisation Melvin Donga acknowledges the huge financing opportunities in the energy sector, saying this requires the banks to work with established institutions that have clear strategies that make economic sense as it is hard to work with individual investors in the emerging sector.
“There are resources available for any industry, including that of renewable energy. We just need to understand the strategic goals and we can come in to support their agenda,” Donga said.
It is understood that financial institutions have a paucity of knowledge about the emerging renewable energy industry, hence have not yet developed suitable financing products.
However, under the partnership, the two firms will collaborate to identify investment areas and develop financial products that will respond to the financing needs of renewable energy firms as they proliferate innovative energy solutions.
Malawi’s energy industry is anchored by hydro power infrastructure that is concentrated on the Shire River and plans are aimed at diversifying the sources, with visible efforts in promotion of off grid solar power technologies.
However, there are numerous other potential clean power sources like geothermal and wind, among others where investment is almost nonexistent.
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