President of Malawi, Dr. Lazarus Chakwera, officially inaugurated and commissioned the 60 MW Salima solar PV plant this week in Malawi’s Central Region.
The Salima Solar project originated back in 2013 and entered the planning and design phase in June 2015. With 60 MWac, it is by far Malawi’s biggest solar plant and one of the largest solar facilities in Southeastern Africa.
A Competitive International Tender
While Canadian independent power producer (IPP) JCM Power had initially entered bilateral negotiations with Malawi’s state-utility Electrical Supply Corporation of Malawi Limited (ESCOM) for the project, Salima Solar is in fact the result of a competitive tender.
A consortium led by JCM Power Corp. and InfraCo Africa with Matswani Capital won the project and developed and constructed the facility at a cost of over $75m.
The same consortium was eventually selected to develop the 20 MWac Golomoti Solar, a project that broke ground in March 2021 and is considered a sister facility to Salima.
Supportive Financing Structures
To finance the facility, $6.5m was provided by InfraCo Africa while the PIDG provided technical assistance funding of $6.44m (including $6m of VGF and $440,000 of grants). On its side, the FMO provided $8.2m for the project through its Access to Energy Fund, used to finance construction.
The project also benefited from guarantees issued by the Multilateral Investment Guarantee Agency (MIGA) amounting to $58.58m and covering 90% of the equity investments for up to 20 years. In July 2021, the African Trade Insurance Agency (ATI), under its Regional Liquidity Support Facility (RLSF), also announced a revolving liquidity guarantee that can be drawn following any payment delays by the national off taker, the Electricity Supply Corporation of Malawi Limited (ESCOM).
A Pathfinder for Malawi’s Diversifying Energy Mix
Salima Solar was awarded and developed when Malawi’s electrification rate stood at below 13%. The country continues to suffer from frequent power outages and over reliance on hydroelectric stations whose operations suffer from rainfall fluctuations. As a result, the Government of Malawi modernised its regulatory environment to attract private capital into the country’s energy sector and diversify the energy mix with additional sources of clean energy such as solar.
A project like Salima is a true pathfinder in that regards and is critical to the country reducing its spending on expensive diesel generation and dependence on hydropower.
Overall, the facility is expected to provide electricity to 1.4 million Malawians and support 600 jobs. It is now able to generate over 146 GWh of energy every year.
Details on the Salima Solar PV Project are available in the “Projects” section within your Hawilti+ research terminal.