The world is going through moments of crises, and climate is one of the concerns that put nations on equal footing. The climate crisis does not discriminate, nor does it have borders. Everyone is affected. The difference lies in how each seeks to react to the problems and provide a response that mitigates the situation. However, the response must be coordinated globally to have any effect. This is what we discussed with the president of the Mozambican Association of Renewable Energies (AMER), Ricardo Pereira, after the third Renewable Energy Conference in Mozambique, held in partnership with the Lusophone Renewable Energy Association (ALER) and financed by the European Union and the Federal Republic of Germany. At the top of the agenda are companies at the forefront of harnessing these resources extracted from nature without harming it or compromising the future of the planet. This conference, being business-focused, naturally focused on financing solutions and the legal framework of a new sector with dynamics that require specialized understanding. However, the idea of sustainable development is the foundation of the cause. After all, much of this energy has been a solution for rural electrification, allowing millions of Mozambicans to connect with the world and all the possibilities that open up, including access to information. This is, for example, one of the focuses of the Sustainable Development Goals aimed at 2030, the year when the entire population must have access to energy.
In this interview, Ricardo Pereira discusses the path and life of companies operating in the renewable energy sector in Mozambique and the potential that exists, considering the concept of Development versus Sustainability.
Mozavibe (M): The Renewables in Mozambique Conference has just ended, what was new about this one compared to the previous two?
Ricardo Pereira (RP): In this third Business Conference on Renewables in Mozambique, the goal was to delve deeper into the issue of investments. As it followed a major event, the "Global Gateway" Mozambique – European Union Investment Forum, where an entire day was dedicated to energy, we naturally maintained the regulatory aspect because 2023 was a crucial year for the sector's regulations. The Government presented on this topic during the conference. We had sessions we called "Investment Pitching" in collaboration with the GET Invest program, Shine /SNV, and Catalyst Energy Advisors, where 12 participating companies each had 4 minutes to present to 17 investors. It was very successful because we not only exposed local companies to national investors, including banks, and international investors, but also provided added value for the investors themselves who wouldn't typically have the availability to hear so many opportunities consecutively and in a structured manner. We had a good response, for example, from national banks because they typically haven't had this type of experience, and they are already asking us to organize more sessions of this kind. In the conference itself, we also prioritized tangible issues, meaning the programs presented were only those currently open and available to receive applications from companies immediately. Our vision was for those in the audience to leave with the feeling of having understood everything that happened legislatively, in the news, and then know how to navigate through the tenders, seek funding, and technical support. Once again, we provided a platform for national companies to showcase what they are capable of and the partnerships they are seeking.
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M: What are the main concerns faced by companies in this sector, do they boil down to the question of funding or knowledge of procedures for accessing this funding?
RP: Unlike other sectors where problems may be very specific, depending on the size of the company and the technology involved, in renewable energy, the problems and challenges are still widespread, and many of them are comparable to any other industry. Companies express concerns about the workforce capacity; at the moment, there is a limited number of trained individuals. I'm not only referring to engineers and renewable energy experts but also to specialized skills like welding solar panels and handling the electrical aspects of all renewable energies, whether from a power plant or a wind farm. The issue of fiscal incentives is another challenge. While our Fiscal Code includes exemptions, they apply to only a few products. Equipment for off-grid energy still faces customs duties on importation and VAT, ultimately affecting end consumers, who are typically rural people, the poorest population in the country. Another concern is the disappearance of subsidies typically provided by donors and partner countries due to geopolitical issues we have experienced in recent years, including the pandemic and conflicts. Another crucial factor is the absence of certification, posing one of the greatest threats to this sector. If someone uses a solar panel or a wind turbine that is not certified, the likelihood of failure is very high. However, the user may not associate the failure with the specific product or brand but rather with the technology as a whole, thereby discrediting an entire technology and energy source that we are trying to promote. There is a considerable amount of uncertified and low-quality products in the market, undermining the credibility of the entire technology.
M: Is the climate emergency and taking into account the Sustainable Development Goals (SDG.7), an opportunity to invest in renewable energies?
RP: In renewable energy, we see significant advancements and innovation, ranging from applications of artificial intelligence in energy efficiency to new sources like hydrogen (blue and green), among others. The efficiency of solar panels and wind turbines is continuously increasing. For a long time, the argument was that renewable energies are too expensive and not cost-competitive, but now that is no longer true; there is global cost parity between renewable energies and fossil fuels. In terms of technology, there is a notable advance in the efficiency of renewables. If we were to redirect all the current investments made in other types of energy towards renewables, I believe that as a planet, we would be making a wise choice, considering it's the only option we have.
M: Returning to the question of financing and taking into account the high investment costs, does the internal environment allow for sustainable solutions?
RP: This sector probably has the most money available. In Mozambique alone, in 2023, we're talking about an availability of investments and subsidies totaling around 306.5 million euros. So, a considerable amount of money is being invested in Mozambique through various programs. Renewable energies require a high initial investment, but it is amortized over the years. Speaking theoretically for a large-scale project, it is always necessary to invest in equipment and infrastructure right at the beginning, the so-called CAPEX. After this initial high investment, there is no need for further investment throughout the project's life, which typically ranges between 15 to 20 years, excluding operational costs (OPEX) and regular maintenance. On average, the investment can be recovered in 7 or 8 years, considering that for the remaining time, the cost of energy would be almost negligible. Those who didn't make the investment have to deal with inflation, increasing tariffs, and the cost of other sources that also rise. Therefore, after the calculations are done, renewable energies turn out to be more cost-effective. This also applies at the consumer level and for people living in remote areas who may not have the means to afford expensive equipment. Companies often offer services in a "pay-as-you-go" or PAY-GO model, where consumers only pay based on their usage or sometimes based on their ability to pay.
M: Where are most of the companies and those who benefit from the services located? Looking at the map of Mozambique, would renewable energy services be more in the cities or in rural areas?
RP: We have companies like the Solar Plant of Mocuba, the Solar Plant of Metoro, the Solar Plant of Cuamba, which are large plants located in the central and northern parts of the country, directly injecting energy into the grid. So, we can say that many of EDM's (Electricidade de Moçambique) customers in those areas, when they turn on their lights at home, are receiving energy from a renewable source because it enters the grid directly. Companies offering services to off-grid customers, such as home solar systems and clean cooking solutions, tend to be spread across the country.
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M: You'll be attending COP28, what agenda are you taking to that event?
RP: The main agenda is to absorb as much as possible and build our networking because we understand that these conferences are important and key moments for countries to communicate with each other, which happens infrequently nowadays. We have indeed started to seriously discuss the urgency of leveraging funding. There is the issue of financing for countries being impacted by climate change, and Mozambique is likely high on that list due to cyclones and other factors. We have the right to be compensated and have access to climate financing that allows us to increase our resilience to these challenges. Therefore, as the Renewable Energy Association, we want to understand how these mechanisms work because we know that it is the private sector companies that will implement many of these mitigation and resilience measures. We also want to represent Mozambique as a country taking this cause seriously. We want to retain as much as possible and bring it back home because that's what these conferences do—they open up the world to certain opportunities and allow Mozambique to be seen as a country that is not asleep, a country that is aware of the urgency to address these issues or at least to prepare for what is coming.
M: Is it possible to talk about sustainable development without changing our current way of being and relating to the environment?
RP: The idea of development involves changing established habits and adopting sustainable practices. There is no development without sustainability. As humans, we struggle to think about the distant future and often focus only on tomorrow. We are part of a global system that encourages consumerism and anything that goes against living sustainably. I also understand that sustainability may be challenging to achieve for those living in countries surrounded by services rather than necessarily having abundant resources. Countries have things to buy and may not be able to produce, and they need to provide services to their citizens such as heating, mobility, etc. The world is moving to extremes, as we see in politics, climate, and social inequality. However, what will actually happen is that natural resources are probably the most valuable, and those of us who have long been labeled "underdeveloped" will move forward. This is because we, and our population, possess knowledge of nature, knowing how to seek sustainably, not depending on imported products and materials but producing locally, and living with what we have. If there is someone who knows how to live with what they have, it's those who are now called "the poor of the world," but who are, in fact, the only ones living sustainably. I don't like being pessimistic, but I think there will be increasing individualism among people and countries, which is detrimental to sustainability because collaboration is necessary for this to work. I hope that our participation in these international forums can inspire us to counter the narrative that problems come from outside. They come from within, and a young Mozambican child looking at their parents, at their grandparents in rural areas living sustainably but thinking, "I want to go to the city because that's where we're better off," will quickly realize in the near future that they are mistaken. We have to change this because it's those parents and grandparents in rural areas who are living sustainably and who have knowledge that may not be written down but needs to be passed on. We must revalue and appreciate this knowledge because it may hold the solution to our problems. As the old saying goes, "History repeats itself, only the characters change."
