Africa

The African Commercial Insurance Agency (ATI) steps in to provide liquidity coverage for the 60 MW JCM Salima Solar PV: the second project in Malawi to benefit from the Regional Liquidity Support Service (RLSF)

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The African Commercial Insurance Agency (ATI) steps in to provide liquidity coverage for the 60 MW JCM Salima Solar PV: the second project in Malawi to benefit from the Regional Liquidity Support Service (RLSF)

ATI (www.ATI-ACA.org), through RLSF, has supported the 60 MW Salima Solar photovoltaic plant in Malawi; This is the second project in the country to benefit from RLSF; the first project is Phase 1 of the Nkhotakota Solar Power Plant, with an initial installed capacity of 21 MW; With project construction nearing completion, Salima Solar will be the first PV plant in Malawi to connect to the grid.

The African Commercial Insurance Agency (ATI), within the framework of its Regional Liquidity Support Service (RLSF), has supported the Salima Solar photovoltaic plant, providing a renewable liquidity guarantee that can be drawn after any delay in the Payments by the domestic buyer: the Electricity Supply Corporation of Malawi Limited (ESCOM). This is the second project in the country to benefit from RLSF, the first project being Phase 1 of the Nkhotakota Solar Power Plant, with an initial installed capacity of 21 MW.

The 60 MW Salima Solar photovoltaic plant, which is one of the most advanced projects, will be critical to Malawi’s underdeveloped power sector, which has an installed generation capacity of around 439 MW. More than 90% of this capacity comes from hydroelectric plants on the Shire River in the southern region; This heavy reliance on hydropower is often limited by drought and low water levels. In the future, there is a high potential for new hydroelectric and solar technologies to enter the energy market, thanks to government reforms that have led to the establishment of a viable electricity market for the participation of the private sector in the expansion of generation.

The Salima Solar PV plant is due to start operations in August 2021. It was developed by JCM Matswani Solar Corp Limited, a Malawian Special Purpose Vehicle (SPV) owned by Canadian Independent Power Producer (IPP) JCM Power and InfraCo Africa Limited ; the latter is part of the Private Infrastructure Development Group (PIDG). The construction capital was provided by JCM Power, the Dutch Development Bank FMO and InfraCo Africa Limited. This will be the first solar PV in Malawi to be connected to the grid. The energy generated, with an estimated annual average of 154 GWh, will be sold exclusively to Malawi utility ESCOM under a 20-year power purchase agreement (PPA). ATI, through RLSF, will cover an amount of USD 4.4 million against the risk of delay in payment by ESCOM; the RLSF policy will have an initial term of up to ten (10) years. The liquidity coverage provided through RLSF will allow up to USD 78 million of total project financing.

Malawi’s energy sector has recently undergone sector restructuring efforts with the aim of increasing the availability of reliable electricity supply in the country. This includes the separation of ESCOM and the establishment of the Malawi Electricity Generation Company (EGENCO). More recently, ESCOM has further separated with the introduction of Power Market Limited (PML), which will become the sole buyer in the energy sector, assuming the PPAs signed between ESCOM and the IPPs. Further restructuring of the Malawi energy market is underway, with strong investor interest and political will for IP service providers to enter the market.

ATI Executive Director Manuel Moses noted that “the Government of Malawi believes that private investment is critical to achieving its goals for the energy sector. This is evidenced by ESCOM’s recent positive track record in meeting its payment obligations to Malawi’s only operational IPP in a timely manner, as recorded by ATI’s Transparency Tool. We remain confident that ESCOM’s payments to JCM Matswani will follow the same trend. In addition to the two transactions we have supported under RLSF, we hope to provide similar support to eligible renewable energy IPPs in Malawi and indeed the rest of the African continent. “

JCM Power quote

JCM Power Country Director Phylip Leferink said: “JCM Power is excited to complete the construction and start-up of the first utility-scale solar PV plant in Malawi in August 2021. ATI’s support played a role. important in improving project bankability to JCM’s approach to developing high-quality, innovative and cutting-edge projects in sub-Saharan Africa. The Salima Solar project is positively changing Malawi’s energy landscape, so JCM is firmly committed to continuing to play a critical role in the development of the country’s energy sector. “

InfraCo Africa’s Director of Asset Management Connor Dawson said: “Salima Solar will be Malawi’s first grid-connected solar PV plant. The renewable liquidity guarantee provided by ATI, within the framework of its Regional Liquidity Support Line, will support Salima Solar, ensuring that it can provide reliable access to clean electricity; driving future economic growth. “

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