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A Profitability Analysis of an Emergency Energy Module in Rural Mozambique

Mozambique has a very low per capita consumption level of electricity and a large part of the population is still relying on traditional biomass to meet their energy needs. Moreover, a substantial part of the population still lacks access to clean water. Electricity will play an important role in reducing poverty and increase the welfare.

There are many solutions and projects working to electrify the country and provide fresh water. Government programs and institutions work to expand the electrical grid and to reach a higher degree of electrification while they also investigate potential energy resources such as the expansion of hydropower and map the solar and wind potential in the country.

Off-grid electricity solutions are necessary for the expansion of rural electrification and this is also an area in which government institutions work, often together with international funders. In an increasingly climate-thinking world, it is necessary to work and plan in long-term and the work for a greener energy sector is ongoing in Mozambique.

The Emergency Energy Module is a project and solution to provide electricity and fresh water to villages or parts of villages. It is a flexible module containing different components to produce electricity for distribution through a mini-grid.

The purpose of this paper is to evaluate if an implementation of an Emergency Energy Module would be profitable from both the users’ perspectives, with regard to their needs being met by the module, and from the investor’s perspective; that it provides a desirable return as an incentive to roll out the project. The villages of Quirimize and Nicuita in the province of Cabo Delgado in the northern Mozambique will be studied in this paper.

The evaluation of the two villages includes finding a balance between the demand of electricity and the capacity of the Emergency Energy Module system. The demand was found out by interviews with representatives in both villages. A cost comparison has been done of different component designs of the flexible module in order to find the most adapted design for the two villages from a cost perspective.

The costs and possible revenues of a possible implementation have also been calculated to finally present the profitability analysis in terms of payback period of the project. The most adapted design of the Emergency Energy Module is one containing a biomass gasifier and solar panels. The implementation will be financially viable if some type of funding or subsidization is found to cover part of the upfront costs.
Source: KTH
Author: Norström, Therese | Allmér, Katarina

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