Should the International Finance Corporation (IFC) use blended finance to develop the Mocuba Solar Project? And if the project is successful, would it be transformational to Mozambique in providing power to residents as well as catalyzing commercial investment in future utility-scale solar projects in sub-Saharan Africa?
Should the International Finance Corporation (IFC) use blended finance to develop the Mocuba Solar Project? And if the project is successful, would it be transformational to Mozambique in providing power to residents as well as catalyzing commercial investment in future utility-scale solar projects in sub-Saharan Africa?
In 2017, the International Finance Corporation (IFC) considered leading a $55 million debt package for the development of a 40.5 MW solar PV plant near Mocuba, Mozambique. The objective was to provide electricity to 170,000 households while demonstrating that utility-scale solar projects have commercial potential in sub-Saharan Africa. One of the least electrified countries in the world, Mozambique would benefit tremendously from the Mocuba solar project. Despite the clear demand for electricity and proven solar technology, there arose significant challenges and risks: Mozambique’s political and economic instability, the lack of experience with utility-scale solar projects in the region, and the high initial capital investment required to construct the project, all of which deterred commercial investors from participating in financing the project. Blended finance – using concessional capital to reduce project risk – was a potential solution. In this case, students will learn about the opportunities and challenges of financing large scale power projects in developing countries and evaluate how blended finance can be used to overcome those hurdles.
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