The African Trade Insurance Agency (ATI) has provided a liquidity guarantee to Malawi’s Golomoti solar PV plant via its Regional Liquidity Support Facility (RLSF). The 20 MW solar farm is being developed by JCM Power Corporation, a Canadian clean energy IPP and InfraCo Africa Limited, part of the Private Infrastructure Development Group (PIDG).
ATI says the provision of the guarantee to cover the Golomoti Solar plant is in line with its strategy to help address the gap in Africa’s renewable energy sector. This is the fourth project to benefit from the Regional Liquidity Support Facility (RLSF) since the launch of the facility.
“We are pleased to be supporting yet another renewable energy project in Malawi with RLSF cover. Special thanks to JCM Power and InfraCo Africa who have allowed us to contribute towards their two projects within the country,” says ATI’s Renewables Underwriter, Obbie Banda.
“Evidently, the sector reforms introduced by the Malawian government in recent years are bearing fruit – we hope to continue being a part of this positive journey in future, not only in Malawi but across the African continent with the view of making a contribution towards a Just Energy Transition,” Banda added.
Golomoti solar plant
Construction funding for the Golomoti solar PV plant was provided by JCM Power and InfraCo Africa. The electricity generated by the power plant will be sold exclusively to the Malawian national power utility, ESCOM, under the terms of a 20 year Power Purchase Agreement (PPA).
The Golomoti Solar will include a 5MWh battery energy storage system (BESS) – the first commercial-scale solar PV plant in Malawi to include battery storage. In addition to contributing towards the increased generation of electricity and creation of employment, the project will further diversify Malawi’s energy mix as it introduces an alternative to the hydro and diesel-powered projects that currently supply the bulk of the country’s electricity.
The project has benefited from knowledge-sharing with its sister project, Salima Solar, with both projects being beneficiaries of the evolving regulatory framework within Malawi that has made it possible for the advancement of such renewable energy projects.
“Support from ATI through the RLSF initiative has been a key aspect of advancing our projects in Malawi. The partnership makes it possible for IPPs like JCM Power to deliver projects that have a positive impact on the renewable energy sector in Africa,” says Christian Wray, CEO of JCM Power.
ATI’s Regional Liquidity Support Facility (RLSF)
The Regional Liquidity Support Facility (RLSF) was launched in 2017 by ATI and KfW Development Bank to help tackle climate change and attract additional investments by supporting renewable energy projects in ATI’s member countries. It is designed to address short-term liquidity risks faced by Independent Power Producers (IPPs) that sell electricity to state owned power utilities across sub-Saharan Africa.
RLSF provides cash collateral supplemented by on-demand guarantees to a bank that in turn issues a revolving standby letter of credit for the benefit of the IPP – the SBLC is available for drawdowns following a payment delay by the offtaker.
In addition to Golomoti Solar, RLSF has enabled projects with a total installed capacity of 108.5 MW to achieve financial close – a key milestone as the projects get closer to connecting to the grid. The other projects that have benefited from RLSF cover are the 7.5 MW Mubuga solar PV in Burundi, the 21 MW Nkhotakota and 60 MW Salima solar PVs in Malawi.
“Our recently inaugurated 60MW Salima Solar plant has benefited from a revolving liquidity guarantee provided by ATI, under its Regional Liquidity Support Facility, and we are pleased to have ATI’s support for Golomoti Solar, our second solar initiative in Malawi. This support will ensure that Golomoti can deliver reliable access to clean electricity for homes and businesses, powering Malawi’s future economic growth,” commented Connor Dawson, InfraCo Africa’s Head of Asset Management.