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Zimbabwe offering 5-year tax breaks to Solar Energy investors

The country is hoping woo renewable energy investors through policy reforms and incentives

Solar energy investors will be granted 5-year tax breaks and government incentives for setting up solar power generation plants in Zimbabwe. The Southern African country’s Minister for Energy Zhemu Soda announced last week. The minister made this announcement during a Question and Answer session with the Senate on Thursday. 

Whatever they are going to generate during those five years, they are not obligated to pay tax to Government

Zimbabwe’s Minister for Energy Zhemu Soda

Zimbabwe has been battling chronic power shortages as a result of breakdowns of state utility ZESA Holdings’s installed capacity. The country has seen load-shedding sometimes lasting up to 18 hours a day. The country’s colonial power plants have not been able to guarantee energy security with the nation having to rely on import from South Africa and Mozambique to cover some of its power needs. 

The minister commented saying the decision to incentivise solar power generation “is done to motivate those who want to invest in the generation of solar energy so that the solar grids can be linked to the national grid.”

Zimbabwe’s power demand is around 2 000MW. The country has largely been circumvented by renewable energy investment that its surrounding neighbouring countries have enjoyed. The country currently has no large scale solar PV plant larger than 50MW. Pan-African renewable energy company, Distributed Power Africa (DPA), owned by billionaire tycoon Strive Masiyiwa is one of the few major renewable energy players in the country. DPA is mostly involved in the private sector renewable energy space.

Solar Energy could restore Zimbabwe’s energy security

As a result of ageing equipment, existing power plants are generating far below the national requirement, the country’s energy strategy is now focusing on utilizing it’s abundant solar energy resources to restore energy security.

“Alternative forms of energy like solar power should also be utilised like we have a lot of sunlight which can generate power. It is important that we have investors or people who will invest in the generation of solar power, and the Government is going to give incentives to investors who want to participate in the generation of solar. This can be done by local people or other businesses which might decide to import gadgets used for generating solar duty free,” said Zhemu.

Zimbabwe has a national electrification rate of 40%. The country is also looking at utilizing off-grid solar energy systems to give more Zimbabweans access to electricity. The nation’s Rural Electrification Agency (REA) is implementing various projects in rural areas to improve energy access. 

 “There are a number of projects being done by REA to install new solar systems ones to better those that were installed from 2005 to 2015. We have 400 solar units that have deteriorated in terms of electricity generation and REA was tasked to make sure that such stations begin to generate power,” said Zhemu.

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