UNDP Energy Offer for Zimbabwe

Catalytic funding towards accelerating access to sustainable, affordable, and clean energy in Zimbabwe

May 11, 2022

Affordable and sustainable energy constitutes one of the six Strategic Impact Areas of UNDP’s Africa Promise, focusing on energy interventions as enablers of development. Sub-Saharan Africa is home to approximately 600 million people without access to clean, affordable energy, making the region a key focus of UNDP’s new Strategic Plan energy objective and scaled up energy offer, which seeks to provide access to clean and affordable energy to 500 million people through strategic partnerships and targeted stakeholder engagement. In Zimbabwe, a significant urban-rural disparity exists when it comes to access to electricity. A large proportion of the rural population still lacks access to electricity.

UNDP Zimbabwe has mobilized a total of USD $1.5 million grant aimed at accelerating access to sustainable, affordable, and clean energy in Zimbabwe. UNDP is working with the Ministry of Energy and Power Development, Rural Electrification Fund and the Zimbabwe Energy Regulatory Agency in the implementation of this project. The National Renewable Energy Policy of 2019 recognizes the high upfront and production costs affecting the economic viability of Renewable Energy projects. This creates the need to balance between project viability and affordable energy cost to provide citizens of Zimbabwe with cleaner, greener and cheaper energy options.

The policy outlined a number of Incentives for Promoting Investment in Renewable Energy in Zimbabwe. One such instrument is the Viability Gap Funding to increase electricity access by developing off-grid community projects in rural areas. The intervention is hinged on the Viability Gap Funding Framework and is investing a minimum of US$1.5 million catalytic support which will unlock further funding of renewable energy in the country through the Viability Gap Funding coined by the Government in the National Renewable Energy Policy. The majority of the project investment will be directed towards support 2 solar min grids by offering up to 50% subsidy for Renewable Energy projects CAPEX as Viability Gap Funding.

The catalytic funding will support the pre-feasibility studies and 5 full feasibility studies of solar mini grids project sites identified and prioritized by the Government of Zimbabwe. The project will also support development of the Viability Gap Funding mechanism for country, which is an incentive for renewable energy project developers to enhance bankability of projects. This intervention also full develop 5 pipeline project which can be presented to potential investors. Government will also select 2 project which will be directly supported by this project and will light up 150 households and institutions in 2020 and a further 350 households in 2023 and 2024. This partnership between the Government and the private sector to finance the development and deployment of renewable energy demonstrates the new thinking and financing models which will deliver impact at scale.The project will also enhance the coordination capacity of the Ministry of Environment through an Embedded Advisor based at the Ministry of Energy and well as sourcing of  Business Development Services in order to identify and build rural enterprises utilizing renewable energy in their productive uses.

Energy is the driver for economic development over the world.  The better the quality and quantum of energy available to an economy, the brighter its prospects are.