How Renewable Energy Can Help Mozambique Grow Its Economy

Mozambique, a country with vast natural resources and immense potential, nevertheless faces several economic challenges, including high unemployment, limited access to energy, and an unstable power supply. Underdeveloped infrastructure has slowed the growth of industry and hampered people’s entrepreneurial ambitions, leaving many regions in the dark—literally and figuratively. 

However, the rise of renewable energy offers a new path forward. Mozambique has the potential to improve energy access, boost productivity, and create jobs by leveraging renewable solar, hydropower, and wind energy sources. Public-private initiatives and international investments are laying the groundwork for a more sustainable and prosperous economy.

Current Energy Challenges in Mozambique

Mozambique’s economy is held back by unreliable energy infrastructure. Power outages are frequent, hampering the operation of businesses that depend on steady electricity. Many businesses are forced to rely on diesel generators, which increase operational costs and cut into profits. A recent study highlights that energy's high cost and unreliability are “devastating” to Mozambique’s entrepreneurs and small businesses, limiting their growth and survival in competitive markets.

The challenge of limited grid access is even more pronounced in rural areas, where most of the population remains without electricity. According to Deloitte’s Africa Energy Outlook: Mozambique Special Report, Mozambique’s electrification rate is only about 44%—leaving many people in the dark and without the resources needed to run schools, hospitals and medical clinics, and businesses. With such low access, inequality in economic opportunities persists between urban and rural populations. The high energy costs and insufficient infrastructure make it clear that Mozambique must find an alternative to its current energy model.

How Renewable Energy Can Drive Economic Growth

Expanding Access to Energy

Renewable energy can help solve the problem of limited access by offering both grid and off-grid solutions. Solar projects, in particular, are becoming popular in Mozambique because they can quickly provide electricity to remote communities. Off-grid solar installations allow schools, hospitals, and homes to access electricity without waiting for expensive grid extensions. The government’s Energy Access in Off-Grid Areas regulations—implemented in 2022 to provide a clearer legal framework for private sector power projects—should help bring power to remote regions.

Mozambique can also meet its electrification goals with help from technologies like hybrid solar systems that combine on-grid and off-grid functionality to ensure communities remain connected even during power outages. This dual-purpose approach also helps to stabilize Mozambique’s overall energy supply and increases the reliability of services for businesses, creating a more conducive environment for economic growth.

Reducing Costs for Businesses and Households

Renewable energy offers long-term cost savings by reducing dependency on expensive fossil fuels. Solar energy, mini-hydro systems, and wind power provide more stable and predictable energy costs, helping businesses cut operational expenses. For example, businesses that currently rely on costly and environmentally harmful diesel generators can transition to solar power and, after the initial investment, dramatically lower their energy expenses.

This cost reduction also extends to households, enabling more people to afford electricity. Families that switch to solar or wind energy solutions can save money, which can then be reinvested in education, healthcare, or entrepreneurial ventures. By easing the financial burden of energy access, renewables make room for more household spending and economic participation.

Enhancing Industrial Productivity

With a more stable and reliable energy supply, Mozambique’s industries, such as agriculture and manufacturing, can thrive. Interruptions in power cause delays and losses for agricultural producers, limiting Mozambique’s competitiveness in regional markets. Renewables can provide uninterrupted power, ensuring that factories, farms, and processing plants operate efficiently. Improved industrial productivity means higher exports, greater economic output, and more local jobs.

Job Creation

The renewable energy sector also offers significant employment opportunities. Large-scale projects, such as solar farms and hydroelectric plants, require a substantial workforce during the construction phase. Maintenance and operation of these facilities also generate long-term employment opportunities. In particular, Mozambique’s hydropower projects along the Zambezi River are already providing hundreds of jobs and contributing to regional development. Deloitte puts Mozambique’s total hydropower potential, centered on the Zambezi, at 12 GW—one of the largest in Sub-Saharan Africa.

Beyond construction and maintenance, the renewable energy sector creates room for entrepreneurship. Startups focusing on solar panel installation, repair, and energy storage solutions are emerging. The growth of this industry helps diversify the economy and provides more career opportunities, especially for young people.

Supporting Long-Term Sustainability

Transitioning to renewable energy also supports Mozambique’s long-term sustainability goals. By reducing reliance on coal and oil, Mozambique can decrease its carbon emissions and mitigate the effects of climate change. Solar, wind, and hydro projects are environmentally friendly, preserving the country’s rich biodiversity while contributing to economic growth.

Renewable energy can also attract international investment. Mozambique has worked with international organizations, such as the United Nations and the African Development Bank, that are eager to invest in sustainable projects. These partnerships strengthen Mozambique’s infrastructure and create new opportunities for regional development.

In addition, renewable energy investments often lead to broader infrastructure improvements. Building solar farms and hydroelectric plants requires roads, transmission lines, and modern communication systems, which benefit other industries. As Mozambique develops its renewable energy infrastructure, it also lays the foundation for further industrial growth and technological advancement.

Government and Private Sector Initiatives

The government of Mozambique has taken steps to promote renewable energy. For example, the PROLER program created clearer rules around renewable energy procurement processes, which has allowed for a more transparent bidding process for government tenders. It has played a key role in encouraging private-sector investment in renewable energy projects.

In the previously mentioned Africa Energy Outlook: Mozambique Special Report 2024, Deloitte identifies Mozambique as a regional leader in renewable energy, noting that continued growth will depend on strategic investments and supportive government policies. International partnerships, including collaborations with European energy companies and non-governmental organizations, are also fostering progress in Mozambique’s renewable sector.

Encouraging an Energy Transformation

Renewable energy holds the key to Mozambique’s economic transformation. By improving energy access, reducing costs, and stabilizing the power supply, Mozambique can create a more supportive environment for businesses and industries to thrive. Job creation and entrepreneurial opportunities in the renewable energy sector can empower individuals and promote economic inclusivity.

However, realizing the full potential of renewable energy will require collaboration between the government, private sector, and international partners. Strategic investments and policy support are essential to driving long-term growth. With its abundant natural resources and growing commitment to sustainability, Mozambique is well-positioned to become a leader in renewable energy, ensuring a prosperous and sustainable future for its people.