FP290

Mozambique faces recurrent droughts, floods, cyclones, and rising temperatures that disproportionately affect rural and low-income communities. These hazards severely undermine agricultural productivity and food security, while energy systems remain heavily reliant on climate-sensitive hydropower. With rural electricity access below 10 per cent, most rural households and small enterprises lack reliable energy to adapt to climate shocks, diversify incomes, or access basic services.

This project aims to enhance climate resilience and reduce emissions in rural Mozambique by expanding access to decentralized renewable energy and climate-smart productive use solutions, while strengthening national institutional capacity to sustainably finance and manage off-grid energy investments.

Structured around four outcomes, the project will strengthen the institutional and technical capacities of Mozambique's national energy fund, Fundo de Energia (FUNAE); support the development of mini-grids through competitive private-sector concessions; reduce emissions through solar mini-grid installation and operation; and increase climate resilience and livelihood generation through climate-smart productive use of renewable energy solutions.

By combining competitive private-sector mini-grid concessions with results-based financing for productive uses, the project addresses affordability, demand, and investment risks that have constrained rural electrification in Mozambique. The project is expected to directly benefit 66,200 people, of whom 52 per cent are women, and indirectly reach a further 158,800 people, while positioning FUNAE as a sustainable national vehicle for off-grid energy and climate finance in the long term.