Cahora Bassa Hydropower Revamp: Powering Africa's Energy Future Amid Climate Turbulence

The Cahora Bassa Hydropower Plant, Africa's second-largest hydroelectric facility, is undergoing a transformative revamp that could redefine regional energy stability and unlock investment opportunities in a continent grappling with climate volatility. Located on Mozambique's Zambezi River, this 50-year-old plant is the backbone of Southern Africa's power grid, supplying over half of Mozambique's electricity and exporting two-thirds of its output to South Africa, Zambia, and Botswana. As climate change intensifies droughts and energy demand surges, the $125 million modernization project—funded by the African Development Bank and private investors—emerges as a critical lifeline for the region.

The Revamp: Boosting Capacity and Climate Resilience

The core of the project, led by Austrian engineering firm ANDRITZ AG, involves replacing five aging turbines and generators to increase each unit's capacity by over 4%. This will elevate total output from 2,075 MW to approximately 2,165 MW—a 4% gain that could stabilize electricity supplies for millions. The phased replacement ensures continuous power generation, a vital consideration for industries like the Mozal Aluminum Smelter, which relies on Cahora Bassa for 40% of its energy and faces a critical contract renewal in early 2026.

The revamp also addresses climate risks. Prolonged droughts in 2024 reduced reservoir levels to 32%, exposing vulnerabilities in hydropower-dependent economies. New water management systems and upgraded infrastructure aim to extend the plant's operational lifespan by 25 years, ensuring it remains a reliable pillar of the Southern African Power Pool (SAPP).

Regional Integration: The SAPP's Crucial Role

The SAPP, connecting 12 Southern African Development Community (SADC) countries, depends heavily on Cahora Bassa's output. South Africa alone imports two-thirds of the plant's electricity via a 1,400-km transmission line—a lifeline for its struggling utility, Eskom. With climate variability threatening hydropower reliability, the SAPP's push to diversify energy sources and strengthen interconnections is gaining urgency.

The parallel development of the Mphanda Nkuwa hydroelectric project—1,500 MW of new capacity supported by the World Bank—adds momentum. Together, these projects could boost Mozambique's total renewable capacity by 60%, positioning it as a regional power exporter.

ANDRITZ's involvement in Cahora Bassa reflects its growing role in African infrastructure. Investors tracking its stock may see gains tied to its hydropower expertise.

Investment Implications: Riding Africa's Renewable Wave

The Cahora Bassa revamp and Mphanda Nkuwa project exemplify Africa's shift toward sustainable infrastructure upgrades. Key investment angles include:

1. Engineering Contractors: Firms like ANDRITZ, with their niche expertise in hydropower modernization, stand to benefit from a continent-wide push to rehabilitate aging infrastructure.
2. Renewables Infrastructure Funds: Investors can access diversified exposure through funds like the Africa50 Infrastructure Fund or the World Bank's International Finance Corporation (IFC), which back projects like Mphanda Nkuwa.
3. Regional Utilities: Companies such as South Africa's Eskom and Mozambique's Electricidade de Moçambique (EDM) may see improved creditworthiness as grid reliability rises.

Hydropower's dominance in Mozambique's energy mix underscores the strategic value of projects like Cahora Bassa and Mphanda Nkuwa.

Risks and Considerations

• Climate Uncertainty: Even with upgrades, prolonged droughts could strain reservoirs. Investors should monitor rainfall patterns and diversification efforts.
• Tariff Negotiations: Disputes over electricity pricing, as seen with the Mozal Smelter, could delay revenue streams.
• Geopolitical Risks: Mozambique's ongoing insurgency in the north poses operational and logistical challenges.

Conclusion: A Strategic Bet on African Resilience

The Cahora Bassa revamp is more than a technical upgrade—it's a catalyst for regional energy autonomy and climate adaptation. For investors, the project signals a broader trend: Africa's energy future hinges on rehabilitating existing assets while building new renewables capacity.

Recommendation:
- Long-term investors should consider exposure to African infrastructure funds or ANDRITZ's stock, leveraging their role in critical projects.
- Sector-specific players might explore utilities with diversified energy portfolios (e.g., solar or gas) to mitigate hydropower risks.
- Watch for milestones: The Mozal Smelter's 2026 contract renewal and Mphanda Nkuwa's construction timeline (targeted for 2028) will be key indicators of progress.

In a continent where 600 million lack electricity access, the Cahora Bassa revamp isn't just about power—it's about unlocking Africa's potential to lead its own energy transition.