Malawi’s electricity generation relies predominantly on large hydro, which accounts for 94% of the total installed capacity. All the major power stations are located in the southern region along the Shire river, which runs out of Lake Malawi. They make up 346MW of the total 368MW capacity. One small hydro station, the 4.5MW Wovwe plant, operates in the north of the country. The remaining capacity comes from on-and-off isolated diesel mini-grids in Lilongwe, Mzuzu including the Likoma and Chizumulu islands, and a PV plant that powers the Kamuzu International Airport of the capital Lilongwe. There are also two captive biomass plants owned by a sugar-cane producer.
The country’s electrification rate is currently at 9%, with a rural share of only 1%, according to the Malawi Energy Regulatory Authority. Increased power demand and the instability of the electricity system have forced the government to incentivize the reform of the power market and the build-out of new capacity.
In September 2012, the Malawi Energy Regulatory Authority (MERA) drafted a feed-in tariff plan. Although the feed-in tariff is currently in use, the plan has not been formally approved yet.
In August 2016, the government completed the unbundling of the power sector. The state-owned Electricity Supply Corporation of Malawi (Escom) will be responsible for transmission, distribution and retail within the country, while the new company; Electricity Supply Corporation of Malawi (Egenco) will be in charge of the generation segment. Malawi is not connected to power systems with neighboring countries and cannot therefore benefit from its memberships of the Southern African and the East African Power Pools, although this option remains open. A plan to interconnect with Mozambique and Zambia for the purchase of at least 150MW is being developed.
In 2017, Escom held its first renewable energy tender, contracting 70MW of PV power across four sites in Malawi. To attract foreign investment in the power sector, the country has started opening up the electricity market with a standardized power purchase agreement to allow independent power producers to operate. Several IPPs are developing projects and more than 36 memoranda of understanding have been signed so far, the majority on renewable energy projects. However, as of now, only two IPPs are in line to agree PPAs by the end of the year: HE Power for a 41MW hydro project, and IntraEnergy for a 120MW coal plant.
Clean energy project developers and manufacturers can qualify for general tax incentives that were set up to support foreign investment. A biofuels blending mandate has been in place since the 1980s, and in 2013, the National Centre for Science and Technology introduced the Malawi Ethanol Programme aiming to increase production of ethanol within the country.
The existing Rural Electrification Programme under the Ministry of Energy Affairs uses revenue from a 3% levy on electricity consumption and fuel import taxes to fund the extension of the main grid to trade centers. The country aims to increase energy access to 30% by 2020 and 40% by 2050, and has set a target of 2 million clean and efficient cookstoves throughout the country by 2020. All the public institutions including hospitals and schools will have access to electricity by 2035 through grid connection and/or minigrid/off-grid projects funded by the Rural Electrification Program.
The National Energy Policy (NEP), delayed from November 2016, is due to be enforced in 4Q 2017. The NEP will diversify further the energy mix with a major focus on renewable sources, such as solar and wind. The new energy policy is expected to raise the RE target to 11% by 2020 (currently at 7%) and 22% by 2030.
The government submitted Malawi’s Nationally Determined Contribution (NDC) in September 2015, listing a set of mitigation and adaption activities, conditional and unconditional, that would reduce emissions per capita to 0.7-0.8 tCO2e by 2030, as opposed to a forecasted business-as-usual scenario of 1.5 tCO2 per capita (47% lower). However, no specific target has been established.