IEEJ : July 2013

THE REPUBLIC OF MALAWITHEREPUBLIC
OFOF
MALAWITHEREPUBLIC
MALAWI
COUNTRY REPORTTH GERMANY – AFRICAN ENERGY FORUM
55TH GERMANY – AFRICAN ENERGYPRESENTEDAT JICA INTERNATIONAL CENTRE
FORUM
5TH GERMANY– AFRICAN
ENERGYFORUMHUMBURGAND
HANOVER,GERMANYTOKYO,JAPANHUMBURG ANDGERMANY
4TH –HANOVER,
6TH APRIL,
2011
ND JUNE,HANOVER,
22AND
2013GERMANY–2ND
7TH– APRIL,
2011
4THHUMBURG

4TH – 6TH APRIL, 2011

RENEWABLE ENERGY INVESTMENTStatusof Energy PolicyinMalawiOPPORTUNITIESIN MALAWIRENEWABLE ENERGY INVESTMENT OPPORTUNITIES IN
MALAWI
Presented byPresented byPresented byPresentedby P. Mwadiwa
Randson
RENEWABLE ENERGY INVESTMENTPatrick
OPPORTUNITIESINMALAWI
Presentedby
G. J LAPUKENI
Randson P. Principal
MwadiwaSecretary
RandsonP.
Mwadiwa
Controller of Policy and Planning
Principal
SecretaryOF NATURALMINISTRY
Principal
Secretary
MINISTRY
OF ENERGYMINISTRY
OF NATURALRESOURCES,ENERGYRESOURCES,ENERGYANDMINISTRY OF NATURAL RESOURCES, ENERGYANDENVIRONMENTAND ENVIRONMENTENVIRONMENTMalawi: A Country Overview
 Population:

13.1m (2013) growing at 2.8%

 GDP (nominal): growing 5.2 2013
 Per capita:$328 (2011 ) Imports:$1.625 billion (2009 est.)
petroleum products, consumer goods, equipment
 Exports:$945 million (2009 est.)
tobacco (53%), tea, sugar, cotton, coffee, peanuts, woodproducts
 Main towns:
 Lilongwe:
 Blantyre: Mzuzu: Zomba:

22Population, (2008; EIU est.)
890,000
750,000
190,000
101,000

STATUS OF ENERGY SECTOR
 Growth indicators – Malawi
 2013 Growth Domestic Product (GDP) at 5.2%

Malawi`s population is now 13.1 million, with an estimatedgrowth rate of 2.8%
 Only 9.8% of population have access to electricity
 Access in rural areas is less than 1%
 87%of energy is from biomass therefore Serious
deforestation and Environmental degradation.
 Women spend more time and energy fetching firewood
STATUS OF ENERGY SECTOR
 Regarding Electricity, the total installed power generation capacity

is 287MW.
The majority of this power is generated from hydro (99%) mainly
from Shire River.
Only one small mini hydropower on Wovwe River in the North,which is generating 4.5MW.
Power transmission is at 132kV and 66kV and only extends tomajor cities.
Power distributed to rural areas is done through 33kV and 11kVlines.
Nationally, electricity access rate is at 8% while in rural areas,
access rate is still less than 1%.
Large investment potential for the development of hydropower
generation from a number of perennial rivers, potential for coal
fired, nuclear power, solar and wind pow

CHALLENGES5Capital finance shortage manifested in lack of investment ingeneration, transmission, distribution and overall powersystem stability
 Aging generation equipment leading to frequent breakdowns
and blackouts
Low power generation capacity – making Malawi an unattractive
investment destination and increasing cost of doing business
in Malawi due to use of expensive alternative power sources
 Environmental degradation affecting hydro power generation
hence redirection of resources to combat the effects
environmental degradation
 Limited internal storage facilities exposing the country tofrequent fuel supply shortages
CHALLENGES6

high cost of transportation (petroleum)

High global prices of oil leading to rising retail prices



Infant renewable energy industry which requires nurturingVandalism of installations and infrastructureForex constraints

NATIONAL ENERGY GOALS
 Government has prioritized energy generation and supply as one of thepriority areas (MGDS II & ERP) to stimulate economic growth. Specificgoals are:
 Make the energy sector sufficiently robust and efficient to support GoM’s
socio-economic agenda of poverty reduction, sustainable economic
development, and enhanced labour productivity.
 Catalyse the establishment of a more liberalized, private sector driven energy

supply industry in which pricing will reflect the competition and efficiency thatwill develop in the reform process; and Transform the country’s energy economy from one that is overly dependent onbiomass to one with a high modern energy component in the energy mix.

ENERGY STRATEGIC OBJECTIVES• improve efficiency and effectiveness of the commercial energy supplyindustries;• improve the security and reliability of energy supply systems;• increase access to affordable and modern energy services;• stimulate economic development and rural transformation for poverty
reduction;• Improve energy sector governance; and• mitigate environmental, safety, and health impacts of energy
production and utilization.
 Increase the number of households with electricity 30% by 2020 and40% by 2050;
 Attract private capital and participation
 Enable the ESI effectively participate in regional electricity trading
throughPOLICY STRATEGIES-ESI Rehabilitation and upgrading of existing power stations
 Construction of new 220-330 kV backbone North Southtransmission lines (one on East and West) Rehabilitation and expansion of the existing transmission anddistribution system Demand-side management activities to reduce peak demandgrowth Weed and siltation management
 Policy and regulatory review to encourage private sector
generation and adoption of vandal free technologies
 Capacity building Connecting to the SAPPPOLICY STRATEGIES-LF&G10

 Internal storage capacity using Government and Private

facilities to increase from the present 6 days cover to aminimum of 30 days
 . (a regime of incentives and penalties for noncompliance being developed by MERA) Building strategic reserves
 Plans under consideration to construct a fuel pipeline fromMozambique Plans in advanced stages to promote increased use of LPG
at household level to be promoted
 Ethanol-Petrol blending ratio under review with apossibility of increasing from 10:90 to 20:80
 Jatropha based Biodiesel production promoted

PRIVATE SECTOR PARTICIPATION
 ESCOM is currently the sole electrical power supply service

provider which owns the entire generation, transmission anddistribution network in the country.
 The Malawi Energy Policy (MEP) of 2003 and the Energy Lawsof 2004 as reviewed in in 2008 provide for private sector
involvement in electricity generation either as: Independent Power Producers (IPP) Public Private Partners (PPP) Build, Own, Operate and Transfer (BOOT) GoM has drafted the Feed In Tariff Policy to guide Private

Sector Investment

EXAMPLES OF INTERVENTIONS

Implementation of Kapichila phase II to generate additional 64 MW
Conduct feasibility studies for different sites for hydropower development
Rehabilitate and upgrade transmission & distribution substations in MalawiRehabilitate already existing hydropower station along shire River- Nkula AConduct feasibility studies for Coal Power Generation
Raising competition by

Connecting to power pool;Providing for new capacity through Independent Power Producers;

Providing for outsourcing of certain services such as billing and revenue collection,
supply and warehousing of spare parts.






Short Term Investment Plans
13

 Short term solutions which have been identified due totheir gestation period are:
 demand side management, installation of peaking thermal (HFO/Diesel) powerplant, Construction of Kapichira Phase II hydropowerplants.
 undertaking of comprehensive feasibility studies onpotential hydro power sites.

Demand Side Management14

 Government is implementing the Demand-SideManagement (DSM) programme which involves; Implementation of time of use tariffs to reducedemand at time of system peak; installation of programmable Maximum Demand(MD) Meters ; promotion and facilitation of use of CFLs.
 Implementation of feeder metering by installingmeters on distribution feeders.
 Construction and maintenance of distribution andtransmission lines to reduce transmission losses.

Power Sector Reform Strategy
The main thrust of the Power Sector Reform Strategic plan was
the vertical separation of the ESI market structure into naturalsegments of generation,
 transmission and distribution markets.
 Pricing Models: Cost Recovery, Efficiency Caps + Return on
Investment
 This was considered strategic to the attainment of the twin policy
goals of efficiency and effectiveness through competition andprivate sector participation including the development of new
power generation capacity.
 The reforms would allow Malawi to benefit from the evolving
regional power pool market through SAPP in form of power
trading if the country is interconnected with neighboringcountries.
Role of GovernmentSet policy framework and commercial environment under which theESI operates (level playing field); Ensure accountability and transparency in the ESI; Monitor set targets for the ESI through performance bonds;
 Ensure that new hydropower plants comply with international

agreements on water riparian rights;
 Ensure that all power project in generation, transmission anddistribution meet environmental standards & approval procedures.

REGULATION AND ROLE OF GOVERNMENT GoM has recognized that effective regulation is key to theESI reforms
 In this regard , GoM has established MERA which issupposed to be independent , transparent, lean and effective
as required by the reforms in the Energy Policy
 GoM has also anchored MERA on all three aspects ofregulation
 Economic Regulation
 Technical Regulation
 Legal Regulation

Liquid Fuels & Gas Industry Structure

Production Activities to be licenseda)
b)
c)
d)

Production of crude oil and gas
Refining of crude oil
Production of ethanol fuelProduction of bio-diesel

Liquid Fuels & Gas Market Structure cont…
Supply Activities to be licenseda)b)c)d)e)

Importation of liquid fuels and gas
Wholesaling
StorageTransportation
RetailingMedium Term Investment Plans
20

Malawi/Mozambique Power Interconnection
 construction of coal fired power plant,
Construction of 8 hydropower plants,
Construction of 2 biomass fired power plants

and construction of 2 wind power systems.

Energy Mix Projections 2000 - 2050

2000 2010 2020 2050
Biomass

93.0

75.0

50.0

30.0

Liquid Fuels

3.5

5.5

7.0

10.0

Electricity

2.3

10.0

30.0

40.0

Coal1.04.0

6.0

6.0

Renewables

0.2

5.5

7.0

10.0

Nuclear

0.0

0.0

0.0

4.0

TOTAL

100%

100%

100%

100%

LF&GSI New Market Structure
ETHCO
(20%)

NOCMA(Upstream & SFR)

Global OIL MARKET(80%)

REGULATORSENERGY MINISTERPRIVATEPRIVATEPRIVATEPRIVATE

Policy Formulation
Policy Guidance

SSSS

ENERGYPRICINGCOMMITTEEOf MERASS

SECTOR-WIDE REGULATORSSDOWNSTREAM LIQUID FUELS MARKET

Regulate-Price Regulation-Technical Regulation-Environmental Aspects-Legal Regulation-Licensing

AppealRegulator
Parliament

Ultimate Energy Sector LegalFramework
ENERGY FRAMEWORK LAWS

Electricity
Act

CoalAct

Liquid Fuelsand Gas ActRETs
ActREActRegulatory
By-laws

Regulatory
By-laws

Regulatory
By-laws

Regulatory
By-laws

Regulatory
By-laws

SECTOR-WIDE
ENERGY INDUSTRY REGULATOR(MERA)
Economic Regulation(Pricing)

Technical Specifications

Legal(Licensing, Environmental
Impact, Promotion)

INSTITUTIONAL, LEGAL & REGULATORYFRAMEWORK The

Ministry of Energy is responsible for policy andcoordination of the energy sector.
 This sector is guided by Mw Energy Policy of 2003, the Energy
Regulation Act of 2004, Rural Electrification Act of 2004,Electricity Act of 2004, Liquid Fuels and Gas Production andSupply Act of 2004
 Both the Policy and the Energy Laws encourage the participationof private sector in electricity generation & distribution
 Mw Energy Regulatory Authority (MERA), an independent
body, regulates energy in accordance with the Energy Laws

Energy Sector Legal Framework
ENERGY FRAMEWORK LAWS

Electricity
Act 2004

CoalAct

Liquid Fuels
and Gas Act
2008

Regulatory
By-laws
2008

Regulatory
By-laws
2008

Regulatory
By-laws
2008

RETsActREAct 2004

Regulatory
By-laws
2008Regulatory
By-laws
2008

SECTOR-WIDE
ENERGY INDUSTRY REGULATOR(MERA)
Economic Regulation(Pricing)

Technical Specifications

Legal(Licensing, EnvironmentalImpact, Promotion)

ELECTRICITY DEMAND AND GENERATIONCAPACITY IN MALAWI The current electricity

demand in Malawi
stands at 347 MW.
The current installedcapacity stands at
283.5 MW

1000
800
600

Surplus/Deficit
MW Installed
Demand (MW)400200•

It is projected thatdemand will be 598
MW in 2015, 874 MW
in 2020 , 1193 MW in2025

19941996
1998
2000
20022004
2006
2008
2010201220142016201820200‐200‐400‐600

CURRENT ENERGY DEMAND GROWTHDRIVERS
 Mining Sector (minimum of 800MW) The Green Belt Irrigation Initiative (minimum of130MW)
 Service – ICT, Tourism, Banks, Hospitals, Offices andeducation (minimum of 500MW)
 Manufacturing and processing (minimum of 700MW)
 Domestic Demand (minimum of 700MW)POTENTIAL ENERGY SOURCESHydro
 The untapped hydro power potential in Malawi is over2000MW
 Currently, Government is conducting feasibility studies
for hydropower development at Mpatamanga inMwanza, Lower Fufu in Rumphi Kholombidzo in
Blantyre and Chimgonda, Chasombo and Chizuma in
Nkhotakota
 These sites have potential ranging from 50 – 300MW
 They are earmarked for IPPs OR PPPsPRIORITY POWER GENERATION PROJECTS

ProjectLower Fufu (hydro)

Potential
Capacity(MW)

Est.Cost(USc/kWh)

Annual Energy(GWh)

100 -175

2.3 - 2.4

420 – 660

160 -310

2.3 - 2.9

1175–1930

20- 50

7.2-9.8

155-280140-280

2.7-2.91160 -1795

30-60

17-29.1

200-240

25-50

9.5-11.8

175-21525-50

7.1-8.5

110-170

Only Feasibility Study fundedMpatamanga (hydro)
Only Feasibility Studies funded

Chimgonda (hydro)
Only Feasibility Studies funded

Kholombizo (hydro)
Only Feasibility studies funded

Malenga (hydro)
Feasibility studies required

Chasombo- (hydro)
Feasibility studies required

Chizuma (hydro)
Feasibity studies required

POTENTIAL HYDRO SITESMANOLO
60 - 130 MW
360 - 590 GWh/a
4.2 - 4.8 USc/kWh

HENGA VALLEY
20 - 40 MW
155 -185 GW/a

8.7 ‐ 9.3 USc/kWh
RUMPHI (STORAGE)
3 - 13 MW
22 - 60 GWh/a

LOWER FUFU
75 -140 MW
420 - 610 GWh/a
2.3-2.4 USc/kWh12.3 ‐ 21.8 USc/kWh
CHIZUMA
25 ‐ 50 MW
110 ‐ 170 GWh/a
7.1 ‐ 8.5 USc/kWh

Dwambazi

CHASOMBO
25 ‐ 50 MW
175 ‐ 215 GWh/a
9.5 ‐ 11.8 USc/kWh

Ri

aBu

CHIMGONDA
20 ‐ 50 MW
155 ‐ 280 GWh/a
7.2 ‐ 9.8 USc/kWhrve

MALENGA
30 - 60 MW
200 - 240 GWh/a
17.0 - 29.1 USc/kWh

KHOLOMBIDZO
140 - 280 MW
1160 - 1795 GWh/a
2.7 - 2.9 USc/kWheRr
ive

RuoRirSh

MPATAMANGA
160 - 310 MW
1175–1930 GWh/a
2.3 - 2.9 USc/kWhiver

MBONGOZI
25 - 50 MW
200 - 240 GWh/a
14.1 - 17.3 USc/kWh

ZOA FALLS
20 ‐ 45 MW
120 ‐ 200 GWh/a
4.6 ‐ 5.8 USc/kWh

POTENTIAL ENERGY SOURCES Cont’dWind & Solar Energy• Malawi has a large potential for wind and solar power generation
with wind speeds ranging from 3-10m/s and solar irradiation of21.5MJ/m2.
• However, there is need to conduct a resource mapping exercise todetermine location and frequency.
• Currently, the Ministry is implementing a pilot Village
Electrification project, using wind – Solar hybrid systems.
 The total installed capacity is 132 kW of which 90 kW is from wind.
 However, large capacity wind turbines in the range of 5MW in awind farm of 20 Wind Turbines would total to 100MW of wind
generation which would add 35% of Electricity generation in thecountry

POTENTIAL ENERGY SOURCES Cont’dBiomass
GoM is encouraging the sugar and tea industry to invest inelectricity production through use of biomass.
Currently, Illovo companies are generating electricity for own useusing bagasse.
The generation capacity is about 18 MW (11 MW at Nchalo and 7MW at Dwangwa )There is potential to generate an additional 100 MW from thesesugar factories.
In the Tea and Timber Industry, wood is the main source ofboiler fuel used to generate steam .
This steam can also be used to generate electricity

OTHER POTENTIAL POWER GENERATION PROJECTS
Project

PotentialC
apacity(MW)

Est.Cost(MUSD)

Est.Cost(USc/kWh)

AnnualEnergy(GWh)Wind Energy
Project-1505?

?

503?

?

10070?

?

Feasibility studies require

Solar Energy
Project- feasibility
studies required

CogenerationsFeasibility Studies
RequiredLEARNING AREAS OFINTEREST
EXPERINCE FROM OTHER COUNTRIESENERGY AND OTHER RESOURCE DATA MANAGEMENTEFFECTIVENESS OF INSTITUIONAL AND REGULATORY FRAMEWORKS
EFFECTIVE SHORT TERM INTERVENTIONS TO PROMOTE PRIVATESECTOR PARTICIPATIONMEASURESTO BUILD CAPACITYOPERATION OF THE SECTORINTHEREGULATIONAND

Contact : report@tky.ieej.or.jp