This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 4/11/2019

Overview

Malawi’s power sector is one of the most severely constrained in sub-Saharan Africa – less than 10% of the population of 18 million is connected to the electrical grid. For the 80% of the people living in rural areas, access to electricity is less than 1%. The total installed capacity for power generation in the interconnected grid of Malawi operated by Electricity Supply Corporation of Malawi (ESCOM) is approximately 362 megawatts (MW), of which 351 MW is hydropower and 11 MW is reciprocal engines (diesel sets). Some off-grid photovoltaic installations exist but are very few.  With the majority of Malawi’s hydropower generation derived from the Shire River located south of Lake Malawi, the hydrology of the river determines, to a great extent, the available output of electricity at any time.

Estimates indicate that shortage of capacity frequently exceeds 60 MW, or over 17% of peak demand in Malawi. With no reserve margin and a stressed system, the reliability and quality of electricity supply is poor. Malawi depends on domestic generation, as there are currently no significant interconnections to neighboring countries.
Considerable investment in new infrastructure is necessary to improve security and regularity in supply and meet a growing demand. To this effect, the Government of Malawi has developed a number of strategies in the energy sector, including power sector reform, rural electrification, biomass energy and renewable energy. The reforms have led to the unbundling of ESCOM into two companies – a generation company (EGENCO) and transmission & distribution (ESCOM Ltd). ESCOM is now the system and market operator (SMO) as well as the single buyer (SB) buyer of electricity generated throughout the country.

The reforms in the power sector have also led to the entry of Independent Power Producers (IPPs) for new generation capacity. A number of potential developers (>30) have been in contact with the Government of Malawi (GoM) to develop independent power projects. Most of the interested IPPs are in solar PV, while some coal, heavy fuel oil (HFO), and small hydropower projects are among the candidates.  In 2017, ESCOM issued a tender for 70MW of solar PV via its first IPP procurement and is currently in the final negotiations with three companies.

Other efforts being undertaken to better serve the existing and future demand include a number of transmission expansion projects co-funded by the U.S. Government, through the Millennium Challenge Corporation (MCC), and by the World Bank. The $350.7 million MCC compact is designed to:  increase the capacity and stability of the national electricity grid through transmission and distribution improvements; bolster efficiency and sustainability of hydropower generation; prepare for future expansion by strengthening sector institutions, regulation, and governance; reduce the cost of doing business; and revitalize Malawi’s power sector. The MCC Compact will conclude in September 2018.
Launched in 2013, Power Africa is a market-driven, U.S. Government-led public-private partnership to double access to electricity in sub-Saharan Africa.  It offers private sector entities tools and resources to facilitate doing business in Africa’s power sector.  Learn more about the full Power Africa toolbox or other opportunities offered by Power Africa.

 

 2014201520162017 (Estimated)
Total Local Production (GWh)1906.511975.021976.991808.64
Total Exports0000
Total Imports (GWh)23.6221.8524.4320.43
Imports from the US
 
0000
Total Market Size (GWh)1930.131996.87   2,001.421829.07
Exchange RatesMK470/USDMK672/USDMK728/USDMK730/USD
(Total market size = (total local production + imports) - exports)

Leading Sub-Sectors

Hydro electricity, fossil fuels and biomass are the most used energy sources in Malawi.  Opportunities exist in the following areas: hydro generation, solar energy, wind energy, thermal power plants,  biomass stoves, biogas and renewable power generation.

Opportunities

According to Malawi’s Integrated Resource Plan (IRP), ESCOM aims to supply electricity to close to 30% of the population by 2030, quadrupling current generation levels to 1875 MW.  To meet the growing demand, new generation capacity needs to be integrated into the grid on an average annual basis of 157MW over the planning horizon (2017-2036). The IRP specifically mentions plans to add 650 MW of new installed capacity by 2032 – including 165MW of solar, 60MW of wind, 23MW of hydro, 50MW of fuel oil, 250MW of coal, and 100MW of biomass.  The likelihood of implementation of these plans varies by project and many believe these plans are overly ambitious.

Since EGENCO currently lacks capital to fully meet ESCOM’s demand for power on its own, U.S. companies can explore independent electricity generation opportunities through power purchase agreements and other possible outsourcing opportunities with ESCOM. In the longer term, additional hydropower, solar, geothermal, and biomass projects provide other potential opportunities.  Generation projects in Malawi are expected to benefit from possible trading and export opportunities when cross-border transmission projects are in place with Mozambique, Tanzania, and Zambia.

Opportunities also exist for U.S. suppliers of household-level solar products.  The use of small-scale household solar units, and accompanying storage options, is growing as 90% of Malawians are not connected to the grid.

Web Resources


 

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Malawi Energy Trade Development and Promotion