MALAWI’S APPROACH TO INVESTMENT IN RENEWABLE ENERGY

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Malawi’s energy supply faces significant challenges, affecting the country’s growth and development.[1] The challenges include; a rise in electricity demand, insufficient power generation capacity, lack of investment in new power generation units, insufficient focus on alternative energy sources, and lack of access to modern electricity for a large segment of the population.[2] This is a big drawback, as energy is considered the “lifeblood of the economy” under the third Malawian Development Strategy (MGDS III). To address the challenges, the National Energy Policy, 2018 has incorporated objectives to ensure diversity of energy sources to increase access to clean, sustainable, and affordable energy for all people.[3] To achieve these goals, the need for private investments, especially in renewable energies, cannot be overstated. It is against this backdrop that this article builds upon, to highlight some of the legislative and regulatory efforts Malawi has incorporated to allow and/or advance investments in renewable energies.

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The Ministry of Natural Resources, Energy and Mining, through the Department of Energy Affairs and the Malawi Regulatory Authority (MERA), has made strides in producing policies, regulations, and frameworks to allow increased investment in the power sector. Through their efforts the National Energy Policy 2018 was launched, to improve the efficiency and effectiveness of commercial energy supply industries. This followed the Malawi Renewable Energy Strategy 2017, breathing life to the agendas of the Rural Electrification Act (2004) which seeks to make provision for the promotion, funding, management, and regulation of rural electrification. The Sustainable Energy for all Action Agenda 2017 grounds the policies by setting targets for sustainable, clean, and affordable energy for all.

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Notably, the Energy Regulation Act, under section 9 (2) (I) makes an even louder and unmistakable call for the exploitation of renewable energy resources in Malawi. The Act provides a wide scope for what renewable energy is - effectively a wider scope for permissible projects. It includes solar, wind, hydro, ocean thermal, ocean wave, ocean tidal, electricity from photovoltaic effects, biomass, and geothermal. Similarly, Part II of the Electricity Act makes beautiful provisions for privatization in the electric power industry through electricity licenses to supply, generate, transmit, distribute, import, export, and buy electricity from generators and system and market operations. These licenses allow for more companies and operators in the sector once the prerequisites for licensing under the Act are met. The recognition and call for investment are further acknowledged by the Energy Regulation Act. Section 9 (2) (c) of the Act advocates for increased competition within the energy sector to increase and promote accessibility in the energy sector. Such an opening facilitates lower prices, more options for consumers, and improved quality of services in electricity generation, distribution, and transmission, among other functions. Therefore, in a world that is shifting to a more sustainable and low-carbon future, Malawi needs adequate laws and policies that drive investment in renewable energy.

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Despite the provisions highlighted above, Malawi’s legal landscape for renewable energy is significantly slow to adapt to the rate of the global energy transition. Currently, the lack of investment in the area is evident from the low electricity access rates. Grid electricity mainly relies on hydropower, which is unreliable as capacity is bound to decrease with siltation and weed infestation causing further inadequacy and unreliability in power supply.[4] While the Rural Electrification Act pushes for off-grid renewable energies and the rural electrification fund, the progress is held back. Limited access to financing, policy and regulatory uncertainty and grid infrastructure limitations are some of the cited reasons investment is minimal in the sector. Amidst the challenges, EGENCO envisages an increase in electricity generation from 441.95MW to 1,631.5MW by 2033. The progress is welcome, however, the gap to reach sustainable energy access for all will continue to widen if the government is the only big player in the power industry. It would consequently mean that the projected $3 Billion in investment opportunities in the sector will remain untapped (RMI, 2019).

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To achieve the desired goals spelt across many of the policies including the Malawi Agenda 2023, collaboration between government, development partners, investors and the private sector is crucial. The energy laws have cleared the path to allow for privatisation, a promising start for growth and development of the energy sector and the economy.

[1]? John Taulo and others, ‘Energy supply in Malawi: options and issues’ [2015] 26(2) Journal of energy in Southern Africa 19-32.

[2] Millennium Challenge Corporation (MCC). Malawi power project studies - final feasibility study report. (2011). MCC, Washington DC.

[3] National Energy Policy 2018, Policy Outcomes.

[4] John Taulo and others, ‘Energy Supply in Malawi: Options and Issues’ [2015] 26(2) Journal of Energy in Southern Africa 19-32.