Power policy

Cameroon has committed to securing 25% of its electricity generation from renewable sources by 2035, as part of its nationally determined contribution (NDC). In 2019, small hydro and solar accounted for just 5% of Cameroon's installed capacity and 1.5% of the country’s electricity generation, so there is a long way to go to achieve the target. Also, through its NDC, Cameroon targets a 32% emissions reduction from the country’s modeled business-as-usual case. The government aims to reach these goals in part through renewable energy laws, which would introduce a mandatory auction or tendering process, set renewable electricity purchase tariffs, and clarify rules around the purchase of renewable electricity. Cameroon also aims to boost energy access, in part, through grid investment and expansion, providing greater opportunity for grid-tied renewable systems. Other fiscal incentives, such as import-duty waivers, are not consistently implemented. The utility, Eneo, has begun to procure tenders for solar.

Power prices and costs

The Electric Sector Regulation Agency (Arsel) sets electricity tariffs in Cameroon. These are relatively high for the region, particularly for a hydro-dominated market, owing to high transmission costs (including grid distribution losses of about 30%). The government subsidizes the tariffs by transferring funds to the monopoly utility, Eneo, and paid out more than $20 million between 2012 and 2019. Hydropower remains Cameroon’s cheapest source of electricity, but recent growth in small-scale and off-grid solar suggests that these alternatives are becoming increasingly competitive in rural areas away from the three separate power grids. Grid operators must buy excess production from renewables installations, but no price is specified, and they may not buy electricity at above-market rates, which limits the policy’s effectiveness. Eneo also recently implemented a retail program backed by prepaid meters, providing consumers with more transparency and control over their power consumption and pricing.

There are no examples of domestic commercial banks investing in renewable energy projects. Most of the finance that is available is from international creditors, mainly based in China. Of the renewable technologies, large hydro has received the cleanest energy investment in Cameroon, with almost 8GW either announced or having secured financing as of September 2019. Some small-scale solar projects have also closed financing in recent years, particularly for rural electrification, but access to finance remains a large risk for small-scale solar and mini-grid developments. Investment in megawatt-scale projects has yet to gain traction. Cameroon is open to private finance. The biggest investors have been international organizations such as the World Bank, which financed $784.5 million in 2018 for the Nachtigal hydropower project. Investors from China, including firms such as Eximbank, are active in Cameroon’s hydro and solar sectors.

Power market

Large hydro dominates the capacity mix, followed by fossil fuels. Cameroon was one of the first countries in Africa to open its electricity sector to private-sector participation, and in 2001, AES became the majority shareholder of the utility (then called Sonel). A new reform phase began in 2011 with the unbundling of generation, transmission, and distribution. Sonel was acquired by Actis in 2014 and rebranded as Eneo. A 2015 decree split the transmission and system operation components to create the state-owned Sonatrel, which decides on dispatch and is a single buyer for grid-connected generation. Eneo dominates generation, but two IPPs operate the two main thermal plants. The legal framework for electricity needs significant review, which has now begun following the October 2018 elections.

Doing business and barriers

Cameroon has seen average economic growth of 3.9% a year over the last decade and growth has picked up recently owing to rising revenue from oil, rubber and coffee production. The country has a relatively weak electrification rate of 64%, with 24% in rural areas. The government aims to reach 3GW of power capacity by 2020, mainly through new hydropower plants, and off-grid solar in rural areas. The Rural Electrification Master Plan, in its second phase, aims to electrify 10,000 locations by 2035, securing 50,000 connections annually over 20 years. The government is also preparing a new framework to regulate private off-grid renewables projects, although the policy’s legal status is still unclear.

The main barrier to private-sector participation is the extent of Eneo's concession for generation, which limits those who can produce electricity in any given area. Another barrier is the inconsistent implementation of import duties for renewables, as Cameroon does not have an import tariff waiver. Equally, the government’s prioritization of hydro development has impeded solar deployment, which has been too expensive. Concerns over the impact of dry seasons on hydropower availability have encouraged the government to consider alternatives, including some demand response in the capital, Douala.

EV market

The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.

EV policy

The government has yet to implement any substantial policy support in the sector and the EV market remains at an early stage.

Buildings market

The government has yet to implement any substantive policy support in this sector and the heat pumps remains at an early stage.

Buildings policy

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.