Malawi
With a cumulative score of 1.35, Malawi ranks number 69 among emerging markets and number 98 in the global ranking.
- Emerging markets
- Middle East & Africa
1.78 / 5
Power score
0.34 / 5
Transport score
Buildings score
Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.
Low-carbon strategy
Net-zero goal and strategy
The Malawian government supports investment in clean energy but has not made any investments itself. Almost all investment is foreign, and renewable developers operating in the country are all foreign subsidiaries as well.
International development banks are a popular source of capital for renewable projects. Overall investment doesn't seem to be growing, which could be due to high inflation and volatile exchange rates shaking investor confidence.
PPAs have been signed for solar, wind and small hydro. Solar is the most funded technology, and a 100MW PPA was recently signed with NTPC, India’s largest integrated energy company.
Malawi's almost complete reliance on hydropower from the Shire River is a concentrated risk. If water levels remain low, the country will need a new fleet of generation assets to supply power.
The local currency has experienced high inflation, which is a concern for foreign investors. There are no local manufacturers of equipment for solar, wind, or hydro, so everything is imported.
To encourage renewable development, import tariffs have been removed for all renewable equipment. However, the quality of imports, especially for solar equipment, is often low or non-functional. This has led to frustration and distrust among potential adopters of solar.
Electricity theft is an issue and will weigh on developers' financial considerations.
Nationally Determined Contributions (NDC)
Malawi's 2021 updated NDC includes a target to reduce emissions 6% relative to a business as usual (BAU) scenario by 2040. The target amounts to 2.1 tCO2eq , covering agriculture and energy sectors.
Fossil fuel phase-out policy
There is no fossil fuel phase-out policy in Malawi.
Power
Power policy
Malawi is one of the least electrified countries globally, with an overall electrification rate of roughly 10%. In rural areas, this reduces to 1%, although many live within 10 km of electrical infrastructure. The country's rural electrification fund has an aim of extending the existing grid, not building off-grid, but it has not been able to increase electrification significantly according to reported results.
Resource potential for solar and minigrid solutions is high. Though Escom, the central utility, has no plans to build solar assets of its own, it has awarded solar PPAs to a number of foreign developers.
Historically, 90% of Malawi’s primary energy has come from burning biomass and only 3% has been met by electricity. Trees are cut down to make charcoal, leading to national concerns of deforestation and exacerbated impacts from climate change.
Power policies
Power prices and costs
In 2003, the government announced a goal of meeting 7% of primary energy demand with renewable generation by 2020. This was not an ambitious goal, especially given the time allotted. Thanks to a buildout of hydropower dams, the country produces about 70% of its power from renewable sources.
In 2016, the generation market opened up to participation from independent power producers. Since then, the central regulator has signed power purchase agreements for roughly 200 MW of renewable energy, none of which has been built.
This year, the country reached financial close on a 70MW solar project, the first of its kind. The project is delayed due to Covid-19. ESCOM, the central utility, has consistently issued tenders and awarded PPAs, though no projects have been completed to date.
Power tariffs have steadily increased in recent years for the central utility to raise revenue and address the energy deficit. For customers, price increases are highly upsetting amid severe load shedding. Fuel prices are increasing significantly, which is bad news because the country increasingly relies on diesel generation for emergency power.
Power market
Malawi does not have significant interconnection to neighboring markets so is unable to import power. German financial aid has been secured to build a 400kV substation and 218 km power line between Mozambique and Malawi, which would improve power supply in the country and potentially bring down its price.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
Essentially 100% of Malawi's electricity generation comes from hydropower plants situated on the Shire River. In recent years, low water levels and debris in the river have significantly reduced electricity output and led to severe load shedding.
In 2016, the generation market was opened to participation by IPPs. With no IPP assets yet operational, Malawi's central utility ESCOM owns all generation, transmission, and distribution assets, and MERA, the central regulatory agency, is the single offtaker.
Currency of PPAs
Are PPAs signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes?
Transport
EV market
The government has yet to implement any substantive policy support in this sector, and the EV/low-carbon heat market remains at an early stage.
EV policy
The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
The government has yet to implement any substantive policy support in this sector, and the EV/low-carbon heat market remains at an early stage.
Energy performance standards
Are there minimum energy performance standards for buildings?
Energy efficiency plan
Does the country have a national energy efficiency plan?
Buildings policy
The government has yet to implement any substantive policy support in this sector and the low-carbon heating and cooling market remains at an early stage.
