Power policy

Solar is the most promising form of renewable energy generation in Zimbabwe, and several IPPs have signed PPAs for the power source. In July 2019, the government announced that all new construction projects must include solar and removed import duties on solar energy-related products, from batteries to cables. The move should significantly boost the solar market going forward. Zimbabwe Power Company (ZPC), the public utility, has plans for a 300MW solar project, which would be the first renewable project in its portfolio, but progress appears uncertain. In May 2020, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) invited bids for the construction of 500MW of PV. Additionally, the Infrastructure Development Bank of Zimbabwe issued a request for proposal in September 2019 seeking partners for the development of seven PV plants totaling 235MW. Rural electrification efforts are mostly focused on off-grid solutions. The country is targeting universal access by 2030.

In 2020, a non-legislative target was submitted in the National Renewable Energy Policy (drafted in 2017, re-released in 2019), aiming to achieve an installed renewable energy capacity of 1,100MW, or 16% of total electricity supply by 2025, and 2,100MW by 2030. This target will enable the country to meet its large supply deficit as well as the emissions objective laid out in the INDC report (achieving GHG emission reduction of 33% below the BAU case). The 2030 target specifies 1,575MW for solar and 100MW for wind, as well as 275MW for biogas and 150MW for small hydro.

Power prices and costs

National electricity tariffs are roughly $0.106 per kWh, compared to a regional average of $0.14 per kWh, according to ZESA. Zimbabwe's tariffs are among the highest in the region when accounting for exchange rates. In October 2019, Zimbabwe raised its average electricity tariff by 320% in response to rising fuel prices and inflation stoked by a rapidly depreciating Zimbabwe dollar, which was reintroduced earlier in the year. The tariff increases should enable ZESA to undertake grid maintenance, repair aging coal-fired generation units and cover imports from South Africa and Mozambique. Tariffs were again increased by 20% in March 2020, followed by 50% hikes in both September and October. The national regulator, ZERA, is operating at a loss and struggling to collect an estimated $1.3 billion owed by defaulters. ZETDC announced in April 2020 that it would begin to disconnect consumers for non-payment. The government's mandatory rollout of prepaid meters was designed to bring in more stable revenue. According to ZETDC, the program has improved revenue inflows by 35%.

Power market

Solar is the most commonly funded form of renewable energy, but total investment in clean energy is negligible to date. Most of the capital for funding renewables development comes from foreign investors, but many are wary of political and regulatory risks. Renewable energy investors have asked for policy changes, such as more relaxed licensing rules for small producers. Prior to 2018, all businesses in Zimbabwe were required to be majority-owned by a local owner, which dissuaded foreign participation in the renewable energy market. Overall economic stability is also a concern. The government outlawed all foreign currency in July 2019 and reintroduced the Zimbabwean dollar as the only form of legal tender. The Zimbabwe dollar was wiped out a decade ago due to hyperinflation, with foreign currencies becoming legal tender in 2009. Legitimate worries remain. The Zimbabwe National Statistics Agency reported in August 2020 that annual inflation reached 838% in July.

State-owned ZESA is the holding company for both the national generation utility (ZPC) and the T&D utility (ZETDC). Hydro accounts for about half of Zimbabwe's overall power generation, supplied by the Kariba plant on the Zambezi river. Water levels on the river have been low over the past few years, which has contributed greatly to the country's severe load-shedding. The next-largest source of generation is coal, which has also been unreliable due to fuel shortages and cost fluctuations. The market for power generation has been liberalized and is open to IPPs, of which there are several, although electricity supply is dominated by ZESA. Regulator ZERA has issued 30 IPP agreements in the past five years and most are for renewable energy (solar). However, only 14 are operational as of March 2020. Participation by the private sector is still low due to capital constraints. ZESA faces major challenges including validating infrastructure, insufficient foreign currency, power theft, and non-payment of bills.

Doing business and barriers

On average, the country produces about 969MW of daily generation against a peak demand of 1,700MW, resulting in severe load shedding of up to 18 hours per day. Businesses in the country struggle to maintain operations without stable electricity provision. Due to unreliable generation in the country's own fleet, Zimbabwe imports approximately 400MW from Eskom (South Africa) and EDM (Mozambique) in order to meet demand. That is not sustainable long-term. All of the country's five main generation plants have surpassed their 25-year general lifespan and require modernization. However, funding for this is limited. Despite contending with severe load shedding, Zimbabwe exports 80MW to Namibia via a 15-year agreement signed in 2015. The countries discussed expanding the arrangement in 2019. Renewable energy development can benefit from a 10-year income tax holiday and solar equipment is exempt from import duty as well as VAT, effective July 2019.

The Indigenization and Economic Empowerment Act, which required that at least 51% of shares in any business be held by indigenous Zimbabweans, has impeded foreign investment. In March 2018, the requirement was removed, and foreigners can now own 100% of a company in Zimbabwe except for platinum and diamond mining companies. This should open the door for more foreign investment. Corruption is a problem that impedes international investment. A solar plant project that was earmarked to be built in Gwanda stalled after allegations that funds were misappropriated at the Zimbabwe Electricity Supply Authority.

In the long term, Zimbabwe will consider building a power station near Mozambique’s Hydro Cahora Bassa dam. The national energy regulator has been licensing a number of solar power projects, most of which are still to take off. Analysis of the projects say that they are off grid and too small in size, averaging 5MW, and will only supply electricity to local communities in the countryside. Fossil fuel subsidies are pretty common in SSA. Through bilateral relations and international institutions, the same governments — mainly in the global North — continue to push for consumer fuel subsidy reforms in the global South. A 2018 report says that Zimbabwe has provided more than $1 billion in fossil fuel subsidies.

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 substantive policy support in this sector and the EV market remains at an early stage.

Buildings market

Zimbabwe has under discussion a draft national energy efficiency policy that is expected to undergo stakeholder validation. The main goal of the National Energy Efficiency Policy is to encourage the adoption of energy efficiency strategies in order to support Zimbabwe to achieve an upper middle-class income economic status by 2030.

Buildings policy

A law is enforced in Zimbabwe placing limits on minimum energy efficiency performance standards for household electrical appliances, measured in accordance with the standards for usage and standby power maximum limits. These regulations apply to mains-operated appliances, which are manufactured, imported, and donated for use in this country.