1923 words

1. References

For comparison, here are some references for the UK

2. Notes

Summary of some key points from the above references, but bear in mind some of this data is from a few years ago

  1. Inadequate energy supply is one of the major problems confronting Malawi and limiting its social, economic and industrial development
  2. 85% of the population live in rural areas and has access only to wood and paraffin as major energy resources
  3. Overall electrification rate in Malawi is 10%, with 37% of the urban population and only 2% of the rural population having access to electricity
  4. Electricity demand has been growing consistently at 6-8% per annum
  5. System is greatly strained, frequency of blackouts increasing, constraining industrial production and socioeconomic services and deterring foreign investment
  6. Total installed capacity for electricity generation as at March 2015 is 430 MW, in which 80% is contributed by ESCOM and 20% by the private sector
  7. Theoretical hydro potential of 1670 MW and the average power generation of 15 000 GWh/year (feasible hydro capacity has been estimated at 6,000 GWh/year)
  8. Malawi also has huge untapped small hydropower potential (capacities <10 MW) 
  9. Gross theoretical small hydro potential of the country is 150 MW, out of which 4.5 MW of the economically feasible potential has been developed
  10. Malawi receives about 2138 to 3087 hours of sunshine and 2133 kWh/m2/year, annual daily mean global solar radiation is about 5.86 kWh/m2/day, equivalent to 250 million tonnes of oil equivalent
  11. Considering that many parts of the country receive 8 to 12 hours of sunshine per day of 244 W/m2, the potential for using solar for electricity generation is very high
  12. Total available solar energy potential over the total geographical area (i.e. 94,280 km2), of Malawi is calculated to be 356,285 GWh/year (of course that would leave no space to live on!)
  13. About 10% of households are supplied with electricity from the national grid, but access goes beyond the grid power being available but also affordable. The MAREP effort could have easily yielded 20 to 25% access to grid electricity if the rural population was also economically empowered to afford paying for upfront costs of wiring, inspection and connection. This calls for an innovative model for rural energy access beyond the grid extension
  14. Transmission losses continue to be amongst the highest in the world, and reducing losses or improving transmission efficiency is the main concern in the electric power sector
  15. (From 2012) Investing by the private sector in electricity generation remains a challenge due to the government subsidy provided to ESCOM in electricity generation which gives unfair advantage to ESCOM over any would be investors hence ESCOM has remained the sole electricity generation company to date
  16. As of 2018 ESCOM has been split with the establishment of the Electricity Generation Company of Malawi (EGENCO). The restructuring of Malawi’s power market is underway, with strong investor interest and political will for Independent Power Producers (IPPs) to enter the market.
  17. Egenco was established when the Electricity Supply Commission of Malawi (ESCOM), hitherto the electricity monopoly in the country, was split, with Egenco assuming the role of electricity generation, and ESCOM retaining the roles of bulk purchase, transmission and distribution.
  18. UK's feed-in-tariff (which ended 03/2019) used to pay 5.3p/kWh for independent energy producers (initially started as high as 41p/kWh on 20 year contracts, but after the government ended up with a massive bill, they slowly lowered it to around 5p/kWh)
  19. From 01/2020 the UK will have a new Smart Export Guarantee as a replacement to the feed-in-tariff, and initial indications are that it will also be around 5p/kWh
  20. According to ESCOM's tariff document, current average purchase price from energy suppliers is 49Mk/kWh = 5.5p/kWh, which is similar to the UK feed-in-tariffs and UK wholesale electricity price
  21. UK's solar radiation is between 750-1100 kWh/m2/year, which is equivalent to 86-126W, so less than 50% of Malawi's apparent 244W average

3. Calculations

Definitions

  • 1Wh = 1W generated over 1 hour
  • 1 toe = 1 tonne of oil equivalent energy = 11.63 megawatt-hours (MWh)
  • 1 tonne of oil = approx $440

Calcs

  • How much does 1kWh of energy from oil cost?
    1kWh from oil = 440 / 11630 = $0.038 (not accounting for efficiency loss of fossil fuel to electricity conversion)

  • How much energy is generated from 1sqm of solar array in 1 year?
    Assuming 244W/sqm of solar energy on average
    Assuming 15% efficiency of solar to electricity
    1 year of electricity generated by 1sqm = 244 * 0.15 * 24 * 365 = 321kWh / year on 1sqm

  • How much money does 1sqm of solar electricity create?
    Assuming tariff of £0.05/kWh
    Assuming 1sqm of solar array generates 321kWh/year
    Revenue = 0.05 * 321 = £16.05
    So 1% of solar to electricity efficiency is worth 16.05 / 15 = £1.07

  • How much does it cost to build 1sqm of solar array, and how long will it last?

    Example 1

    Taking South Africa supplier of 300W, pallet of 26, 1.96m x 0.99m, 15.48% efficiency at cost of R56,794 = £3039
    Excluding cost of installation and other electrical components, shipping, taxes
    1sqm cost = 3039 / (1.96 * 0.99 * 26) = £60.24
    Initial annual return at 15% efficiency, before depreciation = 16.05 / 60.24 = 26.6%

    Example 2

    Taking UK supplier of 300W, 1.64m x 0.99, 18.9% efficiency at cost of £145
    Excluding cost of installation and other electrical components, shipping, taxes
    1 year of electricity generated by 1sqm = 244 * 0.189 * 24 * 365 = 404kWh = £20.20
    1sqm cost = 145 / (1.64 * 0.99) = £89.31
    Initial annual return, before depreciation = 20.2 / 89.31 = 22.6%

  • What area of solar array would be needed to cover Malawi's current energy use?
    Assuming 430MW average use in 2015
    Assuming 15% solar efficiency
    Solar array sqm required = 430,000,000 / (244 * 0.15) = 11,748,634 sqm = 11.7sqkm = 3.4km by 3.4km
    Approximate cost would be = 11,748,634 * 60.24 = £708 million
    (For comparison, in 2015 India built a 648MW solar farm for £545 million)

  • How much does 1kWh of energy from solar cost?
    Assuming 25 year lifespan
    Assuming 1sqm costs £60.24 and generates 321kWh / year
    Ignoring costs of land, etc...
    1kWh from solar = 60.42 / (25 * 321) = £0.008 = $0.01

4. Questions

  • What would be a minimum investment?
  • How many panels can you fit on 1 acre (4047sqm or 63m x 63m) of land? Several references (both referring to India and UK) suggest 1MW installation requires around 5 acres of land
  • How much does 1 acre of suitable land cost?
  • What are the possible sources of funding?

5. Thoughts

  • Is significant profit possible for a new market entrant, or is the industry only really open to established experts?
  • Supply to household use, or to industry? What promotes growth? What has less risk?
  • Supply to the grid, create own mini-grid, or sell standalone systems?
  • An energy business would be as much investing in the country as in any physical hardware, land or infrastructure

  • How do we estimate the costs of running a solar farm?

    • Capital costs
      • Land
      • Solar panel arrays
      • Inverters, transformers, monitoring, structure
      • Other electrical components?
      • Delivery, tax, duty
      • Installation cost
      • Infrastructure costs of connection to grid?
    • Running costs
      • Cleaning
      • Security
      • Maintenance
      • Licensing
    • Depreciation
      • Lifespan of 25 years depending on hardware
  • What are the options for building a solar farm?

    1. Find an international solar developer willing to do a project in Malawi
      • Unlikely to generate a reasonable return due to high cost
    2. Train myself in electrical and solar installation then hire labour locally and manage installation myself
      • Likely to take several years
      • Would require living in Malawi for an extended period of time
    3. Find African expertise, for example in South Africa
      • South Africa is unknown territory, so hard to find and negotiate with developers
    4. Find local electricians and then fund their solar training abroad
      • Where would they train, and for how long?
      • Risk of overseeing the project ourselves with no experience and newly trained workers
    5. Same as 4. above, but hire a consultancy to design the build
      • Reduces risk of build
      • Source materials ourselves, but get consultancy to validate
      • Potentially ask consultancy to validate installation at different stages
      • How much would such a service cost?
      • Requires living in Malawi during build
  • Does Malawi make sense? Based on thoughts so far:

    • Malawi
      • Con - Risk of developing country
      • Con - No local expertise
      • Con - Materials would have to be imported
      • Pro - Good levels of solar radiation
      • Pro- Probably low bureaucracy
    • UK
      • Con - Low levels of solar radiation
      • Con - Labour is expensive
      • Con - High levels of bureaucracy
      • Pro - Plenty of local expertise
      • Pro - Home country
    • Germany
      • Con - Low levels of solar radiation
      • Con - Labour is expensive
      • Pro - Plenty of local expertise
      • Pro - Land is potentially less expensive than UK
      • Pro - Potentially better subsidies than UK?
    • China
      • Con - Don't yet know enough - subsidies, tariffs, cost of land, bureaucracy?
      • Con - Can't speak the local language
      • Pro - Should have good levels of solar radiation in certain regions
      • Pro - Should have good level of local expertise and not too expensive
      • Pro - Materials can be purchased locally
      • Pro - Would have help finding contacts