The president of Malawi, Lazarus Chakwera, this week officially launched the 60 MW Salima Solar PV plant. Developed by JCM Matswani Solar Corp Limited, a Special Purpose Vehicle (SPV) owned by the Canadian Independent Power Producer (IPP) JCM Power and InfraCo Africa Limited, the facility becomes Malawi’s first commercial solar project to connect to the grid.
Situated 75km east of Malawi’s capital, Lilongwe, the new solar energy facility will supply power to Malawi’s state owned electricity utility, Electricity Supply Corporation of Malawi Limited (ESCOM), via a long-term power purchase agreement (PPA).
The African Trade Insurance Agency (ATI) through its Regional Liquidity Support Facility (RLSF) provided a revolving liquidity guarantee of USD 4.4 million that can be drawn in the event of payment delays by the national offtaker, ESCOM. This is the second Malawian project to benefit from RLSF guarantee, the first one being the Phase 1 of the Nkhotakota Solar Power Plant currently under construction.
Only 11% of Malawi’s population has access to electricity and that supply is not always reliable. The renewable energy project will increase Malawi’s electricity supply by more than 12% and help improve its electrification rate.
Malawi inviting renewable energy investors
Speaking at the official opening ceremony, the president of Malawi, Lazarus Chakwera said; “my administration is developing the first ever Renewable Energy Act, which will help us better regulate the sector and reduce systemic inefficiencies.”
“I therefore invite committed investors in the energy sector to leverage off the opportunities present in the country and work with my administration,” Chakwera added.
Malawi’s energy sector has recently gone through sector restructuring efforts with the goal of increasing the availability of reliable electricity supply in the country. This includes the unbundling of ESCOM and the establishment of the Electricity Generation Company of Malawi (EGENCO).
More recently, ESCOM has been further unbundled with the introduction of Power Market Limited (PML), which will become the Single Buyer in the energy sector – taking over PPAs signed between ESCOM and IPPs. Additional restructuring of Malawi’s power market is underway, with strong investor interest and political will for IPPs to enter the market.
Malawi has an installed electricity generation capacity of around 439 MW. Over 90% of this capacity comes from hydro power plants on the Shire River in the southern region; this heavy reliance on hydro is often constrained by drought and low water levels. Moving forward, there is high potential for solar and new hydro technologies to enter into the power market, thanks to reforms by the Government that have led to the establishment of a viable electricity market for private sector participation in generation expansion.