Power policy

Historically, Botswana has lacked a legal framework and incentives to develop its renewable energy industry. The country’s National Energy Policy was finally published in April 2021, aiming to establish an environment for electrification through generation sourced from independent power producers (IPPs), continuous expansion of the Rural Electrification Program, and implementation of cost-reflective tariffs.

An ambitious tender for 100 megawatts (MW) of solar PV capacity announced in 2017 was canceled in May 2019. The tender was reissued and redefined in late-2019 as two 50MW independent power producer projects. Procurement was initiated on 12 grid-connected, solar- and diesel-powered mini-grids with a total capacity of up to 35MW. In 2021, two of the projects, Bobonong and Shakawe, were successfully tendered, totaling 4MW. The tender is being reissued to complete the 10 remaining projects. Revised tender regulations are expected to come in force in 2022 to assist uptake.

Two contracts for solar PV and mini-grids have been awarded through tenders, and power purchase agreements (PPAs) have been arranged with contracts in place with developers.

Only one grid-scale renewable energy project has been commissioned in Botswana to date – the 1.3MW solar PV project located close to Phakalane. It was financed through a $12.5 million grant from the Japanese government and is the only utility-scale renewable project to be financed in the last five years. Botswana is open to foreign investment, but many project developers are unable to prepare project proposals that meet the criteria necessary to attract international finance, according to the World Bank.

Power prices and costs

For decades, electricity in Botswana has been heavily subsidized, but this is slowly changing with tariffs having risen in recent years. Private consumers have typically paid low power prices, which has led to state-owned Botswana Power Corporation (BPC) dispatching power at a loss. In an effort to create more tariffs that better reflect the underlying costs, BPC has gradually increased tariffs and steadily reduced the level of subsidy.

Power market

Coal dominates Botswana’s power sector, accounting for 82% of the current installed capacity. By contrast, solar PV accounts for just 0.1%, although this is expected to change as projects are deployed.

Botswana has gradually weaned itself off dependency on electricity imports from the Southern African Power Pool, and now imports only 23% of distributed power nationally. There is only one operational 1.3MW solar plant in the country, and renewables do not benefit from purchase obligations as BPC buys all the power available, regardless of sector.

Currently, BPC is the sole provider of generation, transmission, distribution and retail services. However, it is looking to transform itself into a transmission and distribution utility and move away from being a fully integrated utility. Independent power producers (IPP) have been allowed to enter the market since 2007 but have only begun to expand into the generation market in the last four years, with the signing of two PPAs for the Morupule B Coal plant and a 1MW solar plant in 2017.

Doing business and barriers

Botswana’s electrification rate is 70%. As the country aims to expand its installed capacity, opportunities for additional power generation from IPPs will increase, particularly for decentralized, renewable, off-grid systems. However, a policy framework to accompany these opportunities is still uncertain.

BPC has an aging power-plant fleet with the oldest plant commissioned in the late 1980s. Refurbishment of the Morupule A coal plant has experienced numerous delays, while Morupule B has been prone to breakdowns.

EV market

The government subsidizes road fuel prices through the National Petroleum Fund, which may hinder the adoption of electric vehicles (EVs).

EV policy

A lack of policy support for EVs means the market remains at an embryonic stage.

Buildings market

Botswana’s climate means the focus is on cooling rather than heating buildings.

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.