Power policy

Sudan’s geography is well-suited to renewables, with high solar irradiation and strong winds, and this could help curb the country’s reliance on costly imported fossil fuels. However, aside from plans to integrate 20% renewables into its power system by 2030, the government has not explicitly issued any further national objectives. With no utility-scale renewables commissioned to date, Sudan has a long way to go in its deployment of clean energy.

The two major pieces of legislation for Sudan’s energy sector – the Electricity Act of 2001 and National Investment Encouragement (NIE) Act of 2013 – allow tendering for energy projects. Specific legislation for the renewable energy sector is in the works in preparation for a renewables master plan. A feed-in tariff is under development with the support of the United Nations Development Programme (UNDP).

The country does not offer any clean energy incentives. A public-private partnership (PPP) law and import-duty exemptions for solar components were planned, but they are stuck at various stages along the legislative pipeline.

Power prices and costs

Sudanese consumers benefit from generous electricity subsidies, which Sudan raised in January 2022 as the country pushed forward reforms. The government maintained higher subsidy rates for lower consumption tiers in order to not burden lower-income households.

A reduced “social tariff” benefits those who consume less than 200 kilowatt-hours per month, and this is a higher threshold than elsewhere in the region. These tariffs fall far short of meeting utilities’ production costs, leaving companies financially dependent on the government.

Following the breakaway of South Sudan in 2011, Sudan lost most of its oil assets, forcing it to import fuel for thermal power generation. Sudan’s runaway inflation and currency devaluation has compounded the challenge, making fossil fuel imports increasingly expensive. However, domestic fuel prices in Sudan have been among the lowest in the world due to heavy subsidies that offered retail prices far below the cost of production. Sudan canceled these fuel subsidies as of June 2021 in the hope of relieving its foreign debt by implementing market-oriented reforms supported by the International Monetary Fund (IMF).

Power market

Sudan is predominantly dependent on oil- and hydro-based power generation, with hydropower accounting for more than half of installed capacity. The country has not added any generating capacity since 2018.

The structure of Sudan’s power sector has evolved in recent years. After the sector unbundled at the turn of the millennium, the Sudanese Electricity Holding Co. was created in 2016. It has an effective monopoly on procurement, with the holding company overseeing two generation utilities – the Sudanese Thermal Power Generating Company and its hydro-focused counterpart – as well as two firms that cover distribution and transmission. These companies remain state-owned, despite the 2001 Electricity Law opening up private participation in the energy sector.

While overseen by the state-owned Sudanese Transmission Company, the extension of the transmission grid lies with regional authorities, leading to a lack of coordination on a national level. According to the World Bank, the last extension plan was dated from 2012. Due to its strong electricity deficit, Sudan is considering investing on interconnections with neighboring countries. One example is the Egypt-Sudan corridor that aims to reach 1 gigawatt of power grid capacity and start operating by the end of 2022.

There are no real independent power producers in Sudan. There is one company that owns and operates thermal plants in a handful of regional capitals, but its fuel is supplied by the Sudanese Electricity Holding Co. free of charge.

Sudan in May 2021 passed a Public-Private Partnership Act, aimed at increasing private participation in developing the country’s infrastructure, including the electricity sector. There are a few “semi-PPAs” in place in regional capitals, where Turkish companies own and operate diesel plants. However, as the fuel for those plants is provided by the Sudanese Thermal Company, they can be viewed as a form of leasing agreement rather than a true PPA. A single PPA with an unspecified United Arab Emirates solar company was reported to be under discussion.

Doing business and barriers

Power demand in Sudan has increased by an average of 9% a year since 2015, but 46% of the population still lacks access to electricity. Sudan’s government is aiming for universal electrification by 2031. It says that at least 80% of energy-access initiatives will be through grid connections, connecting about 250,000 households per year. In areas where grid connection is not possible, 2.5 million standalone solar home systems (SHSs) will be provided by 2023. The electricity sector is subsidized, but Sudan raised electricity prices in January 2022 as part of reforms.

Electrification responsibilities largely lie with individual states, and while there is some support from the national and utility levels, regions must cover the costs involved. The dire financial situation across the country does not bode well for rapid electrification. The devolution of grid extensions to regional authorities also leads to a lack of coordination at the national level and impedes long-term planning. Sudan’s grid is currently unable to keep up with demand. The country’s poor road infrastructure aggravates the situation, due to more chances of delays in project implementation and subsequent maintenance.

Energy developers entering the Sudanese market face a number of obstacles – primarily the unstable macroeconomic and security situation, aggravated by the country’s political situation. Sudan is under military rule, with negotiations for a democratic transition underway, but it is uncertain when or whether this transition will take place. In addition to high capital expenditure costs due to the country’s instability, the lack of market transparency, very low power tariffs and weak purchasing power pose further challenges to project development.

Developers also face many difficulties securing finance in Sudan. No domestic banks offer loans to developers investing in clean power, and years of international isolation, coupled with crippling debts and a dire security situation, have left international financial institutions reluctant to bankroll renewable energy projects in the country. Trouble attracting donors has translated into a lack of utility-scale renewables build.

No payment delays were found under the main PPAs, but there is a risk due to the domestic inflation and exchange rates. Most power sector transactions and PPAs are denominated in hard currencies such as US dollars and euros but Sudan's electricity revenue is set in the Sudanese pound. This maintains a possibility that the sector would not be able to make timely payments due to domestic inflation and currency depreciation.

EV market

As of June 2021, Sudan canceled its heavy subsidies of gasoline and diesel. Three-wheeler vehicles, such as passenger tuk-tuk rickshaws, are popular in the country, but drivers have had to contend with rising oil prices. Electric three-wheelers could potentially be a good alternative to conventional fossil fuel-powered vehicles and lead to an electric revolution for transport, as seen in other developing economies such as Nepal.

EV policy

The government has yet to implement any substantive policy support in this sector.

Buildings market

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.

Buildings policy

There are no specific laws.