National Market Survey for Cogen Services in Malawi
Lewis B. Mhango
Malawi is well endowed with energy resources, ranging from uranium, coal and oil reserves which are a potential source of Malawi’s future generation. Realizing the investment requirements in the power sector to meet energy demands, the Malawi government adopted a policy decision in 2003 that invites private sector participation in generation (Malawi Energy Policy, 2003). Currently several companies in the tea and sugar industries are venturing into producing their own generating power plants to curb business losses due to unreliable power supply from ESCOM’s power grid. This paper therefore examines the market potential for cogeneration and renewable energy services which could be offered to the industry in Malawi.
ii) Cogeneration and Renewable Energy Services Required:
- Training in cogeneration related activities
- Pre-feasibility, Feasibility studies, Project design, Business development
- Consultancy services for improving plant efficiency and increased generation capacity for cogen plants
- Engineering services
iii) Cogeneration Potential
Although the cogeneration potential of about 146.5MW is significant to warrant investments into provision of services, the study also focused on the potential for renewable energy production. However, because there is an existing market potential for services to investors willing to develop mini and micro hydro power the study has also paid a great deal of attention to the potential of this type of power generation. There are about 20 sites with the potential for mini and micro hydro power generation (see table 2 below), with an estimated total of 52MW. In addition to the potential for cogeneration, the study also examined a number of perennial rivers with mini and micro hydro power generation potential and linked these to potential local investors.
iv) Renewable Energy Potential
Currently, Renewable Energy contributes about 0.1% of the total energy consumption in the energy mix for Malawi (Malawi Energy Policy, 2003). The economic growth has meant that the demand for power is not being met by the investment in power generation. The study has therefore looked at the potential from mini/micro hydro on several perennial rivers and wind/solar hybrid power generation in Malawi in details.
v) Services that can be provided for Cogeneration in Malawi:
a) Training in cogeneration related activities
Almost all companies and organizations interviewed indicated that they are willing to receive training in the cogeneration and renewable energy generation related activities. Regarding development of mini and micro hydro power generation, there has been a renewed interest in the sub sector because of the power shortage experienced by ESCOM. Almost all potential mini/micro hydro power sites in the tea growing areas have been explored. About 20% of the sites have the potential to generate economical power. These have shown interest to be trained in the operations of hydro power plants.
b) Prefeasibility, Feasibility Studies, Project Design, Business Development
Malawi has not invested in power development for the past 15 years. Power sector reforms were meant to interest private investors to champion investments in the power generation. This range from cogeneration in agro–industries such as sugar and tea processing, timber industry, cement production, and dairy industry on the one hand and the use of renewable energy such as mini/micro hydro and wind/solar hybrid power generation on the other. It was concluded that the shortage of power has pushed most cogeneration potential companies to the point where they find it relevant to invest in their own power generation. This therefore presents an opportunity for the provision of cogeneration services in Malawi.
c) Consultancy Services for Improving Plant Efficiency and Increased Generation Capacity
For Renewable Energy, these consultancy services would be required for the prefeasibility, feasibility studies and design and business development for mini/micro hydro and wind/solar hybrid systems. The Malawi Energy Regulatory Authority (MERA) is now the independent energy regulator whose mandate is to regulate the energy sector. The Department of Energy has plans to negotiate for a general feed in tariff which would allow renewable energy investors to go into power generation either using mini/micro hydro or wind and solar energy.
d) Engineering services
As far as mini/micro hydro power generation is concerned only the Malawi Industrial Research and Technology Development Centre has ever tried to design, install and commission a micro hydro power plant for a rural community. If through this project more Engineering Services can be made available in Malawi, it would boost the development of the various potential sites for mini/micro hydro power.
The shortage of power in Malawi has meant that if most of the cogeneration and renewable energy services were available, and the fact that MERA as an independent regulator is in place issuing licenses for power generation, the potential for Malawi to have facilities on fiscal investments incentives, duty free arrangements for direct foreign investments which could allow for growing the ideas of cogeneration services into industrial services and/or products is very high. For example, cogeneration services alone can generate a very viable market opportunity for service providers from various engineering fields.
Power generation potential from the two combine would create a sizable market for the various services required for a vibrant power generation service industry in Malawi.
vi) Cogen Operations Examples of Export Power
It is common knowledge that power export from cogeneration plants is not new to the Sugar Industry worldwide. This means that the power plant can grow with the growing power demand. The provision of Cogeneration Services in Malawi would therefore boost the possibility of power export to the grid. This is why all companies with the potential to produce power through cogeneration that were interviewed had indicated that they would welcome the services if provided in the country.
vii) Assessment of Institutions Offering Similar Cogen and Renewable Energy Services
The study has shown that there are very few institutions offering Cogen/Renewable Energy Services in Malawi. Concerning the services for Renewable Energy, there are a number of companies Certified by the Malawi Energy Regulatory Authority (MERA) which have been authorized to import Renewable Energy equipment on duty free basis. Only one or two would have the capacity to provide services in the Mini/Micro Hydro power generation. The Department of Energy has the capacity to provide advice on the development of Mini/Micro hydro power generation.
viii) Potential Customers for Cogen & Renewable Energy services
There are a number of private companies and nongovernmental organizations with the potential to acquire cogeneration and renewable energy services in Malawi. A comprehensive list has been compiled through the study and provided in this report.
ix) Conclusions and Recommendations
The study has shown that in Malawi, although there are only two existing Cogeneration Plants, there is a potential to generate up to 146 MW of power using cogeneration technology from steam boilers in the agro-industry sector of the economy. Due to persistent power black outs, this is the right time for Malawi to be involved in cogeneration activities. Regarding Mini/Micro Hydro Power Generation, the study has revealed that more than 52 MW can be generated from the various perennial rivers across the country which if exploited; Malawi would have a significant increase in power generation capacity.
However, the main problem is the lack of services and ready equipment to harness the mini/micro hydro power potential the country has. Malawi urgently needs Cogen/Renewable Energy Services as outlined in this report. Malawi should develop a Feed-in-Tariff which should be used to encourage investments into mini/micro hydro power generation. This tariff can also attract investments into wind power generation. In order to attract large investors who can develop power generation of more than 5 MW, whether cogeneration or hydro power, Malawi should also develop a Standard Power Purchase Agreement. Although the new Energy Laws allows private power generation to invest as Independent Power Producers (IPPs), it is recommended that special information dissemination on cogeneration services as well as hydro power generation services should be accessed in Malawi through institutionalized arrangements.
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