Botswana - Country Commercial Guide
Energy

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2022-08-02

Overview

Botswana has export potential given its central geographic location in the region.  To strengthen Botswana’s exporting capacity, the GoB is investing in national and regional grid infrastructure.  The sole power utility, the Botswana Power Corporation (BPC), has also embarked on a distribution network development which includes a rural electrification program of 116 villages, 44 of which had never been covered and the remaining 72 villages are being expanded.  With 212 billion tons of coal, coal-fired plants remain the foundation of the GoB’s energy framework and current peak demand of approximately 610 MW.  Two power plants near Palapye, about 200 km north of Gaborone, supply the vast majority of the country’s electricity.  Morupule B’s current capacity is 600 MW, but it has faced technical challenges and at times has been closed for repairs or operated at partial capacity.  As of July 2021, the plant operated at only 29 percent capacity.  However, the GoB has completed rehabilitating the Morupule A power station which has added 132 MW of power to the national supply.  There are two diesel operating power plants, Orapa which produces 90 MW and Matshelagabedi, producing 70 MW.  Both these are emergency power plants that are used to mitigate any short fall.  Additionally, Botswana imports the bulk of its power from South African utility Eskom, and the rest from Nampower (Namibia), Zesco (Zambia), SAPP (Southern African Power Pool), and cross-border to make up for any production shortfalls.   Statistics on Electricity Generation and Distribution up to third quarter 2021 show that of Botswana’s 424,703 MWh of imported electricity, 53.7 percent comes from Eskom, 26.7 percent from Zesco, 13.1 percent from SAPP, 4.8 percent cross border and 1.7 percent from Nampower.

In October 2020, the government approved an Integrated Resource Plan (IRP) that provides a roadmap to achieve a reliable, safe, and affordable electricity supply with a target of renewable energy contributing 15 percent to the energy mix by 2030 from its current negligible contribution.  Additionally, the country launched a Rooftop Solar (RTS) Program in October 2020 with the assistance of USAID’s Southern Africa Energy Program (SAEP).  The five-year project, which is designed to increase the supply of and access to electricity in Southern Africa, will enable domestic consumers to install their own solar systems to generate electricity and sell excess back to BPC.  In 2017, BPC signed a contract for a $460 million North West Transmission Grid project to connect the northwestern villages of the country with electricity.  The project was completed in 2020 aiming to unlock mining investments previously suppressed due to lack of access to grid power.

Botswana has tremendous potential for solar energy utilization, with an annual Direct Normal Irradiation equivalent of 3,000 kWh/m²/a in most parts of the country, with an average insolation on a horizontal surface of 21 MJ/ m².    Previous independent power producer (IPP) projects have not succeeded due to regulatory framework challenges.  However, the 2007 Amendment to the Electricity Supply Act allows private companies to participate in power generation and sign Power Purchase Agreement (PPA) in order to sell electricity to BPC which enjoys a monopoly of transmission and distribution of electricity.  IPP guidelines in the form of a National Energy Policy (NEP) were released in April 2021.  The NEP is expected to create a conducive environment that will facilitate investment and create employment in the energy sector.  To create a more enabling environment, the GoB set up an energy regulator, Botswana Energy Regulatory Authority (BERA), which began operation in September 2017.  This has sparked interest in renewable energy development among the private sector and two companies are in the process of developing solar power plants in north-eastern Botswana.  In 2019, Tesla (a U.S. company) set up a PV plant with battery storage in the Okavango Delta for a tourism operation and has so far set up six other projects with more projects coming up in the tourism sector.

Botswana also has wind and coal bed methane potential that have not been fully explored.  Reasonable wind speeds exist in the country with the highest wind resources potential located in the South-West, Central, and Eastern parts of the country with averaging wind speeds above 7 m/s, wind power density above 200W/ m² and annual energy production above 4.5 GWh/year.  A theoretical biomass energy potential also exists at 32 million GJ per year, estimated from a considerable biomass potential of 20 million tons per year, which could come from cow-dung and municipality solid waste.  A feasibility study for production and use of biofuels in Botswana has revealed the potential for liquid bio-fuels production, mainly biodiesel from Jatropha carcass, and ethanol from sweet reed.  In January 2021, a Canadian company began oil and gas exploration activities on the Namibian side of the environmentally sensitive Kavango Basin area in northeast Namibia and northwestern Botswana.  Botswana is heavily reliant on imports of refined petroleum products, particularly from South Africa as it does not yet have any proven crude oil reserves/refineries.  The strategic reserves/storage is also not yet at the required international standard; storage capacity is approximately 18 days compared to the international standard strategic storage capacity of 90 days.  Commercial buffer stock stands at less than 5 days of national consumption compared to the international standard of 14 days cover.  Botswana government-owned company, Botswana Oil Limited is working on a 186-million-liter petroleum storage facility project (Tshele Hill facility) to meet the government’s objective of achieving 60 days cover of strategic reserves.  The company is also pursuing coal beneficiation through a coal/gas to liquid project (XTL) named Ikaegeng XTL project.  Botswana Oil Limited reported total procurement of petroleum products in 2020/21 (March – April) period to be at 106.94 million liters of which 97.13 million was for commercial purposes while 9.81 million was for strategic stocks.   

Power Africa

Power Africa is a market-driven, U.S. Government-led public-private partnership aiming to double access to electricity in sub-Saharan Africa.  It offers tools and resources to private sector entities to facilitate doing business in sub-Saharan Africa’s power sector.  The Electrify Africa Act of 2015 Institutionalized Power Africa.  Learn more about the full Power Africa toolbox or other opportunities offered by Power Africa.

In April 2021, Power Africa signed a Mega Solar Memorandum of Intent (MOI) with the governments of Botswana and Namibia, the International Finance Corporation, the International Bank of Reconstruction and Development (World Bank), and the African Development Bank.  Under Mega Solar, Botswana and Namibia strive to work toward solar power output of 2-5 gigawatts within 20 years through technical advisory, procurement, and private sector regulatory services.  Power Africa also worked with Botswana’s power utility – the Botswana Power Corporation (BPC) – and Botswana’s Department of Energy to establish the Botswana Energy Regulatory Authority (BERA) in 2017.  Power Africa provides capacity building and advisory services to set up structures to facilitate transparent and effective procurement of solar projects and to facilitate the launch of Mega Solar.

Sub-Sector Best Prospects

Energy equipment, solar heating systems, solar photovoltaic equipment, and engineering services are the best sub-sector prospects.

Opportunities

The GoB’s growing openness to independent power producers (IPP) and solar projects as well as its investments in grid infrastructure provides opportunities to develop energy projects for domestic use and export.

Substantial natural gas reserves (coalbed methane) exist in Central and Northeast Botswana.  Once fully developed, the natural gas deposits could generate substantial downstream opportunities for new natural gas intensive equipment and services.

Resources

  • Botswana Ministry of Minerals and Energy
  • Botswana Investment & Trade Centre
  • Botswana Power Corporation (BPC)
  • Botswana Ministry of Trade and Industry
  • Botswana Department of Customs and Excise.