Malawi Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in malawi, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Overview 

Malawi’s power sector is one of the most severely constrained in sub-Saharan Africa. Less than 25 percent of the population of 21 million has access to electricity. Due to limited electricity generation, firewood and charcoal remain the major cooking fuels across the country. More than 85 percent of the population lives in rural areas, but less than seven percent of rural residents have access to electricity. The Electricity Supply Corporation of Malawi (ESCOM) manages an interconnected grid with an installed capacity of approximately 581 megawatts (MW). There are a few off-grid photovoltaic installations in remote locations.

Approximately 13 percent of Malawians use off-grid solar products for lighting while less than 11 percent are connected to the national grid. The World Bank estimated a routine shortfall of 50 MW generation, and ESCOM reports that 30 percent of generation is lost to theft. With no reserve margin and a stressed system, the reliability and quality of electricity supply is extremely poor. Malawi signed a power purchase agreement with Zambia in August 2018 and signed technical and commercial agreements with Mozambique in April 2019. However, without operational interconnectors between the countries’ grids, the two agreements have yet to yield any appreciable benefit to Malawi’s electricity needs.

Considerable infrastructure investment will be needed to provide reliable electrical supply and meet the growing demands of the county. In 2018, Malawi completed the $350 million MCC Compact to increase the capacity and stability of the national electricity grid through generation, transmission, and distribution improvements. It prepared Malawi for future power generation expansion by strengthening sector institutions, regulation, efficiency, and governance. Under the MCC compact, the government developed energy sector strategies focused on sector reforms, rural electrification, biomass energy, and renewable energy to stimulate investment in the sector. 

Reforms led to the unbundling of ESCOM into three companies – a generation company (Electricity Generation Company - EGENCO), transmission & distribution entity (ESCOM Ltd), and a procurement company (Power Market Limited) that has since been disbanded. ESCOM is now the system and market operator (SMO) as well as the transmitter of electricity generated throughout the country. ESCOM is also responsible for sourcing power from generators like EGENCO and a growing number of Independent Power Producers (IPPs), a responsibility it inherited from Power Market Limited. The government has signed 16 Power Purchase Agreements (PPA) totaling 689 MW, but most agreements remain in the planning phase. Several potential developers are working with the government to develop independent power projects. Most of the interested IPPs are in solar photovoltaic (PV), while some LNG, coal, heavy fuel oil (HFO), and small hydropower projects are among the candidates.

More than 80 IPPs have signed Memorandums of Understanding with the government, but only 11 are active with signed power purchase agreements. Additional power projects and reforms are co-funded by the World Bank, and U.S., Japanese, and German governments. The government reiterated their intention to develop a 350 MW hydropower project in the 2025/2026 budget statement estimated at $1.5 billion on the Shire River at Mpatamanga Gorge under a Public-Private Partnership (PPP) project finance development model.  

The World Bank approved a $350 million grant from the International Development Association to the Malawi government as part of its contribution to the project. Construction is expected to begin in 2026 once the additional financing is secured and will take up to five years to complete. 

Leading Sub-sectors 

Hydro electricity, fossil fuels, and biomass are the prominent energy sources in Malawi. Opportunities exist in hydro generation, solar energy, wind energy, LNG, thermal power plants, biomass stoves, biogas, and renewable power generation. 

Opportunities 

Malawi’s energy sector is undergoing transformative development under the World Bank’s Energy Compact, with ambitious goals to achieve universal electricity access by 2030. The plan includes increasing electricity access from 25.9 percent to 70 percent, requiring 1.15 million new on-grid and 1.55 million off-grid connections. Clean cooking solutions aim to reach 75 percent of households by distributing advanced woodstoves, liquefied petroleum gas (LPG), electric, biogas, and ethanol/paraffin cookstoves, reducing reliance on traditional fuels. 

Renewable energy will play a critical role, with hydropower and other renewables increasing their share in the energy mix from 90 percent to 96 percent. The Compact also targets an additional 848 MW of installed generation capacity, with 714 MW expected from private sector investment, and aims to generate 5,166 GWh annually by 2030. To support this growth, Malawi plans to expand its grid infrastructure with 22,417 km of distribution lines, 1,940 km of transmission lines, and upgraded substations. Regional interconnectors with Mozambique, Zambia, and Tanzania will enhance power trade, strengthen the grid, and position Malawi as a key player in the Southern and East African Power Pools.

EGENCO lacks capital to fully meet ESCOM’s demand for power on its own. U.S. companies can explore independent electricity generation opportunities through power purchase agreements and other possible outsourcing opportunities with ESCOM. Additional hydropower, solar, geothermal, and biomass projects constitute longer term opportunities. Power generation projects are expected to benefit from possible trading and export opportunities once cross-border transmission projects are in place with Mozambique, Zambia, and Tanzania. Opportunities also exist for U.S. suppliers of household-level solar products. The use of small-scale household solar units and accompanying storage options are growing as most Malawians are not connected to the grid. 

Web Resources 

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