Scatec commissions first 60 MW of solar farm in Botswana

From the newsletter

Norway-based renewable energy company Scatec has begun commercial operation of the initial 60 MW of its 120 MW Mmadinare Solar Cluster in Botswana. This marks Scatec's first venture in the country. The remaining 60 MW of the project is currently under development and is expected to be finished in the first half of 2026.

• Botswana is currently a net importer of electricity, spending over $150 million annually on electricity imports from the Southern African Power Pool market. In 2023, electricity was the fifth most imported product in the country.   

• The country is targeting to become a net exporter of electricity by 2030 and is focusing investments in renewables, which it wants to account for 30% of its generation mix by 2030, up from the current 1.1%.

More details

• Private sector companies are leading the renewable energy transition in Africa. They have played a key role in scaling projects from small sizes to gigawatt capacity. For example, in Egypt, AMEA Power is building a 2 gigawatt wind farm at $2.3 billion, which is set to be the largest wind farm in Africa and the largest private sector investment in a single project on the continent.   

• The African renewable energy market, particularly wind and solar, has attracted significant interest from investors, including international energy companies like Scatec and ACWA Power. These companies have dwarfed the investment size of local African energy companies and target mostly utility-scale projects, as well as large commercial and industrial customers.   

• Scatec is a leading renewable energy solutions provider, accelerating access to reliable and affordable clean energy in emerging markets. It develops, builds, owns, and operates renewable energy plants, with 4.8 GW in operation and under construction across five continents. In Africa, their investments have focused on South Africa, Egypt, Tunisia, Cameroon and now Botswana.   

• The company recently sold its African hydropower assets to TotalEnergies as it shifts its focus mainly to solar and battery energy storage solutions. In South Africa, it has built over 700 MW of solar and 300 MWh of battery energy storage systems. In Egypt, it has built 380 MW of solar and has over 2000 MW under development. Last month, it signed a 25-year power purchase agreement with Egypt Aluminium, the largest aluminium producer and industrial electricity consumer in Egypt, for a project featuring 1,100 MW of solar PV capacity coupled with a 200 MWh battery energy storage system. 

• Botswana has ambitious renewable energy targets and recognises that it won't achieve these without private sector involvement. In 2007, it amended the Electricity Supply Act to allow private companies to invest in power generation and sign Power Purchase Agreements (PPAs) to sell electricity to Botswana Power Corporation (BPC). It has also developed its renewable energy roadmap and established the National Energy Policy (NEP) and the Renewables Readiness Assessment (RRA), designed to enhance energy security and reduce reliance on fossil fuels.

• These changes and plans are expected to catalyse renewable energy investments. Botswana stands to benefit beyond just meeting its energy demands; it can also reduce its foreign expenditure on electricity imports, which can then be redirected towards improving the grid infrastructure.

Our take

• Botswana, like many other African countries, won't find the transition to renewables a smooth ride. There are significant challenges that need to be addressed. The electricity grid, which was originally built for coal-fired power, needs upgrading to accommodate renewable energy sources.

• This adds another challenge. Currently, the private sector is not allowed to invest in transmission and distribution. But with their increased participation in generation, they will need to evacuate their power. The government should move quickly to open investments in this sector to the private sector.

• Countries like South Africa provided incentives to encourage businesses and households to switch to solar. The result was massive, with 2023 solar installations breaking records. Botswana should follow the same approach, given their current market, which is not yet as mature.