Sugar Cane farm. Drone photo of cane sugar. Sugarcane field in eSwatini, Africa.

Biomass Energy Generation

Photo by Shutterstock

Biomass Energy Generation

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
185 MW biomass generation potential; timber and sugar industries with co-generation capacity potential of 168 MW
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7) Climate Action (SDG 13) Good health and well-being (SDG 3)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Reduced Inequalities (SDG 10) Sustainable Cities and Communities (SDG 11) Life on Land (SDG 15)

Business Model Description

Set up and operate biomass plants for bagasse cogeneration and fuel-grade ethanol production from residues generated by the sugar and forestry industries, to meet own energy demand of industries and sell excess power to the national energy grid through a power purchasing agreement with the Eswatini Electricity Company (EEC).

Expected Impact

Utilise biomass waste from sugar and forestry industries to enhance energy security and reduce import dependency.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

Read More

Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Eswatini: Lubombo
  • Eswatini: Manzini
  • Eswatini: Hhohho
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
Eswatini imports 80% of its energy from South Africa and Mozambique (22). The high dependency on energy imports contributes to the government’s fiscal deficit and increases Eswatini’s exposure to energy supply risks, namely supply security and price shocks, highlighting the need for increased domestic energy production capacity (1).

Policy priority
The Kingdom of Eswatini Energy Masterplan 2034 aims to reduce dependency on energy imports by advancing domestic energy production through the utilization of available renewable energy resources, such as biomass and solar, and to ensure sustainability, efficiency, accessibility and affordability of all energy sources (1).

Gender inequalities and marginalization issues
Although national electricity coverage in Eswatini is 87%, several rural inhabitants, especially smallholder farmers and small business owners, do not have access to electricity or cannot afford high tariffs (2, 3, 4).

Investment opportunities introduction
Eswatini is well endowed with renewable energy resources, which incentivizes investments in renewable resources and alternative energy, including scaling-up renewable energy power plants, especially solar PV and biomass, that will provide low-cost energy (1, 4).

Key bottlenecks introduction
Limited private participation in energy generation, lack of regulatory and fiscal incentives for investors, high infrastructure costs and lack of adequate institutional and private sector capacity to plan, prepare and implement viable renewable energy projects prevent uptake of renewable energy (2, 6).

Sub Sector

Alternative Energy

Development need
Eswatini's domestic energy supply is mostly derived from hydropower and sugar cane-based cogeneration, making the supply vulnerable to external factors such as droughts. Energy demand is expecting an 18.76% increase by 2034, placing further pressure to pursue alternative energy sources such as renewables (1).

Policy priority
Eswatini's National Energy Policy (5) and Nationally Determined Contributions (NDC) (9) commit to increase the share of renewables to 50% of the national energy mix and to increase household access to clean and affordable energy to 100% by 2030.

Gender inequalities and marginalization issues
Although the access rate to electricity is relatively high at 87%, rural electrification rate stands at 83% compared to urban regions with above 95% (4). 90% of the total rural energy for cooking and heating in Eswatini is primarily collected and used by women (5, 9).

Investment opportunities introduction
Substantial investment opportunities exist for solar PV and bagasse generation as seen in electricity authority's intention to roll out three more 15 MW solar projects and a 40 MW biomass plant (10).

Key bottlenecks introduction
Limited financial resources of the primary utility company to implement solutions constrains alternative energy production. Additionally, the current tariff system is not based on cost of service delivery and electricity access is constrained by high tariffs (7).

Industry

Biofuels

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Biomass Energy Generation

Business Model

Set up and operate biomass plants for bagasse cogeneration and fuel-grade ethanol production from residues generated by the sugar and forestry industries, to meet own energy demand of industries and sell excess power to the national energy grid through a power purchasing agreement with the Eswatini Electricity Company (EEC).

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

185 MW biomass generation potential; timber and sugar industries with co-generation capacity potential of 168 MW

Potential for biogas cogeneration in Eswatini can be as high as 185 MW (15), with the timber and sugar industries potentially providing surplus power of 78 MW and 90 MW to the national grid (14).

The sugar industry owns and operates significant co-generation facilities with a capacity of 107 MW that provides electricity to its factories and associated communities using bagasse (18).

Eswatini's per annum demand for fuel grade ethanol (10% blend) stands at 12 million liters (25).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

According to the Sustainability for All report, biomass power plants in Eswatini can generate an IRR of 12% (14).

Production of fuel grade ethanol can produce an IRR of between 20-22% (25).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

A global analysis covering biomass plants of 150 kW to 1,0000 kW revealed a payback period of 8 years (27).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

Biomass energy can generally only be produced for eight months of the year in Eswatini and is vulnerable to climatic conditions, such as droughts and fire that might lead to a decrease of supply in bagasse of sugar-based by-products, potentially requiring imports of biomass supply (29, 30).

Market - Highly Regulated

The policy and regulatory framework for renewable energy production is under development with the blending mandate for bio-fuel and pricing for bagasse co-generation under review, presenting bureaucratic red tapes to investors.

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

The majority of Eswatini's energy is imported from South Africa that relies on fossil fuels for its energy production, which contributes to the country's indirect carbon footprint (9) and highlights the need for increased domestic production capacity.

Eswatini's energy sector is vulnerable to external shocks as a result of its heavy reliance on energy imports and energy sources such as hydro and biomass that are impacted by drought and other climatic factors, highlighting the need for more reliable sources of energy (17).

Eswatini's growing population size, coupled with the rising demand for fuelwood and poor management of indigenous forests, has resulted in biodiversity loss, deforestation and fuel wood resources being depleted in certain areas (9).

Gender & Marginalisation

Around 90% of Eswatini's rural population relies on fuel from wood for heating and cooking, which contributes significantly to GHG emissions and is detrimental to human health, solidifying the need for clean and affordable energy for low-income households (5, 9).

For the rural poor, grid connection costs exceed present consumption needs. These costs are an often insurmountable barrier for those who are energy poor (9); domestic energy generation from renewable resources is expected to drive down electrification costs currently reliant on fossil fuel imports.

Expected Development Outcome

Biomass energy generation reduces Eswatini's dependency on energy imports and contributes to the overall reduction of Eswatini's GHG emissions (9).

Biomass energy generation leads to increased access to clean energy sources, which reduces reliance on wood fuel and charcoal for cooking and heating, and enables restoration of indigenous forests, ecosystems and land in Eswatini (9).

Biomass energy generation leads to improved waste management and power reliability for producers in the sugar and forestry industries, capitalizing on the country's renewable biomass potential reaching around 170 MW between the sugar and timber industries (14).

Gender & Marginalisation

Increased access to clean and affordable energy through biomass energy generation reduces the use of traditional household fuels, especially wood, charcoal and dung, by rural and vulnerable households, reducing health risks and emissions (15).

Ethanol production through biomass plants can create jobs and opportunities for smallholder farmers in rural areas where poverty is concentrated and employment opportunities are most needed (9).

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.2.1 Renewable energy share in the total final energy consumption

Current Value

Eswatini has 76% national electricity coverage (84% in urban and 55% in rural areas) (3).

68% of domestic energy production is from renewables, but when including energy imports / total energy consumption, only 7,7% is derived from renewable resources (7, 16, 28).

Target Value

Achieve 100% access to clean energy at household level by 2030 (3).

Achieve 50% share of renewables in total energy consumption by 2030 (1, 5, 9).

Climate Action (SDG 13)
13 - Climate Action

13.2.2 Total greenhouse gas emissions per year

Current Value

Eswatini’s net GHG emissions in 2018 were estimated at 3,240.10 Gg CO2e (9).

Target Value

Achieve a 9.08% (665,800 tons) reduction in total GHG emissions in 2030 compared to a baseline scenario (9).

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.9.1 Mortality rate attributed to household and ambient air pollution

Current Value

Approximately 161,913 households are affected by household air pollution and possible respiratory-related health issues (9).

Target Value

N/A

Secondary SDGs addressed

Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities
Life on Land (SDG 15)
15 - Life on Land

Directly impacted stakeholders

People

The general population enjoys lower electricity costs and reduced dependency on wood fuel for cooking and heating.

Gender inequality and/or marginalization

Low-income rural households benefit from reduced energy tariffs and obtain alternatives to using wood fuel for heating and cooking, causing less harm to their health and the environments they live in (9).

Planet

The environment benefits from increased usage of bio-energy solutions that reduce burning activities of conventional sugar farming and reduce overall carbon footprint of Eswatini, mitigating the energy sector's impact on climate change (9).

Corporates

Companies in the sugar and forestry industry obtain opportunities for additional income generating activities from biogas cogeneration and biofuel production, and become energy sufficient, which reduces costs (18).

Public sector

The government benefits from a reduced dependency on energy imports, consequently lowering annual public expenditure and strengthening fiscal consolidation.

Indirectly impacted stakeholders

People

Communities around plants obtain job opportunities, as one 15 MW biomass plant creates around 300 jobs (19).

Gender inequality and/or marginalization

Small- and medium-sized sugarcane farmers in rural areas benefit from employment opportunities (9).

Planet

The planet enjoys improved land and forestry management as less people rely on fuelwood for their energy requirements.

Outcome Risks

Despite its renewable energy character, burning of biomass for energy generation releases carbon dioxide, contributing greenhouse gas emissions in the energy sector (20).

The expansion of monocrops such as sugarcane and forestry plantations, required as inputs for biomass energy generation, may worsen soil degradation and negatively impact fragile ecosystems (9).

Forestry and sugarcane traditionally require large areas of land for cultivation; increased production thereof could restrict access to land by smallholder farmers (9).

Impact Risks

Co-production of energy from agricultural bi-products relies on success of farms and is therefore vulnerable to external factors, such as climatic conditions and market conditions, which may limit the expected impact.

If biomass energy production does not lead to reduced energy costs and increased connectivity, the rural energy crisis will not be adequately addressed and the expected impact may be limited (9).

If the sugar and forestry industry support imported energy rather than cogenerated power from bagasse boilers, due to historically cheaper prices, the expected impact may be limited (20).

Impact Classification

C—Contribute to Solutions

What

Biomass energy generation utilises biomass waste from sugar and forestry industries to reduce energy import dependency.

Who

Businesses benefit from reduced energy costs, the environment enjoys sustainable energy generation, and the sugar and forestry industries utilise their waste through biomass energy generation.

Risk

While the biomass energy generation model is proven, external input and climatic factors, tariff levels and connectivity, and the uptake by sugar and forestry industries require consideration.

How Much

Biomass energy generation realizes the biomass potential of the forestry and sugar industry, which is able to provide 78 MW and 90 MW (14), and contributes to increasing the share of renewables by 50% in energy consumption by 2030 (9).

Impact Thesis

Utilise biomass waste from sugar and forestry industries to enhance energy security and reduce import dependency.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

National Energy Policy, 2018: this Seeks to create a framework for the energy sector that is robust and aligned to global trends. It highlights the potential of liquid and solid biomass to contribute to the resilience of Eswatini's energy sector (5).

Kingdom of Eswatini Energy Masterplan 2034: Seeks to provide national decision makers with the necessary information for planning future energy sector development and includes plans for expanding the overall biomass energy production capacity of Eswatini (1).

Independent Power Producers (IPP) Policy, 2015 : Aims to increase the utilization of local renewable energy resources, including biomass besides solar, by establishing an enabling environment to promote the establishment of sustainable renewable energy and IPP generation sources (21).

Energy Efficiency and Conservation Policy of 2019: Seeks to secure energy supply through locally available resources. It is a high-level roadmap for implementation, covering regulations, financing, institutional responsibilities and monitoring evaluation (22).

Financial Environment

Financial incentives: The Post COVID-19 Economic Recovery Plan seeks to establish a 15 MW biomass energy plant valued at E 800 million (USD 52 Million) as part of its planned energy projects (19).

Fiscal incentives: As part of the Special Economic Zone Act (2018), investors benefit from a 20-year exemption from all corporate taxation (followed by taxation at 5%); full refunds of customs, value-added tax, and other taxes payable on goods purchased and unrestricted repatriation of profits (22).

Other incentives: The S10 Lifeline Tariff cushions lower usage customers against high prices; it is an attempt to increase energy security and advance poverty alleviation (33).

Regulatory Environment

Eswatini Electricity Act, 2007: Reforms and consolidates the laws regulating the generation, transmission, distribution and supply of electricity in Eswatini and sets obligations to hold licenses (1).

Eswatini Energy Regulatory Authority Act, 2007: Allows the establishment of Swaziland Energy Regulatory Authority with the mandate to administer the Electricity Act (1).

Swaziland Electricity Company Act, 2007: Provides for the establishment of the Eswatini Electricity Company (EEC) under the Companies Act and performance by that Company of the powers and functions presently performed by the EEC relating to the generation, transmission, distribution and supply of energy (23).

The Grid Connection Code for Renewable Power Plants Connected to the Electricity Transmission System or the Distribution System, 2014: Specifies minimum technical requirements for renewable energy plants wishing to connect to the grid (24).

Eswatini Petroleum Act, 2020: Inserts that the Eswatini Energy Regulatory Authority (ESERA) will provide licensing application forms for downstream petroleum activities; the National Petroleum company is mandated to blend and distribute fuel (31, 32).

Legal Notice No. 324 the Public Procurement Act, 2020: Regulates the procurement of goods, works and services by procuring entities, including for biomass energy generation, to ensure transparency, accountability and promote diverse private sector participation in public procurements (36).

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

ILOVO Sugar, UBOMBO Sugar Ltd, Royal Eswatini Sugar Corporation, Montigny, Peak Timbers, Mhlante Group, Tibiyo Taka Ngwane, Symbion Power, Electricite de France South Africa, ABF Energy Limited, BNM Technology Group, Eswatini Europe Energy Resource Consortium.

Government

Eswatini National Petroleum Company, Ministry of Natural Resources and Energy, Eswatini Energy Regulatory Authority (ESERA), Eswatini Electricity Company (EEC).

Multilaterals

European Union (EU), African Development Bank (AfDB), International Renewable Energy Agency (IRENA), World Bank Group (WBG).

Non-Profit

Eswatini Cane Growers Association.

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Eswatini: Lubombo

The Lubombo region hosts some of the largest sugar plantations in Eswatini, including Ubombo Sugar and the Royal Eswatini Sugar Corporation (RESC) (12).
semi-urban

Eswatini: Manzini

Large forestry plantations are based in Manzini, including Montigny with a planned development of a biomass energy production plant (13).
semi-urban

Eswatini: Hhohho

The forestry sector has a strong presence in Hhohho, which provides the potential for biomass energy production from woodchips (35).

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.