Coal fired power plants will improve electricity availability through the national grid, including reduced prices and fewer blackouts, and would have a positive effect on citizens and major industries, such as mining, that could catalyse economic growth.

Malawi's generation expansion plan makes provision for a diverse energy mix including solar, wind, hydro and biomass. However, each solar and wind plant is relatively small, and in particular the intermittent plants would need to be strategically placed in terms of location in order for such generation to support the grid, hence the importance of utilising coal in the meantime (34).

The Electricity Supply Corporation of Malawi (ESCOMs) grid can only absorb limited amount of power from variable renewable sources such as wind, solar PV and Concentrated Solar Power (CSP). Some preliminary assessments have indicated that the grid can only take up to 20 MW of such variable power source on the existing network. Solar PV technology takes lots of land and for a country like Malawi with very high population density this needs to be handled with care. In situations like these, reclaimable land can be used (33).

As overall grid connectivity improves due to increased generation capacity, deforestation will decrease. Studies show that grid electricity reduces firewood consumption by approximately 0.83–2.09 cubic meters per month and electrified households are approximately 61–71% less likely to use kerosene as lighting fuel (13).

The recent downward trend of global investment in coal-fired power plants shown in the IEA’s World Energy Investment 2021 report reflects both the growing sentiment that new coal power generation capacity is misaligned with achieving a net-zero economy by 2050, and the diminishing economic case for coal versus alternative generation sources (27).

A critical mass of private financiers has taken steps to curb direct financing of emissions-intensive activity, such as coal-fired electricity generation. 53 financial institutions representing nearly one quarter of global banking assets have joined the UN’s Net Zero Banking Alliance, which reflects a commitment to aligning the institutions’ loan portfolios with net-zero emissions by 2050 (27).

Without sufficient, parallel investment in supporting grid infrastructure, a coal plant risks being stranded on commissioning, preventing it from realizing the benefits of baseload generation that coal-fired power can theoretically provide while leaving financial and environmental costs to bear (27).

The mining and coal use are associated with significant environmental impacts. The local environmental hazards of coal vary from place to place. While some communities are most affected by air pollution from coal-fired power plants, others endure toxic groundwater from mining. The large scale mining and burning of coal emits greenhouse gases responsible for global climate change (42).

However, Malawi needs to improve its energy mix for reliable generation capacity. Malawi's power demand will vary cyclically from day to day, reaching maximum during day business hours and dropping to minimum during late night and early morning, but never dropping below a certain base. This base load is typically at 30-40% of the maximum load, so the amount of load assigned to base load plants is tuned to that level. The above-base power demand (above the base) is handled by intermediate and peak power plants, which are also included to the grid (42). Considering Malawi wants ramp up generation capacity to 1,873 MW by 2030, 30% - 40% (561 - 749 MW) would need to be firm base load (34).

The increased electricity supply may not reach those most in need because they are not connected to the grid.

Provide an energy baseload alternative to hydropower to achieve grid stability, which will assist in decreasing operational costs of industry in Malawi, contributing positively to overall Malawi economic growth.

Malawi 2063 states that the country shall continue investing in the energy sector beyond hydro, which is currently the main source of energy. Alternative sources, including solar, coal and thermal, shall be tapped into, in ways that avoid or minimize environmental degradation (31).

Malawi's Energy Policy of 2018 seeks to guide planning and implementation of programmes, projects and activities in the energy sector with the aim of increasing access to affordable, reliable, sustainable, efficient and modern energy services for every person in the country. Under Policy Priority Area 6 it states that the Government will promote coal as a fuel for power generation and as an alternative for household, tobacco curing and other applications through the implementation of environmentally friendly coal-fired electricity generation projects (38).

Integrated Resource Plan (IRP) for Malawi of 2017 is a follow-on to a Mini-IRP study completed in 2015. The Plan's aim is to prepare a least-cost investment plan in generation, transmission and demand-side measures covering the 20 year period 2017 to 2037 (34).

Financial incentives: The Export–Import Bank of China provides concessional loans with no or low interests. It offers a range of financing and trade finance instruments, including demand guarantees. Any overseas company benefitting from the guaranteed investment needs to be partly or fully owned by a Chinese parent company (25.1).

Fiscal incentives: The Malawi Government has, through the Taxation (Priority Industries) Regulations 2013, designated two industries as priority, one of which is the electricity generation, transmission and distribution. The companies that are accorded the Priority Industry status are given either 0% Corporate Income Tax rates for a period not exceeding 10 years or 15% income tax rate; provided that an additional 5% of taxable income is charged for companies not incorporated in Malawi (39).

Other incentives) The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank and aims to promote cross-border investment in developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and lenders (17). Investors can apply for MIGA guarantees to the value of the investment. Companies must be incorporated in a member country or majority-owned by nationals of a member country to be eligible.

The Malawi Energy Regulatory Authority (MERA) is the custodiam of the Malawi Feed-In Tariff Policy 2012 which regulates the details of Power Purchase Agreements to feed access electricity into the national grid (26).

The Energy Regulation Act of 2007 aims to establish the Malawi Energy Regulatory Authority (MERA) to regulate the energy sector, to define the functions and powers of the Energy Regulatory Authority, to provide for licensing of energy undertakings (22.1).

The Electricity Act of 2007 makes provisions for the regulation of the generation, transmission, wheeling distribution, sale, importation and exportation, use and safety of electricity (23.1).

The Environmental Management Act of 1996 (revised in 2004) makes provision for the protection and management of the environment and the conservation and sustainable utilization of natural resources (24.1).

Rukuru Power Company Limited, Hubei Electric Power Construction Engineering Co, Zagaf Cement, China Energy Engineering Corporation (CEEC).

Electricity Generation Company (EGENCO) of Malawi, Energy Regulatory Authority (MERA), Electricity Generation Company (Malawi) Limited (EGENCO), and Electricity Supply Corporation of Malawi (ESCOM) Ltd, the state transmission and distribution company. ESCOM is the system and market operator (SMO) as well as the single buyer of electricity generated throughout the country (37).

World Bank Group, Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB).

Electricity Supply Corporation of Malawi (ESCOM) purchases generated electricity through a Power Purchase Agreement (PPA) (4).