Decentralisedrenewableenergyforagriculturein

Malawi

?IRENA2025

Unlessotherwisestated,materialinthispublicationmaybefreelyused,shared,copied,reproduced,printedand/orstored,providedthatappropriateacknowledgementisgivenofIRENAasthesourceandcopyrightholder.Materialinthispublicationthatisattributedtothirdpartiesmaybesubjecttoseparatetermsofuseandrestrictions,andappropriatepermissionsfromthesethirdpartiesmayneedtobesecuredbeforeanyuseofsuchmaterial.

ISBN:978-92-9260-653-4

Citation:IRENA(2025),DecentralisedrenewableenergyforagricultureinMalawi,InternationalRenewableEnergyAgency,AbuDhabi.

AboutIRENA

TheInternationalRenewableEnergyAgency(IRENA)isanintergovernmentalorganisationthatsupportscountriesintheirtransitiontoasustainableenergyfuture,andservesastheprincipalplatformforinternationalco-operation,acentreofexcellence,andarepositoryofpolicy,technology,resourceandfinancialknowledgeonrenewableenergy.IRENApromotesthewidespreadadoptionandsustainableuseofallformsofrenewableenergy,includingbioenergy,geothermal,hydropower,ocean,solarandwindenergyinthepursuitofsustainabledevelopment,energyaccess,energysecurityandlow-carboneconomicgrowthandprosperity.

Acknowledgements

ThisreportwasdevelopedundertheguidanceofGürbüzG?nül(Director,IRENACountryEngagementandPartnerships)andKavitaRai(IRENA),andwasauthoredbyWilsonMatekenya(IRENA)andTioneKaonga(consultant).

ThereportbenefitedfromreviewsandcommentsbyBabucarrBittaye,NtseboSephelane,KamranSiddiquiandPaulKomor(IRENA),andStephaniePinnington(consultant).ThereportalsobenefitedfromreviewsbyChristoneNyondo(MwAPATAInstitute[Malawi]),CollenZalengera(GlobalEnergyAllianceforPeopleandPlanet[GEAPP]Malawi),GiftChiwayula(MinistryofEnergy[Malawi])andBraveMhonie(RenewableEnergyIndustryAssociationofMalawi[REIAMA]).

PublicationsandeditorialsupportwereprovidedbyFrancisFieldandStephanieClarke.ThereportwaseditedbyJustinFrench-Brooks,withdesignbyElkanodata.

ThisreportwasmadepossiblebythevoluntarycontributionsoftheGovernmentoftheUnitedArabEmiratesandtheOpenSocietyFoundations.

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Contents

Executivesummary5

1.Countrycontext9

1.1.Background9

1.2.Climatechange,mitigationandadaptation11

1.3.Policyandregulatoryframeworks11

2.Methodology13

2.1.Desktopreview13

2.2.Stakeholderconsultations13

2.3.Valuechainselection14

2.4.Datacollectionandanalysis15

2.5.Datasynthesisandvalidation16

3.Mappingenergyneedswithavaluechainapproach17

3.1.Keystagesinagriculturalvaluechains17

3.2.TargetedDREentrypointstocatalyseintegration17

3.3.Olericulturevaluechainanalysis18

3.4.Dairyvaluechainanalysis19

3.5.Ricevaluechainanalysis20

3.6.Legumevaluechainanalysis21

3.7.Aquaculturevaluechainanalysis22

4.Mappingenergyneedsvaluechainapproach25

4.1.Introduction25

4.2.Methodology25

4.3.DREmarketpotentialintheolericulturevaluechain25

4.4.DREmarketpotentialinthedairyvaluechain26

4.5.DREmarketpotentialinthericevaluechain27

4.6.DREmarketpotentialinthelegumevaluechain28

4.7.DREmarketpotentialintheaquaculturevaluechain28

5.Recommendations30

References32

Tables

Table1Mappingofselectedvaluechains15

Table2SummaryofthepriorityDREtechnologiesandpricerange18

Table3Estimatedmarketpotential-olericulturevaluechain26

Table4Estimatedmarketpotential-diaryvaluechain27

Table5Estimatedmarketpotential-ricevaluechain28

Table6Estimatedmarketpotential-legumesvaluechain28

Table7Estimatedmarketpotential-aquaculturevaluechain29

Table8Summaryofmarketpotential29

Figures

Figure1Malawienergysupplymix10

Figure2Malawienergydemandmix10

Figure3TheroleofMBGs20

Boxes

Box1Milkbulkinggroups20

2

Abbreviations

DRE

decentralisedrenewableenergy

EGENCO

ElectricityGenerationCompany

ESCOM

ElectricitySupplyCommissionofMalawi

HPS

HighPenetrationScenario

IRENA

InternationalRenewableEnergyAgency

kW

kilowatt

kWh

kilowatthour

LPS

LowPenetrationScenario

MBG

milkbulkinggroup

MMPA

MalawiMilkProducersAssociation

MPS

ModeratePenetrationScenario

MW

megawatt

PAYG

pay-as-you-go

PU

productiveuse

SDG

SustainableDevelopmentGoal

SEforALL

SustainableEnergyforAll

NASFAM

NationalSmallholderFarmersAssociationofMalawi

3

4

Photo:DietmarTemps@

Executivesummary

AccesstoenergyremainsacriticalchallengeinMalawi,particularlyinruralareaswherelimitedaccesstoreliablepowersignificantlyconstrainsagriculturalproductivityandoveralleconomicdevelopment.Recognisingthis,thegovernmentofMalawihasimplementedtheNationalEnergyPolicy,prioritisingrenewableenergyasameanstodiversifyenergysourcesanddriveruralelectrification.Inparallel,theMalawiRuralElectrificationProgrammeaimstoextendelectricitytounderservedruralregions.

Supportingtheseefforts,theInternationalRenewableEnergyAgency(IRENA)isworkingtopromotedecentralisedrenewableenergy(DRE)solutions,particularlyintheagriculturalsector.ThissectorholdsimmensepotentialtoboostMalawi’seconomy,enhancefoodsecurityandsupportinclusivegrowth.

ThisreportpresentsthefindingsofafeasibilitystudyfocusedondeployingDREtechnologiesacrossselectedagriculturalvaluechains.Drawingfromdeskreviews,stakeholderconsultations,focusgroupdiscussionsandinterviewswithfarmers,thestudyprovidescriticalinsightsandactionablerecommendationstoalignDREinvestmentswiththenationalaspirationsofMalawiVision2063.

Keyfindings

ThestudyidentifiedhighdemandforDREsolutionsacrossselectedagriculturalvaluechains,namely,olericulture,dairy,rice,legumes(groundnutsandsoybeans)andaquaculture.Forinstance,dairyfarmersfaceseverechallengesduetoenergyinsecurity,with52%ofsurveyedfarmerslackingaccesstoelectricity.Evenamongthosewhohaveaccess,44%relyonthenationalgrid,wherepoweroutagesposeasignificantchallenge.Inbothinstances,thelackofreliableelectricityandcoldchaininfrastructureresultsinover41%ofthemilkproducedbyfarmersspoilingbeforereachingthemarket.Theselosses,compoundedbytransportandinfrastructureissues,reducefarmers’incomesandunderminetheprofitabilityofthedairyvaluechain.

Inthericevaluechain,thestudyrevealedthathighelectricitytariffsposeasignificantbarriertoirrigation.Onaverage,ricefarmersreportedspendingnearlyUSD576monthlyonelectricitytopowertheirirrigationsystems.Asaresult,irrigationschemesliketheLifuwuRiceIrrigationSchemeareunderutilised.Despiteitscapacitytoirrigate180hectares,theschemecurrentlyirrigatesonly30hectares,representingjust18%utilisation.Thisinefficiencyleadstosubstantialproductionlosses,underutilisationofinfrastructureandreducedincomeforsmallholderfarmers.

TheassessmentfindingsalsoshowthatmostofthesurveyedsmallholderfarmersarewillingtopayforDREsolutionsiftheeconomicbenefitsofthesolutionsareclearlyexplained.Themajorityofthefarmersaremotivatedtoincreaseproductivityandreduceenergycosts,andarethuswillingtoinvestintechnologiestoachievethis.Farmersappreciatetheincreaseinprofitabilitythatresultsfromenergyaccessleadingtoareductioninpost-harvestlosses.ByimplementingDREsolutions,farmersforeseeincreasedyieldsandreducedwaste,whicheventuallycontributetohigherincomes.Therefore,creatingfinancialmodelsthatalignwithfarmers’capacitytopaycanfacilitatetheadoptionofthesetechnologies,ensuringthattheyarebothaccessibleandeconomicallyviableforsmallholderfarmers.

FinancialviabilityofDREsolutions

AnalysisconductedduringthestudydemonstratestheneedtodeployDREsolutionsinthesevaluechains,althoughsystemsthathavealreadybeenimplementedinthesectorstruggletohighlightastrongbusinesscase.Forexample,inthelegumesector,JescaEnterprises,asmall-scaleprocessor,investedUSD125520ina30kilowatt(kW)DREsystem.Overfiveyears,thisinvestmentresultedinanunattractiveinternalrateofreturn(IRR)of4%.Similarly,inthedairysector,KalimbukaMilkBulkingGroup(MBG)investedinDRE-poweredmilkstorageandprocessingsolutionswithanIRRof2%,againalowreturninvestment.Theseexamplesalsoindicatethat,despitetheirimportance,DREinvestmentshavehighinvestmentcostandlowreturn.However,becauseofthepotentialforpositiveimpacts,thereisaneedforpolicyinterventionsuchastaxexemptionstodrivetheircostsdownandincreasetheirattractiveness.

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DecentralisedrenewableenergyforagricultureinMalawi

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DREtechnologiesalsooffertransformativepotentialinaquaculture.Energyisessentialforheating,watercirculationandhatcheryoperations.TheadoptionofDREforpondirrigationandprocessingcanenableyear-roundfishproductionandsignificantlyincreaseyields.Intheolericulturesector,theuseofDREforirrigationandcoolingcanincreaseyieldsandextendtheshelflifeofhigh-valuecrops,improvingmarketabilityandreducingpost-harvestlosses.Forinstance,usingsolar-poweredcoldstoragesystemsinmarketsandproductionhubscouldreducevegetablespoilagebyover30%,leadingtoincreasedfarmerincomesandimprovedfoodsecurity.

Investmentandscalingpotential

AnestimatedUSD183.85millioninvestmentisrequiredtointegrateDREsolutionsacrossfivepriorityagriculturalvaluechainsinMalawi:olericulture,dairy,rice,legumesandaquaculture.ThiscatalyticinvestmentwouldhelpreduceperceivedriskwhilstboostingthecommercialviabilityofDRErolloutinthecountry.Thefundingwouldbeusedtosupportanddeploysolar-poweredirrigation,coldstoragesolutionsandcustomprocessingunitsacrossthevaluechains.Itwouldfurtherbeusedtoprovideliquiditytomicrofinancinginstitutionsthatprovidesmallholderfarmerswithaccesstofinancethroughconcessionalcreditlines.ThismultiprongedapproachwouldhelpkickstartandacceleratetheuptakeofDREtechnologiesandhelpreducepost-harvestlosses,boostproductivity,andimprovefoodandnutritionsecurity,whilstempoweringsmallholderfarmerstoconductandscaletheirfarmingoperationssustainably.Thefollowingisanoverviewofthefundingspreadacrossthevaluechains:

?Olericulturevaluechain(tomatoes,onions,leafygreenvegetables,greenbeans)(USD12.24million):DREsolutionstargetingthecoldchain,processingandirrigationwouldhelpincreaseproductivityandreducebothyieldlossesanddependenceonrain-fedfarming.Thesesolutionswouldincreasefarmers’earningswhilstenhancingthesupplyoffreshproduce.

?Dairyvaluechain(USD22.88million):Coldchainsolutionsareneededtoreducethemilklossesexperiencedacrossthevalueschain.Thesesolutionswouldhavethegreatestimpactonremoteruralfarmerswithlimitedaccesstoenergyandlocatedfarfrommilkaggregationcentres.

?Ricevaluechain(USD32million):Capitalwouldenabletheuseofsolardryersandwatermanagementsystemstoimproveyieldquality,enhancedouble-croppingcapabilitiesandreducerelianceonrain-fedirrigation,bolsteringresiliencetowaterscarcity.

?Legumevaluechain(USD82.93million):Investmentswouldtargetsolar-poweredwaterpumps,storageanddryingtechnologiestominimisepost-harvestlossesandimproveprocessingefficiency,supportingtheproductivityandprofitabilityoflegumefarmers.

?Aquaculturevaluechain(USD33.80million):Fundingwouldenabletheinstallationofsolar-poweredrefrigeration,aeratorsandwaterpumps,enhancingfishstockhealth,reducinglossesandensuringsupplystability.

Beyondincreasingproductivity,investmentwouldgenerateemploymentinDREinstallationandmaintenance,strengtheninglocaleconomies.DREsolutionscanfurtherenhanceclimateresiliencebyreducingfossilfueldependence,stabilisingyieldsduringdroughtsandimprovingsupplychainsthroughrobustinfrastructure.Establishingmini-gridstoservemultiplevaluechains,farmerco-operativesandruralbusinessescanenhancecost-effectivenessandeconomiesofscale,whiletargetedrenewableenterprisesshouldbeprioritisedaccordingtotheirscalability,profitabilityandimpactpotentialforsmallholderfarmers.

Highelectricitytariffs,unreliablegridsupply,andlimitedaccessinruralandremoteareasdrivethedemandforDREinMalawi’sagriculturalsector.However,realisingthefullpotentialofDREsolutionsrequiresfinancingandcapacity-buildingchallengestobeaddressed.Accesstocreditremainsasignificantbarrier,withmostfinancialproductseithercostlyorincompatiblewiththeneedsofruralsmallholderfarmers.Flexiblefinancingoptions,suchaslow-interestloanswithrepaymentplanslinkedtoagriculturalproductioncycles,areimportanttoscaleupDREadoption.Thisassessmentaimstostimulateaself-sustainingDREecosystemthatsupportssmallholderfarmers,strengthensmarketlinkages,andenhancesMalawi’sagriculturalresilienceandproductivity.

Recommendations

ToboostDREimplementationinMalawi’sagriculturalsector,aco-ordinatedapproachisneededwithactionablerecommendationstargetingkeystakeholdergroups.

Governmentandpolicymakersshouldimplementtaxincentivesandsubsidies,suchasprovidingtaxexemptionsforimportingDREsolutionsusedinsmallholderagriculture,includingsolar-drivenwaterpumpsandrefrigerationunits.ReformingimportproceduresandenhancingaccesstoforeigncurrencyforDREsolutionswouldeaseaccessforsmallholderfarmers.Furthermore,developinganationalagriculturalDREpolicyundertheMinistryofAgriculturecanhelpintegrateDREtechnologiesintoagriculturaldevelopmentplans,withdetailedtargetsforsolarwaterpumpsandcoolingfacilitiesinruralareasby2030.Establishinga“GreenFinanceFacility”inpartnershipwithlocalbankscansupportDREpurchasesbyprovidinglow-interestloansforDREsolutions.Additionally,improvingthecapacityofagriculturalextensionofficerstomanageDREmaintenanceandoperationwouldenablethemtosupportfarmersinintegratingsolutionslikesolardryersforolericultureandsolaraeratorsforaquaculture.Finally,increasinginterministerialco-ordinationthroughataskforceacrossrelevantministrieswouldalignsuitablepoliciesandresourcestobedevelopedforDREimplementation.

DevelopmentpartnersanddonorsshouldsupportDREdemonstrationprojectstoshowcasethebenefitsofDREtechnologies,suchasasolarcoolingprojectfordairyco-operativesinMzuzu.ProvidingfarmerswithcapacitybuildingandtrainingonDREsolutions,andoperationalandbasicmaintenancetechniquesisimportant.AllyingprojectsandprogrammeswithnationalenergygoalsinpartnershipwiththeMinistryofEnergyshouldhelpguaranteeeffectiveimplementation.

FinancialinstitutionsareencouragedtocreatetailoredfinancialproductsforDREsolutions,offeringfinancewithflexiblesettlementtermssuitedtotheextendedproductioncyclesinagriculturalsectorssuchasaquacultureanddairy.Institutingpay-as-you-go(PAYG)financingmodelscanallowsmallholderfarmerstobuyDREsolutionsincrementally,reducingthefinancialburden.Localinstitutionscanalsocollaboratewithregionaldevelopmentbankstodeveloprisk-sharingandreductionmechanismssuchasriskmitigationfacilitiesthatwilllowerthecostofcapitalforsmallholderfarmers.

DREtechnologyprovidersandsuppliersareencouragedtodevelopDREsolutionssuitedtoMalawiansmallholderfarmers’needs.Awidernetworkofserviceandrepaircentresisneededtoservicefarmersinremotelocations.Thiswouldenhancethereliabilityofthesolutionsandsubsequentlyuptakeacrossthevaluechains.Technologysupplierscanalsoincreasebusinessvolumesbyimplementingtargetedoutreachandawarenesscampaignsthatmakethefarmersawareofavailablesolutions,thusstimulatingdemand.

Agriculturalco-operativesandfarmergroupscansetupsharedDREsolutioncentrestomakesolutionsavailabletotheirmembership.Forexample,co-operativeoperatedcoldchainsolutionsataggregationcentrescouldincreaseenergyaccessandthroughputs,enhancingresourceutilisationefficiencyasopposedtolockingcapitalinon-farmcoldstorage.Theco-operativesandgroupscanalsobeinstrumentalinnegotiatingbulkpurchasesandloanagreementsfortheirmembers.

Researchinstitutionsandacademiacanleadevidence-basedworkdemonstratingthebenefitsofDREsolutionsforthelivelihoodsofsmallholderfarmersinMalawi.Developingappropriate,cost-effectiveinnovationsspecificallyforsmallholderneedscanaddresslocalchallengeseffectively.Likewise,transferringresearchfindingsintopracticalapplicationthroughpartnershipswithextensionservicesandrenewableenergyenterprisescouldenhancefarmers’understandingofDREtechnologies.

Localcommunitiesandfarmersshouldformco-operativestocombineresourcesforbuyingDREequipmentandparticipateinmaintenanceandoperationtrainingsessionstoensurethereliabilityoftechnologiesbeingutilised.Encouragingcommunity-levelDREprojectsfosterssharedinfrastructure,suchassolar-poweredcoldstoragefacilitiesthatbenefitmultiplefarmersfromdifferentvaluechains.EntrepreneursandfarmersareurgedtoleverageDREtechnologiestoimproveproductioncyclesandimprovepost-harvestprocessing.ThisincludesusingDREforirrigationandcooling,particularlyinthedairyandaquaculturesectors.Finally,followingbestpracticesforcropandanimalmanagementmaximisesthebenefitsofDREintegration.

Inconclusion,byimplementingtheserecommendationsacrossgovernment,theprivatesector,financialinstitutionsanddonorcommunities,Malawicanfast-tracktheintegrationofDREsolutionsintosmallholderagriculturalvaluechains.Thisshouldincreaseyields,decreasewasteandincreasefarmers’earnings,eventuallycontributingtothenation’sdevelopmentgoalsasdefinedinVision2063.

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DecentralisedrenewableenergyforagricultureinMalawi

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Photo:africa924@

1.Countrycontext

1.1Background

AgricultureisacornerstoneofMalawi’seconomy,supportinglivelihoodsandcontributingsignificantlytothecountry’sdevelopmentagenda.However,thesectorfacespersistentchallenges,includinglowproductivity,limitedmechanisationandvulnerabilitytoclimate-relatedimpacts.Theseissuesarecompoundedbyinsufficientaccesstoreliableenergy,whichiscriticalformodernisingfarmingpractices,improvingvalueadditionandreducingpost-harvestlosses.Energyplaysapivotalroleintransformingagriculturalsystemsbypoweringessentialactivitiessuchasirrigation,processingandstorage.Yet,manyruralcommunitiesinMalawirelyonmanuallabourortraditionalfuels,whichlimitstheirabilitytoincreaseproductivityandimprovethequalityofagriculturaloutputs.

Decentralisedrenewableenergy(DRE)solutionsofferapracticalandsustainablealternativetomeetingtheenergyneedsofagriculture,particularlyinoff-gridandunderservedareas.Technologiessuchassolar-poweredirrigationsystems,biomass-baseddryingunitsandgeothermalenergysystemsprovideopportunitiestoenhanceproductivity,reduceenergycostsandsupportenvironmentallysustainablepractices.

InresponsetoarequestfromthegovernmentofMalawi,theInternationalRenewableEnergyAgency(IRENA)hasconductedanassessmenttoexploretheintegrationofDREsolutionsinthecountry’sagriculturalvaluechains.Thisstudyidentifiesenergyentrypoints,evaluatesthesuitabilityofDREtechnologiesforkeyagriculturalactivitiesandprovidesrecommendationstosupportsustainabledevelopmentinthesector.ThisinitiativealignswithIRENA’smissiontoacceleratetheglobalenergytransitionanddemonstratesitscommitmenttosupportingdevelopingstatesinaddressingcriticalenergychallengeswhilefosteringeconomicgrowthandenvironmentalresilience.

Socio-economics

ThegovernmentofMalawivaluestheimportanceoftheenergysectorasakeydriverforthecountry’ssocio-economicdevelopment,aschartedinitsstrategicplan,Malawi2063.Thislong-termdevelopmentplanaimstomoveMalawiuptoanindustrialisedlower-middle-incomecountryby2030,focusingonpillarssuchasagriculturaloutputandcommercialisation,industrialisationandmining(NPC,2020).Thetransformationoftheagriculturalsectorisimportantforachievingthesegoals.Shiftingfromlow-productivitysubsistencefarmingtoahighlyproductiveandcommercialisedsystemwithmanufacturinglinkagesrequiresincreasedmechanisationandtechnologyadoption,leadingtoasurgeinenergyde