Power policy

Solar is the most promising form of renewable energy generation in Zimbabwe, and several independent power producers have signed power purchase agreements for the power source. In July 2019, the government announced that all new construction projects must include solar and removed import duties on solar energy-related products, from batteries to cables. The move should significantly boost the solar market going forward.

Zimbabwe Power Company (ZPC), the public utility, has plans for a 300-megawatt solar project, which would be the first renewable project in its portfolio, but progress appears uncertain. In May 2020, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) invited bids for the construction of 500 megawatts of solar photovoltaic (PV). Additionally, the Infrastructure Development Bank of Zimbabwe issued a request for proposal in September 2019 seeking partners for the development of seven PV plants totaling 235 megawatts.

Rural electrification efforts are mostly focused on off-grid solutions. The country is targeting universal access by 2030. The most recent version of the National Renewable Energy Policy (2019) recommends implementing a feed-in tariff (FiT) for wind, small hydro, biomass, and geothermal, as well as rooftop solar. The Renewable Energy Feed-In Tariffs (REFIT) are used to benchmark the price at which power can be sold to the utility. These are still not fully implemented.

Power prices and costs

National electricity tariffs are roughly $0.106 a kilowatt-hour, compared with a regional average of $0.119 a kilowatt-hour, according to the state-owned utility Zimbabwe Electricity Supply Authority (ZESA).

Zimbabwe’s tariffs are among the highest in the region when accounting for exchange rates. In October 2019, Zimbabwe raised its average electricity tariff by 320% in response to rising fuel prices and inflation stoked by a rapidly depreciating Zimbabwean dollar, which was reintroduced earlier in the year. The tariff increases should enable ZESA to undertake grid maintenance, repair aging coal-fired generation units and cover imports from South Africa and Mozambique.

Tariffs were again increased by 20% in March 2020, followed by 50% raises in both September and October. The national regulator, Zimbabwe Energy Regulatory Authority (ZERA), is operating at a loss and struggling to collect an estimated $1.3 billion owed by defaulters. The government’s mandatory rollout of prepaid meters was designed to bring in more stable revenue. According to ZETDC, the program has improved revenue inflows by 35%.

Power market

Solar is the most commonly funded form of renewable energy, but investment in clean energy has been negligible, with a cumulative total of $24.4 million as of 2021. Most of the capital for funding renewables development comes from foreign investors, but many are wary of political and regulatory risks. Renewable energy investors have asked for policy changes, such as more relaxed licensing rules for small producers.

Overall economic stability is also a concern. The government outlawed all foreign currency in July 2019 and reintroduced the Zimbabwean dollar as the only form of legal tender. The Zimbabwean dollar was wiped out a decade ago due to hyperinflation, with foreign currencies becoming legal tender in 2009. Legitimate worries remain. The Zimbabwe National Statistics Agency reported in August 2021 that annual inflation reached 257% in July.

State-owned ZESA is the holding company for both the national generation utility ZPC and the transmission and distribution utility ZETDC. Hydro accounts for about half of Zimbabwe’s overall power generation, supplied by the Kariba plant on the Zambezi river. Water levels on the river have been low over the past few years, which has contributed greatly to the country’s severe load-shedding. The next largest source of generation is coal, which has also been unreliable due to fuel shortages and cost fluctuations.

Doing business and barriers

On average, the country produces about 969 megawatts of daily generation against a peak demand of 1,700 megawatts, resulting in severe load shedding of up to 18 hours a day. Businesses in the country struggle to maintain operations without stable electricity supply. Due to unreliable generation in the country’s own fleet, Zimbabwe imports approximately 400 megawatts from South Africa’s Eskom Holdings SOC Ltd. and Mozambique’s Electricidade de Mocambique in order to meet demand, which is not sustainable in the long term.

All of the country’s five main generation plants have surpassed their 25-year general lifespan and require modernization. However, funding for this is limited. Despite contending with severe load shedding, Zimbabwe exports 80 megawatts to Namibia daily in a 15-year agreement signed in 2015. Renewable energy development can benefit from a 10-year income tax holiday and solar equipment is exempt from import duty as well as value-added tax, effective as of July 2019.

The Indigenization and Economic Empowerment Act, which required at least 51% of shares in any business to be held by indigenous Zimbabweans, impeded foreign investment. In March 2018, the requirement was removed, and foreigners can now own 100% of a company’s shares in Zimbabwe except for platinum and diamond mining companies. This should encourage foreign investment. However, corruption is a persistent issue that impedes international investment. A solar plant project that was earmarked to be built in Gwanda in 2019 stalled after allegations that funds were misappropriated at ZESA. The project has remained in limbo for years due to legal battles since the contract was signed in 2014. The contractor Intratrek Zimbabwe in September 2022 filed a case against ZPC for breaching the agreement.

In the long term, Zimbabwe will consider building a power station near Mozambique’s Hydro Cahora Bassa dam. The national energy regulator has approved several solar power projects, most of which are still to take off.

Fossil fuel subsidies are common in Sub-Saharan Africa. Through bilateral relations and international institutions, the same governments – mainly in the global North – continue to push for consumer fuel subsidy reforms in the global South. In response, fuel riots against price increases have taken place in 41 countries between 2005 and 2018, including Zimbabwe.

EV market

The government has yet to implement any substantive policy support in this sector and the electric vehicle (EV) market remains at an early stage.

EV policy

The government is working with local private companies to manufacture EVs as outlined in the National Development Strategy published in 2021, which is expected to propel the country Vision 2030, which aims to help the country grow to become a middle-income economy by 2030.

Buildings market

Zimbabwe has a draft national energy efficiency policy under discussion that is expected to undergo stakeholder validation. The main goal of the National Energy Efficiency Policy is to encourage the adoption of energy efficiency strategies to support Zimbabwe’s push to become an upper-middle-income economy by 2030.

Buildings policy

Zimbabwe enforces a law that places limits on minimum energy efficiency performance standards for household electrical appliances, measured in accordance with the standards for usage and standby power maximum limits. These regulations apply to mains-operated appliances, which are manufactured, imported, and donated for use in this country.