Low carbon scenarios and policies for the power sector in Botswana

Abstract

The Government of Botswana has pledged a nationally determined contribution (NDC) as a commitment to the Paris Agreement. For the power sector, the NDC states that the government expects renewable energy (RE) to meet 25% of peak electricity demand by 2030. However, due to high initial cost of RE technologies, the government plans to maintain a coal-based power system in the future. Therefore, the purpose of this paper is to examine Botswana's national plan from an economic perspective, using scenario and cost analysis, to explore the possibility of the power sector's low carbon transition in the light of Botswana's NDC. Five scenarios are designed to reflect a range of investment cost changes of RE technologies. While most scenarios only achieve 19% (P3, P4 and P5) and 54% (P6) of the NDC's power sector target, the P7 scenario far exceeds the goal by achieving 188% of the NDC target. Furthermore, as the difference of levelized cost of electricity among the scenarios is minimal, the P7 scenario is the most attractive pathway for the government. Even for other scenarios, the government should still deploy the suggested capacity of solar photovoltaic (PV) as it is both economically and socially beneficial in the long term. However, in these cases, the government's political will to meet the NDC's power sector target and to promote the solar PV industry will be critical in designing future power sector policies. Key policy insights Model results show coal as the cheapest resource for electricity generation in Botswana up to 2030, but the cost competitiveness of solar photovoltaic (PV) against coal will continue to increase over time. It is economically and socially beneficial to adjust the current national plan and substitute some share of coal with solar PV in the future energy mix. Government support is critical in achieving the power sector's NDC target, as cost reduction of solar PV alone does not guarantee success. Encouraging independent power producers (IPP) with financial support mechanisms would be a suitable business model for developing the renewable energy industry.