In the Budget speech delivered on February 10, 2025, the first under the new government of the Umbrella for Democratic Change, the Minister of Finance doubled down on Green Energy as one way to diversify the economy from its long dependence on diamonds, whose demand and revenues have significantly plummeted. Mega Projects such as the 8,000 MW solar program, which are self-funding, were identified as the key vehicles to deliver economic transformation

The Vice President of Botswana, His Honor, Gaolathe Ndaba, has painted a vision of Botswana producing and exporting 8,000 MW of Solar energy, an ambitious project that he has been given a timeline of 4 years  Botswana’s ambition to invest in 8,000 MW  of solar power is a bold move,  that must be evaluated against the current and future power demand, transmission infrastructure, and market dynamics within the Southern African Power Pool (SAPP).

This article analyzes the 8,000 MW program ambition in the context of SAPP’s current and future demand and other nuanced factors within the Southern African region.

Current Demand of Power in the SAPP

The article looks at the current power demand in SAPP and Botswana’s competitive advantages of solar power investment. Finally, we discuss the challenges that the country needs to mitigate to ensure the viability of this investment.

As of 2023, the SAPP region has an installed generation capacity of approximately 80,000 MW. However, the available capacity was around 48,000 MW, which fell short of the peak demand of 57,000 MW, resulting in a significant electricity generation deficit (SAPP, 2023 Annual Report). From 2024 into 2025, key SAPP members Zambia and Zimbabwe faced power deficits due to ongoing droughts that affected water levels at Kariba Dam. The power deficit amounted to 2000 MW for Zimbabwe and 1410 MW for Zambia, necessitating load shedding of almost 17 hours daily.

As of 2024, this shortfall in South Africa has been significantly mitigated. South reduced the bulk of the 8,000 MW deficit through operational and maintenance interventions occasioned by the new leadership team at ESKOM. Some consumers have also moved off the grid.

Demand Growth Forecast

SAPP demand is expected to grow at 3–5% per year, driven by Industrial expansion (mining, manufacturing, infrastructure projects), urbanization, increased electrification, and Electrification of transport and green hydrogen projects. If demand grows at 5% per year, SAPP could require an additional 13,000 MW by 2030. South Africa alone has about 2,500 MW in the pipeline, leaving a forecasted deficit of 10,000 MW that Botswana can contribute to.

The energy mix in the SAPP area is highly skewed towards fossil fuels, with coal contributing 59% of the electricity sources and Solar only 4%. With the move towards more renewable energy, Botswana can contribute to the global aspiration to reduce fossil fuels with cleaner energies by replacing the significant 59% contribution by coal with Solar energy.

Does an 8,000 MW Solar Investment Make Sense?

The following are considerations in favor of the Investment

1. The region has an electricity deficit, and demand has been forecast to grow at about 3-5% per annum. Botswana has an opportunity to tap into this growth.
2. Botswana has one of the best solar radiation levels in the world (21 MJ/m² daily insolation), making solar cheap and abundant. Solar PV costs have fallen globally, making large-scale solar competitive against coal and hydro.
3. Many SAPP countries (especially South Africa and Zimbabwe) are transitioning from coal-fired power due to climate commitments. Botswana can position itself as a key exporter of clean energy by replacing coal-based power with solar exports.
4. Diversifying Botswana’s economy beyond diamonds is essential. Exporting even 4 GW of solar at competitive tariffs could bring significant foreign exchange revenue.
5. Hydropower reliability is decreasing due to climate change (e.g., Kariba dam levels in Zambia/Zimbabwe).
6. Electricity access remains low in some SAPP regions, meaning new demand centers can emerge with proper transmission expansion.

Key Challenges to consider for this investment

Grid Constraints & Transmission Bottlenecks.

Botswana’s current grid cannot handle 8,000 MW of solar power exports. Massive investment in transmission lines would be needed to connect to SAPP markets, and the current SAPP cross-border interconnection capacity is insufficient to evacuate such large volumes of power.

Variable Demand & Overcapacity Risks:

South Africa (SAPP’s most prominent market) is adding renewables, reducing import dependency. This poses the single most significant risk: competing South African renewable energy (Solar) would make the Botswana program less commercially viable.

Energy Storage & Baseload Backup Needs:

Solar is intermittent, meaning Botswana needs large-scale battery storage. Botswana must also explore hybridization with gas or green hydrogen to provide 24/7 dispatchable power. Large-scale battery storage is quite costly, and the technology is not fully developed; it should be noted that the technology is exponentially improving.

Financial Analysis:

The following is a high-level financial analysis of investment, looking at capital and operation expenditure.

Capital Expenditure (CAPEX)

Operational Expenditure (OPEX)

The following are identified ongoing operational costs.

1. Solar farm maintenance (1% of CAPEX per year)
2. Transmission & grid maintenance (1% of CAPEX per year)
3. Labor, administration, and insurance
4. Battery storage upkeep and replacement (after 10 years)

Net Revenue Calculation

Two (2) revenue sources are assumed: power sales to countries in the SAPP and carbon credits. Two (2) scenarios are considered: low case and high case.

Net revenue on an annual basis remains positive, meaning the project is profitable after covering operational costs.

Payback Period

Formula: Payback Period = CAPEX / Net Annual Revenue

Low Case: $10.3B / $1.30B = 7.9 years

High Case: $14.4B / $1.68B = 8.5 years

Investment can recover its capital in 7.9 – 8.5 years, which is feasible for large infrastructure projects.

Return on Investment (ROI)

Formula: ROI = (Net Revenue / CAPEX) × 100

Low Case: ($1.30B / $10.3B) × 100 = 12.6% ROI

High Case: ($1.68B / $14.4B) × 100 = 11.7% ROI

A double-digit ROI confirms that the project is financially viable.

Net Present Value (NPV) & Internal Rate of Return (IRR)

Assuming:

20-year lifespan

8% discount rate

Net cash flows as calculated above

Positive NPV means the project adds value to Botswana’s economy.

An IRR above 10% is attractive for investors, and the high case reaches 16.3%, making it highly competitive.

Of course, the investment should be stressed and tested against various scenarios, like tariff drops below the low case, delays in completing the Grid/transmission upgrade, and scenarios involving an increase in the pricing for storage technology.

Comparing Alternative Scenarios: Phased Approach vs. Full 8,000 MW Investment

To reduce risks and optimize investment timing, a phased investment strategy is recommended:

Recommended Approach: Start with 2,000 MW first, build grid capacity, secure PPAs, and then scale up in phases.

Optimal Strategy for Botswana

Considering the Southern Africa Power Pool (SAPP) dynamics and based on the financial analysis above, Botswana must identify an optimal strategy for the 8,000 MW solar investment. Instead of committing fully to an 8,000 solar expansion, Botswana should take a phased, strategic approach as shown

Phase 1 (2025–2030): Build 2,000 MW with Grid & Market Expansion

1. Develop up to 2,000 MW solar parks, focusing on self-consumption and regional exports.
2. Upgrade transmission capacity to connect Botswana to SAPP’s most reliable off-takers (e.g., Namibia, Zambia, South Africa).
3. Establish Power Purchase Agreements (PPAs) with off-takers before building excess capacity.

Phase 2 (2030–2040): Scale to 3,000–8,000 GW Based on Market Absorption

1. Expand only if demand materializes from:

1. Industrial demand growth (e.g., mining, green hydrogen production).
2. Increased SAPP integration.
3. Emerging technologies (energy storage, hydrogen).

1. Deploy energy storage solutions (e.g., batteries, green hydrogen) to mitigate solar intermittency.

Phase 3 (Beyond 2040): Expand Beyond SAPP to Export Green Hydrogen

1. Long-term vision: Use excess solar energy to produce green hydrogen for export to global markets (Europe and Asia).

What Necessary policies and regulatory barriers need to be addressed to Unlock Botswana’s full Solar Energy potential?

Botswana has immense solar energy potential and a strategic location that allows it to become a key exporter of solar power to the Southern African Power Pool (SAPP). However, policy and regulatory barriers must be addressed to unlock the full investment potential. Below are the key reforms underway or necessary to position Botswana as a regional leader in renewable energy exports. These include.

1. Full Liberalization of the Energy Market

Botswana’s electricity sector is still largely state-controlled, with Botswana Power Corporation (BPC) playing a dominant role. To attract Independent Power Producers (IPPs) and facilitate competitive energy exports, Botswana must fully liberalize the energy market by:

1. Unbundling generation, transmission, and distribution to allow greater private-sector participation. This is currently underway but needs to be fast-tracked. The current exercise focuses on unbundling the generation from the transmission; there is a need to unbundle distribution as well.
2. Establishing a competitive electricity trading framework that allows IPPs to sell power directly to SAPP members and large industrial consumers

1. Strengthening the Independent Power Producer (IPP) Framework

While Botswana has opened its market to IPPs, the process is still slow and bureaucratic. Necessary reforms include:

1. Clear and streamlined licensing processes for IPPs.
2. Bankable power purchase agreements (PPAs) to give confidence to investors.
3. Guaranteed open access to the national grid for private solar power producers.

• Establishing a Competitive Wholesale Electricity Market

Botswana should create a day-ahead and intra-day electricity market for competitive bidding among IPPs. This will ensure:

1. Competitive pricing for electricity exports to SAPP.
2. Higher efficiency in electricity dispatch and trade.
3. Reduction of reliance on bilateral, long-term contract

Conclusion: Does 8,000 MW Make Sense?

Yes, but only in a phased manner. The immediate focus should first be 2,000 MW, with grid reinforcement and SAPP trade deals. The 8,000MW investment should only be committed once transmission, energy storage, and market absorption challenges are addressed.

To help Botswana unlock the full potential of its solar energy ambition, necessary policy and regulatory frameworks need to be fast-tracked.

Botswana should secure buyers (PPAs) and transmission routes before scaling up. Investment in battery storage, innovative grid solutions, and cross-border power agreements is critical. Prioritizing targeted exports (South Africa, Namibia, Zambia) before expanding is also essential.

Next Steps for Botswana’s Energy Policy

1. Fast-track the necessary policy and regulatory frameworks.
2. Finalize transmission upgrade plans to handle higher power exports.
3. Negotiate long-term PPAs with regional partners (South Africa, Namibia, Zambia).
4. Leverage climate finance & carbon markets to fund solar infrastructure.
5. Invest in energy storage to make solar power dispatchable.
6. Explore green hydrogen production to utilize excess solar energy efficiently.