Many of those who have written on the subject often described the situation of the energy sector in Madagascar as "energy starvation”. Recent studies which are available indicate that in terms of overall access to energy, Madagascar ranks 184th out of 190 countries and is among the 20 countries in the world where 1.6 percent of the population has access to clean fuels and technologies[1]. 95 percent of Malagasy households depend on solid biomass for their fuel consumption, mainly wood energy and charcoal[2]. Access to electricity, which represents 3 percent of total energy consumption, is still very limited, with 20.5 percent of the population having access to an electricity network and nearly 10 percent in rural areas. [3]
About 670 MW of electrical capacity were available in the country in 2020 (450 MW of diesel/heavy fuel, 120 MW of hydroelectricity and 20 MW of solar) [4]. According to studies conducted by the Ministry in charge of energy and hydrocarbons, it is estimated that 31 to 41% of the country's total electricity consumption is attributed to the 95% of Malagasy industries[5].
In terms of renewable energy, Madagascar has enormous, diversified but yet untapped potential. To mention only the hydroelectric potential, totaling 7.80 GW of which 2 percent is exploited. Or its solar resource, which is among the highest in the world, with sunshine (2800h/year) uniformly distributed in almost all regions. Similarly, wind power, with an average wind speed of 3-8m/s to 20m/s, represents a capacity of 2,000MW that can be exploited[6]. In addition, the country has begun its energy transition and "realistically, has committed since 2018 to reduce its greenhouse gas emissions by 14 percent by 2030 and increase the absorption capacity of its carbon sinks to 32% during the same period." [7] The improvement of the sector's regulatory framework is also an ongoing process, notably through the 2015 New Energy Policy and the Electricity Code (Law N° 2017-020).
It is well established that development is not possible without energy. For a country like Madagascar, which has chosen industrialization as one of its priorities "to catch up on its development delays", the ambition is to produce locally what the population needs. This is all the truer in the current global context (pandemic, war...) which has seen the disruption of the supply chain at the global level as well as a growing uncertainty in the field of investments.
Although several projects and investments of various sizes have been launched in Madagascar's energy sector over the past five years, energy is still an obstacle to industrialization and both domestic and foreign investment, First, the lack of adequate energy infrastructure makes supply, production and distribution operations challenging, in many respects. Second, the cost associated with the energy factor is among the highest and crushes companies’ purse, thus reducing the competitiveness of the Malagasy industrial sector as well as the attractiveness of the country in terms of investment.
To transform these challenges into opportunities, the Big Island has several alternatives. Among others, optimizing the existing projects in the sector by using the overproduction of energy for productive activities and by bringing the transformation to the place where the raw material is produced. Experience has shown that investing in energy infrastructure is often risky and economically unprofitable if it is only dedicated to domestic and social use, among other reasons because of the low purchasing power of the target population. It is therefore necessary not only to associate it with productive purposes but to diversify the sources as much as possible in order to encourage those that would be the most competitive and sustainable (i.e., renewable and efficient at the same time).
Promoting circular economy and entrepreneurship along the industrial activity chain would also stimulate the creation of value, wealth and jobs in an inclusive and sustainable manner. This would provide sufficient mass to absorb the energy produced and thus reduce costs through an economy of scale. Finally, the use of cleaner and more resource-efficient technologies would increase the competitiveness of the industrial sector and investments in general, as well as their resilience to climate change.
By and large, industrialization and investment promotion cannot be separated from energy. And increasing access to energy means developing related investments. In Madagascar, the United Nations system is bringing its contribution to this. In addition to an ongoing support to develop small-scale hydroelectricity for productive use, a joint initiative with the Government, and with a financing from the U.N SDG Fund, is being implemented by UNDP, UNCDF and UNIDO, which seeks to set up an innovative financial system to support the development of renewable energy as well as pertaining investments.
[1] Investment Support Program Madagascar. Ethanol Cooking Strategy and Roadmap. Demand and supply analysis report, USAID, March 2020
[2] Banque Mondiale, PID 2016
[3] National Energy Information System - http://www.energie.mg/
[4] National Energy Information System - http://www.energie.mg/
[5] Economic Development Board of Madagascar, Investir #2, June 2018
[6] Economic Development Board of Madagascar, Investir #2, June 2018
[7] Ibid.
UNIDO Country Representative in Madagascar
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