Energy Sector

Madagascar’s electricity mainly comes from hydroelectric and thermal production. Although the hydroelectric potential of the country is tremendous, its exploitation remains limited. Since the commissioning of the hydroelectric plant in Andekaleka in 1980 by JIRAMA, increases in generation capacity has been largely due to thermal installations (heavy fuel oil and diesel) and IPPs , making it possible to respond urgently increases in electricity demand. As a result, the share of hydroelectric production decreased from 68% in 2001 to 59% in 2015.

Electricity demand comes mainly from households and has increased in recent years. Residential customers are the primary consumers of electricity, accounting for about 50% of total consumption, despite low purchasing power.

Access to electricity services is low countrywide and especially in rural areas. The estimated current electricity access rate is 15%, with an estimated 54% of the population in urban and peri-urban areas having access, and an estimated 5% of the rural population having access to electricity. The country’s acute poverty, low population density, political crises between 2002 and 2009, and the continuing deterioration of JIRAMA’s financial situation have limited potential progress in electrification.

Madagascar’s electricity supply is mainly ensured by JIRAMA – Jiro sy Rano Malagasy – the vertically integrated state-owned water and electricity company. Created in 1975, JIRAMA holds the monopoly of transmission and distribution of electricity in urban areas. JIRAMA, which operates 119 sites, also accounts for the majority of electricity production. The share of production provided by independent private producers (IPPs) has increased in recent years – from 4% to 29.5% in 2014. Net power generation has been steadily increasing for more than a decade. While this was only 0.832 GWh in 2001, power generation reached 1,487 GWh in 2014 and 1,542 GWh in 2015.

Installed Capacity and Share of Generation

The national electricity mix is dominated by hydroelectric and thermal generation. While JIRAMA holds almost all hydroelectric dams in operation, thermal production is more than 50% supplied by private producers leasing capacity to JIRAMA through Power Purchase Agreements (PPAs). The contribution of thermal power stations operating on heavy fuel oil has increased from 6% in 2000 to 30% in 2011.

Share of resources in Madagascar’s electricity generation as of 2015

Breakdown of electricity generation sources – 2014

Of the 681 MW total installed generation capacity in 2016, 676 MW are represented by JIRAMA assets (of which 514 MW are diesel and 162 MW are renewable energy ) or are managed by JIRAMA under Power Purchase Agreements (PPAs). The total generation capacity is decreasing due to a general lack of maintenance. Emergency generators have been contracted by the government – as a response to the insufficient supply – from companies including HIER (hydro), HFF (diesel and hydro), AGGREKO (diesel), TAMATRADE (diesel), FIRST ENERGY (diesel), FIRST INVESTMENT (diesel) or ENELEC (heavy fuel and diesel). Only 6 MW correspond to rural electrification sites managed by independent operators (of which 3.5 MW are diesel and 2.5 MW are renewable energy. At present, around 12 small-scale and micro-hydro plants with a total capacity of around 300 kW operate in the country and are often installed in hybrid diesel systems.

JIRAMA estimates that there were 799 outages due to power breakdowns on the medium voltage network in 2015, more than twice a day on average. Some parts of the capital experience load shedding of several hours each day, while anticipated power breakdowns are organized in secondary cities. Many residential and commercial establishments maintain diesel generators to compensate for load shedding, and purchase equipment to prevent frequent voltage fluctuations.

Planned Expansion to Generation Capacity

Several energy development opportunities are underway in hydro, solar PV, wind and biomass. In particular, two Calls for Projects aiming at increasing rural electrification rates have been launched in 2015 by ADER – Agency for Rural Electrification Development – for the installation of renewable energy generation in four regions in the North for about 10 MW (Call for Project 1 – small hydro off-grid) and in three regions in the South, for about 15 MW (Call for Project 2 – hydro, solar PV, wind, biomass). Calls for Projects for larger scale hydro projects have been launched since 2015 by the Ministry of Energy and Hydrocarbons. Some of these large-scale projects aim at adding production to the three national interconnected grids.

Hydro projects launched by the Government of Madagascar

Source: http://www.energie.gov.mg/

Three interconnected grids in the country comprise about 70 percent of the total load of the country: the RIA in Antananarivo, the RIF in Fianarantsoa and the RIT in Toamasina. The majority of transmission and distribution assets are administered by JIRAMA.

The distribution network consists of 3,300 km medium-voltage (5.5/35 kV) lines and 6,624 km low voltage (220/380 V) lines, combination of overhead and underground lines.

Interconnected grid of Antananarivo – RIA

Interconnected grid of Fianarantsoa – RIF

Interconnected grid of Toamasina – RIT

Electricity tariffs in Madagascar are not cost reflective. An important program related to the restructuring of JIRAMA – PAGOSE – is ongoing to determine more cost reflective tariffs. On average, the sale price (all subscribers combined) is 380MGA/kWh. The tariff structure differs in three zones: ZONE 1 for customers powered by hydro, ZONE 2 for cities where heavy fuel oil production predominates, and ZONE 3 for customers where gasoil production is the majority. However, without tariff equalization, significant price disparities exist between subscribers, depending on location.

Note: Tariffs have been approved by ORE and were introduced in August 2016 after the previous revision of tariffs in June 2016.

Source: ORE

The low technical and financial capacities of JIRAMA and the restrictive budgets allocated to ADER have limited rural electrification activities. The private sector is involved in the financing of rural electrification schemes (usually with a 30% share of the total costs for an electrification project using renewable energy), but most operators are small-scale companies unable to raise significant capital. Companies in the sector can be characterized as having limited experience with bank loans, difficulties with bookkeeping, and the definition of investor-ready business plans.

Following the return of international donors and financial institutions to Madagascar following elections in 2013, independent operators and developers have started implementing off-grid electrification solutions across the country, installing renewable energy systems, hybrid systems (REN-diesel), and/or diesel generators to power rural and low income communities. International Agencies and Institutions have committed resources to support the government in redefining the Electricity sector. The World Bank is involved in three programs in the country: PAGOSE for the Improvement of Governance and Operations in the Electricity Sector with a focus on restructuring JIRAMA; SREP (Scaling Renewable Energy Program) under the CIF; ESMAP aiming at providing a detailed comprehensive assessment of potential renewable energy resources with a focus on between 1 MW and 20 MW hydro resources. German Cooperation is bringing both technical (GIZ) and financial assistance (KfW) for improving the electricity sector and renewable energy development. UNIDO (United Nations for Industrial Development Organization) provides financial and technical assistance for the development of small hydro projects in rural areas. The European Union is providing technical assistance on the Jiro Kanto Project in Alaotra Mangoro and financial assistance through the Indian Ocean Commission under the 10^th European Fund for Development (EUROPEAID/137090/ID/ACT/RSO). In 2016, the Althelia Ecosphere Impact Investment Fund announced a USD$50 million fund for Madagascar targeting conservation and off-grid solutions.

A few SMEs and projects provide basic electrification including energy access services such as solar lamp rentals, phone charging, internet access, and the rental of productive equipment such as fridges or freezers for low income populations. Several companies are beginning to provide Pay-As-You-Go (PAYG) household solar solutions.