Does Botswana's Net Zero Plan have a Financing Gap?

Report on the Financial Analysis of the financing gap in Botswana's Energy Sector under a Net Zero by 2050 Scenario using the Model for Informed National Financing (MINFin).

Botswana’s planned power-sector expansion requires substantial investment, raising an important question about whether available sector revenues can meet the resulting financing obligations. This study applies the Model for Informed National Financing to a USD 4.69 billion investment programme for 2025–2050, dominated by concentrated solar power, using historically grounded financing terms, projected exchange rates, tariffs, operating costs and corporate taxation. The results identify a cumulative funding gap of BWP 77.6 billion, equivalent to USD 4.71 billion. The central problem is not generator bankability. Generators record no shortfall years at current tariffs, while the distribution utility carries 81–85% of the gap because contracted power-purchase costs cannot be recovered from end-user revenues. Increasing the power purchase agreement tariff therefore redistributes the shortfall rather than closing it. Each percentage-point increase shifts about USD 66 million from the utility to generators, while 22% of the transfer is absorbed through corporate tax. A Concessional Compact, combining concessional financing shares of 88% for renewables with USD 2.68 billion in grants directed to the off-taker, reduces the gap by BWP 17.4 billion. A 2% annual end-user tariff increase from 2026 to 2030 closes a further BWP 11 billion, while faster currency depreciation adds BWP 1.5 billion. Botswana should therefore prioritise utility cost recovery, targeted concessional support and bridge financing for the single system-wide shortfall in 2025, rather than higher payments to already viable power generators.

This work was supported by the Climate Compatible Growth Programme (#CCG) of the UK's Foreign Development and Commonwealth Office (FCDO). The views expressed in this paper do not necessarily reflect the UK government's official policies.