Lesotho’s energy mix is dominated by traditional biomass (66 percent). Petroleum products, coal, electricity and LPG constitute the remainder. Demand for Petroleum products is rising, which are all imported from South African refineries. Electricity only contributes 6 percent of the national energy mix. The household electrification rate is 30 percent, providing energy to 65 percent of urban households and only 6 percent of rural households. More than half of Lesotho’s energy consumption is imported from South Africa and Mozambique, with the balance supplied locally from hydro resources. Lesotho’s indigenous energy resources are only from renewable sources, including wind, solar and hydro. The Government of Lesotho is keen to develop its renewable energy resources to increase access to electricity, and to reduce its energy dependency on South Africa and Mozambique.
Lesotho has good renewable energy resources, such as hydro, solar and wind. The major barrier to renewable energy technologies deployment in the household sector is lack of financing mechanisms due to high upfront cost and a lack of capital. Most of the rural households in Lesotho are inaccessible by road, further adding to the cost of initial investments. Service arrangements and maintenance of Solar Home Systems (SHS) and other renewable energy systems are unclear or non-existent.
Lesotho has an estimated 14,000 MW of hydropower potential alone, with strong wind and solar resources as well.
Thus, Lesotho needs help from SREP to establish pilot Independent Power Producers (IPPs) from renewable energy sources and distribute electricity to rural areas. A project unit will be established within the Ministry of Energy, Meteorology and Water Affairs to specifically implement the project under SREP. Potential areas of SREP intervention might include on-grid renewable energy technologies (hydro, wind and solar), off-grid renewable energy technology (small hydro, solar photovoltaic and hybrid generation systems), capacity building in both the public and private sector and a funding facility for private sector initiatives such as energy efficient cook stoves and solar home systems. In cooperation with IFC, the World Bank, and AfDB, SREP has agreed to submit the Investment Plan in May 2016.