Zambia Scores with “First Scaling Solar Project in Africa

The President of the Republic of Zambia, His Excellency Edgar Chagwa Lungu on 11th March 2019 commissioned Zambia’s and Africa’s First Scaling Solar Project supported by the World Bank to be run by the Bangweulu Power Company Limited. The facility boasts of a 54 MW first large-scale solar power plant in Africa that will cover 30,000 households and the lowest tariff in sub-Saharan Africa at 6¢ (US Cents). In July 2015, Zambia’s Industrial Development Corporation (IDC) signed an agreement with the International Finance Corporation to explore development of two large-scale solar projects through Scaling Solar. The competitive auction organized through the program attracted 48 solar power developers, seven of whom submitted final proposals, and the bids yielded the lowest solar power tariffs in Africa to date.

PMRC reiterates the importance of having a coherent, transparent process that the investor and investing public, the private sector, are able to work towards as well as the public institutions on the Government side — that is, the IDC as investment vehicle and the state utility as off-taker, to achieve predictability and a clearly defined process that lays the foundation towards the attainment of this 600-megawatt target which has been set for renewable energy in Zambia. PMRC’s research and policy contributions on Power Sector Reform and Renewable Energy in Zambia have laid the framework for success and provided key policy recommendations relevant to the discourse.

Given the challenges of Rising Demand, Below Cost Tariffs, Over Dependence of Hydropower and Climate Vulnerability and Low Rates of Access in Rural Areas, the private sector remains a key investment partner to adequately improving power supply in line with fiscal consolidation. Following PMRC’s recommendations, Government has made reforms to increase tariffs to make them cost-reflective thereby improving the country’s power sector investment climate.

To build on this progress Government has demonstrated its willingness and commitment to secure investment in the power sector without compromising fiscal consolidation objectives through the launch of the Scaling Solar Project. Government must therefore continue to make institutional changes to its planning and procurement capacity to secure productive, cost-effective and diversified power sector investment portfolio.

PMRC therefore recommends that the Government:

• Establishes a planning function to develop a strategic vision for Zambia’s energy portfolio and guide procurement;
• Establishes a procurement function that sits alongside the planning function to implement the strategy for Zambia’s Power Sector and secure investment at better value for money, through improved commercial capacity, more competitive tenders and a streamlined procurement process;
• Speeds up reforms based on diagnostic study on ZESCO Limited to improve the credit-worthiness of ZESCO as off-taker to improve investor confidence through increased financial transparency and more secure guarantees; and
• Makes governance reforms to the Energy Regulation Board (ERB) to improve its independence and its effectiveness so that it better serves both investors’ and consumers’ interests.
• Renewable energy is growing rapidly on a global scale, with record numbers of new renewable energy solutions ranging from wind and solar installations coming online every year. Zambia can readily continue this expansion of renewable energy by utilizing existing technologies, investing in improvements to our electricity system, and making smart policy decisions that move the country towards a clean energy future and harnessing its vast potential for renewable energy.

Improving operational efficiency in the power sector in Zambia will be a key driver for the country’s prospects of substantial progress in the attainment of Sustainable Development Goals, Vision 2030, and the programmes envisioned in the Seventh National Development Plan.

By Bernadette Deka Zulu

PMRC Executive Director