Zambia’s installed capacity is 2.4GW, of which more than 90% – some 2.1GW – consists of large hydro. The remainder is made up of oil and diesel plants, while small captive biomass projects power the country’s sugar estates and surrounding areas. Due to low rainfall levels in recent years, the country faces a large power deficit that in 2015 propelled its clean energy ambitions.
The power market is governed by the Department of Energy, the Zambian Energy Regulatory Board, the Rural Electrification Authority and ZESCO, the state-owned utility. The latter generates nearly 95% of the power while two private on-grid generators make up the remainder using fossil-fuel and small hydro plants. Outside the state utility, a private transmission and distribution company purchases 55% of the generated electricity for the Copperbelt mining region.
Zambia’s power deficit amounts to over 500MW or 30% of peak demand, which has meant load-shedding through routine rolling blackouts. One response: in summer 2015 the government signed an agreement for two 50MW PV projects under the International Finance Corporation’s “Scaling Solar” program. ZESCO will look to install 200-500MW more grid-scale solar in the coming years.
The utility is also currently upgrading and expanding existing large hydro projects, which saw installed capacity grow by 360MW at the Kariba plant in 2014 – the first additional capacity installed by the state since the 1970s. With the country struggling to meet demand, it is on track to add a further 120MW hydro project at Itezhi-Tezhi and its first coal power plant with the 300MW Maamba Collieries project, expected to be commissioned by early 2016. In late 2014, ZESCO completed expansion work on the 14.8MW Lunzua small hydro plant, bringing the country’s installed renewable power capacity (excluding large hydro) to 130MW. Of that, over 90MW is provided by independent power producers (IPPs), though only 52MW is grid connected.
The government offers tax incentives for developers of small hydro and solar projects. They include import duty and VAT exemptions, and tax holidays. Those policies have yet to drive any clean energy investment, however, with uncertainty over which solar products are covered and only a few importers operating. The tax holidays last for up to ten years and are for companies that set up projects within priority sectors or in special economic zones. No IPPs have benefited from the tax holidays as yet, reflecting the lack of wider renewable energy policy or cost-reflective electricity tariffs. The government raised tariffs in August 2015, but they are not yet cost reflective.
Zambia’s Revised Sixth National Development Plan (2013-16) proposes introducing renewable energy technologies (small hydro, solar and wind) into the generation mix and a feed-in tariff, as well as making use of ethanol and alternative fuels. The government is consulting stakeholders on the introduction of feed-in tariffs, with the next discussion scheduled for mid-September 2015. The energy regulator is also developing guidelines for off-grid systems. The country previously developed a draft national renewable energy strategy which would seek to add 400MW of renewable energy by 2030, but the plan was never implemented.
Score Summary
Zambia scored 0.99 in Climatescope 2015, placing it 34th on the list of countries overall, a drop of four places compared with 2014. Its highest ranking was on Greenhouse Gas Management Activities Parameter IV.
On Enabling Framework Parameter I, Zambia dropped one place to rank 38th. Areas of strength included the presence of regulations governing the distributed energy sector and energy access policies.
The country slipped one place to 39th position on Clean Energy Investment and Climate Financing Parameter II, reflecting the absence of any new investment in clean energy.
Zambia also fell on Low-Carbon Business & Clean Energy Value Chains Parameter III, losing three places to rank 23rd. A number of distributed energy service providers bolstered its score in this area.
On Parameter IV, the country was placed 22nd, a relatively strong position that was largely built on its historic carbon offsetting activity relative to total emissions.