Africa has long been talked of with regards of leapfrog trends and technologies. Across the continent mobile phones took off before landlines had been installed in many places and in Zambia, a country where only 25% of the population have regular access to electricity, mobile penetration rates are over 75%. What this means for energy is with falling prices on renewables and little out-dated expensive infrastructure in place the country has the opportunity to really push a smart renewable future.
It is a pattern we can see across Africa and one that puts it in a prime place to gain from innovation and investment in smart energy.
“The technology curve has changed completely and I think the energy curve is exactly like that. You do not have to through old school technologies and setting up networks,” said Kiren Maharaj, CEO of TRENEX, an energy investment company, which manages the engineering, operations and maintenance of a power project over its life cycle. “Now there are micro-grids, there’s much better technology than there was. So maybe being a slightly under-developed or semi-developed area gives Africa quite a nice profile going forward. We don’t have to do anything the West did, they’ve made the mistakes, learned and now there’s new technology on the table.”
The government of Zambia is recognising that and has ambitious plans for energy capacity addition, which includes opening it up to the private sector and foreign investment of a previously small state-owned utility.
Currently Zambia’s energy needs are primarily being taken up by the mining industry, which uses approximately 68% of all power generated, with households only consuming 19%. The government wants to address this imbalance and get its people using more power. Its programme Vision 2030, aims to achieve universal access to clean energy by 2030. Although only 25% of the population currently have access to electricity, that figure drops remarkably to 5% in rural areas, leaving substantial potential for growth in this field. It is potential that the government is looking to achieve with the assistance of private capital. With Vision 2030 aiming to grow Zambia’s energy demand by 6% each year, it is an area that offers vast potential.
Zesco, Zambia’ state owned electricity utility, is looking to significantly expand its hydropower electricity generation. Currently it generates 2,348 megawatts of power with a demand of 2,100 megawatts. This provides the majority of Zambia’s total 2,800 megawatt electricity generation capacity.
Under Vision 2030 Zambia is looking to greatly expand the capacity of its dominant source of electricity, hydropower. The government estimates that the potential for hydropower in the country is 6,000 megawatts.
This would require a vast increase in the country’s capacity and subsequently tremendous investment in its energy infrastructure. It is a something Victor Mundende, President of African Power and Utilities Association (APUA) and managing director of Zesco, the state-owned energy utility acknowledges cannot be done by the country alone, He argues that the country will need significant foreign direct investment to achieve its electricity capacity growth aims, both for hydro and other forms of electricity.
“Private or PPPs is the way to go. I know that the president is very keen to see PPP projects,” he said. “There is a model that was being discussed around partnerships with the private sector; if you bring in a private company, they will take the larger share, about 45%, the government takes 35% and the rest goes to Zambians.”
To fulfil this desired growth in electricity Zesco are developing a $2 billion 750 megawatt hydro power plant called Kafue Gorge Lower, which should be completed in the second half of 2020. In addition it is looking to develop two hydroelectric power stations on transboundary rivers. The first is the 2400 megawatt Batoka Gorge Hydroelectric Power Station on the Zambesi River on the border of Zimbabwe. The second is a 1200 megawatt power station on the Luapula River next to DRC. Both projects would see shared ownership between Zambia and the neighbouring country.
Zambia is keen to use its water borders and grow its energy capacity for its own energy security and develop its economy by bringing electricity to more people. Yet it is also keen to deliver power to its neighbours and become a regional power hub.
“Geographically we are well positioned to be an energy hub which is what we are aiming to become,” said Mundende. “We have eight neighbours and we have already started connecting with them, but our goal within the next few years is to strengthen and create more connections in the region. Zambia could easily become the region’s hub of energy.”
Currently Zesco is looking to develop interconnections with Malawi and Mozambique, whilst the development of an interconnector line with Angola, Zimbabwe and Namibia is ongoing.
In addition to hydro, Zambia is significantly increase its solar energy. This has already seen the launch of Zambia’s Renewable Energy Feed-in Tariff strategy (REFiT) as it looks to utilise innovative technologies and its widely untapped solar energy source. It will also help the country diversify its energy source, where recent droughts have led to supply deficits in the hydro-intensive country. Finally, the programme will aim to galvanise private sector investment. The strategy, launched in 2015 with assistance from USAID on the policy side allows Zambia to buy renewable energy at a fixed price from independent power producers (IPP). These producers will build solar plants with funding from USAID, the International Finance Corporation as well as private investors.
“Zambia has excellent potential to provide enough clean energy for the country’s growing needs, and even for export, but getting there will require greater private sector investment,” said Eric Schultz, US Ambassador to Zambia of the REFiT programme.
In the first bidding round, which held this year, REFiT aims to add 100 megawatts of solar energy to the grid by funding solar projects of up to 20 megawatts at a time. Investors in this first round include the Green Climate Fund (GCF).
The REFiT programme is being run through the Industrial Development Corporation (IDC), which was launched in 2014 by the Zambian government to transform and privatise its 34 state-owned enterprises. It aims to add 600 megawatts of renewable energy to the grid.
Zambia is showing though that it has the opportunities and ambition in seeking out private investment to be making that push now.