Solar is getting cheaper, and in Zambia solar generated electricity is going to be sold for record low prices. Two large-scale PV projects, totaling 73 MW, are going to be developed in the country as part of the World Banks Scaling Solar program, after some major PV developers won tenders during the countrys first solar auction.
The World Bank organized the auction as part of its Scaling Solar program, which it set up alongside the IFC and Multilateral Investment Guarantee Agency. The aim of the program is to promote renewable energy in developing nations, especially solar, which it does by offering various services to reduce the risks and the costs for investors. One such service is the use of standardized contracts, to ease the complications associated with negotiating power purchase agreements (PPA).
Zambia, Senegal and Madagascar are currently participating in the program, which aims to develop 1 GW of solar power over the next three years. A fourth sub-Saharan country is expected to join the program by September, while the IFC said that it may eventually spread to countries within Central and East Asia.
The first tender round in Zambia was organized in just 10 months, and attracted 48 solar power developers, of which seven submitted final proposals. The winners of the first auction were First Solar, Neoen, and Enel Green Power, the renewable energy division of Enel.
U.S. PV company First Solar will partner up with French company Neoen, to jointly develop and construct a 45 MW plant, which will sell electricity for just 6.02 cents per KWh under a 25-year PPA. This is a record low for Africa, and now sets the benchmark for the rest of the region.
These are the lower solar power tariffs seen to date in Africa, and among the lowest prices for solar anywhere in the world a game changer for Zambia and other countries in the region facing electricity shortages, said Philippe Le Houérou, IFCs Chief Executive Officer and Executive Vice President. Scaling Solar is paving the way for governments to deliver fast, cheap, and clean energy even in relatively small and untested markets and setting a new regional standard for procuring large-scale solar power.
Enel Green Power will develop the other project that was awarded during the auction. That is the 28 MW Mosi-oa-Tunya PV park, which Enel will invest approximately $40 million in, selling the electricity for 7.84 cents to state-owned utility ZESCO under a 25-year PPA. It is Enels first project in Zambia and is expected to enter into operation in the second quarter of 2017.
This is a landmark award for EGP, underling the consistent development of a gradually and well planned expansion in selected areas of the African continent when the company can play a key role in providing smart, efficient and sustainable solutions, said Francesco Venturini, Head of Enel Green Power. Our entry into Zambia a country offering a very attractive investment proposition is another step forward in this respect and we are proud to contribute to the Scaling Solar program, one of the best-designed schemes for renewables in Africa.