Zambia’s solar: mini grids and scaling solar projects pick up

Zambia's solar sector has attracted global attention due to the very low costs of electricity procured via the first round of the so-called scaling solar program in 2015.

Last week, Zambia also attracted attention mainly because of the publication of the names of 12 firms whose bids pre-qualified under the second round of the scaling solar program. pv magazine has gathered the latest information concerning all portions of the country's solar sector.

Scaling solar projects
Regarding the PV projects qualified under the first round of the scaling solar program in Zambia, a member of the International Finance Corporation (IFC) told pv magazine that two projects totalling 75 MW will reach financial close by the end of the summer.

In February, Zambia’s Industrial Development Corporation (IDC) signed a new agreement with the IFC to develop up to 500 MW of renewable energy through two to four projects. The second round of the scaling solar program that shortlisted successful bidders last week concerns the first 180 MW of solar PV capacity out of the total 500 MW of capacity agreed to be developed.

The list of the successful bidders can be found via this link.

A new third scaling solar tender may be announced before the end of 2017, says the IDC.

Mini grids boost
During the AEF, which took place last week in Copenhagen, the US Trade and Development Agency (USTDA) signed a US$750,000 grant to the Standard Microgrid Initiatives firm, aiming for the large-scale deployment of solar with battery storage mini-grids in Zambia.

Zambia-based Standard Microgrid claims that it is reinventing the African utility with an innovative approach to distributed renewable energy services. Its system includes flexible, modular components with proprietary grid management tools that can deliver reliable AC. Its “10kW micro power utility can be deployed in three days, with the capacity to deliver power to upwards of 150 homes,” said Standard Microgrid Initiatives.

Furthermore, during the forum, InfraCo Africa, an investment company of London-based Private Infrastructure Development Group, an equity investor, also signed a Convertible Loan Agreement for the phased disbursement of up to US$3.5 million to  Standard Microgrid Initiatives for the Zambia mini grids project.

Lida Fitts, regional director for Sub-Saharan Africa at the USTDA, told the AEF that the project will deploy a total of 150 mini grids units across Zambia and that Standard Microgrid Initiatives uses technology made in the U.S. with a business model tailored for Zambia specifically. USTDA aims to facilitate U.S. technology exports, Fitts added before the signature of the grant to Standard Microgrid Initiatives.

Reforming Zambia’s electricity sector
Speaking at the AEF, Zambia’s minister of energy and water development David Mabumba said there are very few private sector companies that are willing to develop projects up to 20 MW of capacity in Zambia.

For this reason, the ministry, together with the World Bank and Germany's government, are looking at the legal documents linked to the power purchase agreement (PPA) procedure. “Our aim is to standardise the PPA agreement process, to encourage the private sector to step in. Germany's government is funding this work,” added Mabumba.

However, investors won't come to Zambia unless we reform our electricity tariffs too, stressed the energy minister. “Zambian electricity tariffs are not currently cost reflective, driving the private sector away, and this is why we decided to increase the residential and business tariffs starting in May,” he explained, adding that this effort needs to continue and conclude by 2019.