International investors provide $34 million for solar plant in Zambia

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Apart from being financed by Enel with as much as $40 million, the 28 MWac/34 MWdc solar PV plant in the south of Zambia will be supported by loans from the European Investment Bank (EIB) and the International Finance Corporation (IFC).

The EIB is providing $11.75 million in loans to the project, which will be built by the Italian utility in the Lusaka South multi-facility economic zone. 

“The ongoing initiative to standardize both tendering and financing processes, is creating economies of scale for solar projects across the African continent, improving economic viability and resulting in the development of solar power in smaller markets and developing countries,” EIB Vice-President Andrew McDowell said.

A further financing package from the IFC includes senior loans of up to $10 million, and up to $12 million from the IFC-Canada Climate Change Program, plus $2.5 million in interest-rate swaps from the IFC and a $2.8 million partial risk guarantee from the World Bank’s International Development Agency.

The project, expected to produce around 70 GWh of electricity per year, is part of the Scaling Solar program, a World Bank Group initiative that offers competitive bidding and simplified procurement for grid-tied PV power. The program is supporting the development of more than 1 GW of solar capacity across Africa.

The Ngonye solar farm is the second Scaling Solar project under development in Zambia, the contract having been awarded in June 2016.

The first project awarded under the scheme is a 45 MW solar PV plant which is also near Lusaka, with construction set to start soon by French company Neoen and U.S. giant First Solar.

“Scaling Solar has set a new standard for the development of solar power in Africa, starting with these two projects in Zambia,” said IFC Chief Executive Philippe Le Houérou.

Both plants will sell electricity under 25-year power purchase agreements with Zambia’s state owned utility ZESCO – the output of the Ngonye project will be sold for $0.0784/KWh, while the 45 MW project will trade electricity for just $0.0602/KWh, a record low price for solar in Africa.

The Ngonye plant will be owned by a special purpose vehicle in which Enel Green Power will have an 80% holding with the Industrial Development Corporation of Zambia having the remaining 20% stake.