Zambia’s energy sector is going through a period of electrifying transformation as the country aims to mitigate the effects of drought and become a regional energy hub
The great rivers flowing through Zambia, whose power can be observed in the country’s stunning waterfalls, have long made hydroelectricity Zambia’s energy source of choice. Today, it accounts for nearly 97 per cent of the country’s energy. However, a lack of rainfall in 2015 and 2016 saw generation capacity fall by almost 50 per cent, a wakeup call that caused Zambia’s decision-makers to fundamentally rethink the country’s energy policy.
Today, the country is focused on diversifying and increasing its energy supply, not only to guarantee national energy security, but also to reach its goals of becoming the biggest exporter in the region.
“Eight countries surround us, and many of them face power deficits. It is a huge potential market,” says David Mabumba, Zambia’s former energy minister and current minister of education.
As the country revised its energy strategy, the first major move came in 2016, when the government made the politically problematic decision to remove certain energy subsidies. Months later, the government formed a consensus to raise domestic and mining electricity tariffs. Prior to that, electricity in Zambia had been among the cheapest in the region.
For us to create appetite for further investment in this sector, we needed a tariff that allowed all industry players to recover the cost of doing business whilst making an attractive return on the investment,” says Victor Mundende, managing director of ZESCO, Zambia’s state-owned energy company.
In the wake of the new regulations, investments have started pouring in. Projects are now underway that will add renewable energy, thermal energy and more hydroelectricity to the grid. Nuclear energy is also being studied, and oil and gas exploration has begun, after hydrocarbons were proven to be present in Zambia.
Solar has been dubbed particularly apt, and Zambia’s “Scaling Solar” project even set historically low cost benchmarks when France’s Neoen and US-based First Solar bid at $0.06 per kilowatt hour in 2016. This became lowest price for producing solar in Africa, and among the lowest in the world, according to the World Bank.