THE REPUBLIC OF ZAMBIA Ministry of Energy
ZAMBIA SEFORALL ACTION AGENDA Sustainable Energy for All Initiative
Ministry of Energy (MOE)
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1. FOREWORD and priority actions. It was during this workshop that five thematic working groups
on access to electricity; access to clean cooking
solutions; energy efficiency; renewable energy; and regulatory framework and
financing mechanisms, were set-up to help
define the country’s SEforALL objectives and identify the priority areas for the SEforALL Action Agenda (AA) and Investment Prospectus (IP). The results from these working groups form the basis for the country’s Action Hon. Matthew Nkhuwa, MP Agenda and the Investment Prospectus.
The then UN Secretary-General, Ban Ki-Moon, Zambia has great potential for renewable launched the Sustainable Energy for All energy, which includes solar, mini-hydro, Initiative (SEforALL) in 2011 and declared the biogas, wind, geothermal and biomass. following year (2012) the year for sustainable However, these need to be harnessed and energy for all. developed to scale to support the country’s Rural Electrification Programme (REP) and The goal of the SEforALL Initiative is to: development agenda. The SEforALL Initiative mobilise stakeholders worldwide to take comes at the time at which Zambia is in the concrete action toward ensuring universal process of scaling up and diversifying its access to modern energy services; double the renewable energy programme as promulgated global rate of improvement in energy in the National Energy Policy (NEP, 2008), the efficiency and double the share of renewable Renewable Energy Feed-in-Tariff (REFiT) Policy energy in the global energy mix by 2030. (2016), the REFiT Strategy and Regulatory Support Mechanisms (2016), the Power The Government of the Republic of Zambia Systems Development Master Plan (PSDMP, (GRZ) fully embraces the objectives of the 2010) and the Rural Electrification Master Plan SEforALL Initiative and appreciates that its (REMP, 2008) which aims to increase access to timeframe coincides with the country’s electricity to 66% countrywide, 100% in urban national development blueprint – Vision 2030 areas and 51% in rural areas by 2030 in line and partly overlaps with the Seventh National with Vision 2030. Development Plan (7NDP), 2017-2021. In particular, the SEforALL objectives align with The Ministry of Energy is also in the process of Outcome 4 of the 7NDP: ‘Improved energy strengthening the electricity regulatory production and distribution for sustainable environment. To that effect, the Ministry development’ to ensure universal access to submitted two Bills to Parliament for clean, safe, reliable and affordable energy at ratification: Electricity Bill, 2017; and Energy the least cost, consistent with national Regulation Bill, 2017. These Bills were development aspirations of Zambia. In 2015, intended to give the Energy Regulation Board Zambia also submitted its Intended Nationally (ERB) greater oversight of the energy sector, as Determined Contribution (INDC) to the United well as to create a consistent tariff Nations Framework Convention on Climate determination framework, which has been Change (UNFCCC) highlighting key mitigation problematic in the past. These Bills also measures to meet its contributions to climate provide a regulatory oversight of power and change mitigation and adaptation within the bulk supply agreements and empower the energy sector. Energy Regulatory Board (ERB) to review and determine tariffs for all electricity consumers, Zambia opted to be part of the SEforALL including mining companies. These actions are Initiative in 2016, starting with a workshop in supportive of successful implementation of the May 2016 to articulate its energy trajectories SEforALL Initiative in Zambia.
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The SEforALL Action Agenda and Investment priority high impact initiatives. They also Prospectus will help Zambia catalyse strategic provide an opportunity for increased private partnerships and investments in the energy sector participation in the quest to deliver sector towards poverty alleviation and sustainable energy to all Zambians. As we prosperity, taking into consideration the commence the implementation of our impacts of climate change and the need to investment pipeline, we shall be strengthening achieve gender-balanced socio-economic our collaboration with the AfDB’s Africa Energy development. Market Place (AEMP) platform, which will play an important catalytic role of bringing GRZ The Action Agenda and Investment Prospectus closer to the private sector and other draw on the many on-going activities in cooperating partners in order to fast-track Zambia’s energy sector and are aligned with priority transactions so that we transform our Zambia’s commitments contained in its energy power sector and improve connectivity to policy framework and its Nationally ensure access to all. We will depend on their Determined Contribution (NDC) on climate institutional guidance and assistance to change. Both the AA and IP have been prioritise and accelerate the necessary sector developed through a consultative process and reforms to attract private investment, as well provide valuable inputs for defining the as refining the bankability of our pipeline of country’s roadmap to delivering clean energy projects and programmes for implementation. to all Zambians. The AA and IP have been developed with financial assistance from the The Ministry of Energy is pleased to take a Global Environment Facility (GEF)-funded leading role in contributing to the on-going Africa Climate Technology Centre and the efforts to address the energy needs of the SEforALL Africa Hub (both hosted by Africa African Continent and, those of Zambia, Development Bank (AfDB), the United Nations towards a green economic development path. Development Programme (UNDP) and the The Government of the Republic of Zambia is Worldwide Fund for Nature (WWF) and have convinced that sustainable energy for all is undergone extensive stakeholder review and critical to equitable human development and validation. environmental security of Zambia.
The AA and IP finalisation processes were led I appeal to cooperating partners, private by the Ministry of Energy through the SEforALL sector, civil society, academia and the general Core Team (led by SEforALL Country Focal public to take an active role in realising the Point) under the Department of Energy and Zambian dream towards sustainable energy with continuous support from AfDB and UNDP. for all.
It is with great pleasure and honour that I present the Zambian Action Agenda and Investment Prospectus, representing the third milestone in the four-step SEforALL process, namely: (1) Country Opt-in; (2) Stock-taking Hon. Mathew Nkhuwa, MP and Gap Analysis; (3) Country Action Plan Minister of Energy (Action Agenda and Investment Prospectus); Republic of Zambia and (4) Implementation, Monitoring and Evaluation.
As we proceed to the fourth step, the Action Agenda and Investment Prospectus pave way for development of bankable and viable projects, mobilization of resources and multi- stakeholder engagement to facilitate implementation, monitoring and evaluation of
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2. ACKNOWLEDGEMENTS
(UNZA), Ministry of Lands and Natural Resources, Zambia Bureau of Standards (ZABS), Zambia Environmental Management Agency (ZEMA) and the Zambia Development Agency for the technical inputs into the SEforALL process.
▪ African Development Bank and the Global Brig. Gen. Emeldah Chola Environment Facility (GEF) –SEforALL Africa Hub and Africa Climate Technology Centre. The Ministry of Energy wishes to express for financial and technical support. gratitude and deep appreciation to all parties and individuals who unreservedly provided ▪ United Nations Development Programme financial support and technical assistance for facilitating and supporting the towards Zambia’s achievement of the first three government to procure funding from the milestones of the SEforALL process culminating AfDB towards development and finalisation in the Action Agenda (AA) and Investment of the Action Agenda and Investment Prospectus (IP). Prospectus.
Special thanks are particularly extended to the following institutions and organisations: ▪ Other Cooperating Partners: The European Union (EU) for its active participation and ▪ Ministry of Energy (Department of Energy) – sponsorship of the 2018 Annual Zambia the Director and SEforALL Core team, for Energy Conference, where SEforALL and diligently organising and coordinating the other renewable energy issues were SEforALL process; the Planning Department; presented and discussed by a large number and the Office for the Private Participation in of stakeholders. Power Investments (OPPPI). ▪ Civil Society and Private Sector – World ▪ Other Line Ministries and Quasi Government Wide Fund for Nature (WWF) for financial Organisations – Working group members and technical support. The Copperbelt from the Ministry of National Development Energy Company (CEC), SNV, Zambia Energy Planning, Ministry of Finance (the Interim and Environmental Organization (ZENGO), Secretariat on Climate Change – ISCC), prior Centre for Energy, Environment and to the establishment of the National Engineering Zambia (CEEEZ), Utilink Ltd., Designated Authority (NDA) for the Green Zambian Association of Manufacturers Climate Fund (GCF), the Energy Regulation (ZAM), Biofuels Association of Zambia (BAZ) Board (ERB), Ministry of Lands, Natural and Muhanya Solar Ltd. for their active Resources and Environmental Protection participation in the various SEforALL (Department of Forestry), Zambia Electricity Working Groups Supply Company (ZESCO) Ltd, Rural Electrification Authority (REA), the ▪ Eugenia Masvikeni and SOFRECO, the Technology Development and Adaptation consultants for their work in developing the Unit (TDAU) of the University of Zambia Action Agenda and the Investment
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Prospectus through a consultative process with all key stakeholders, and Prof. Mtakala for editing and proofreading the document.
The medium to long term vision of the Ministry is to entrench SEforALL into the five-year national development planning processes including at the provincial and district levels so that they synergistically contribute to the national and global agenda on SEforALL.
The Ministry looks forward to continued collaboration and support from all stakeholders in achieving the national SEforALL national goals towards the global goals.
Brigadier General Emeldah Chola Permanent Secretary Ministry of Energy, Republic of Zambia
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3. LIST OF ACRONYMS AND ABBREVIATIONS
7NDP Seventh National Development Plan AA Action Agenda AEO African Economic Outlook AfDB African Development Bank AFUR African Forum for Utility Regulators BAU Business as Usual BOT Build Operate and Transfer BoZ Bank of Zambia CEC Copperbelt Energy Corporation CEEEZ Centre for Energy, Environment and Engineering Zambia CFL Compact Fluorescent Lamp
CO2 Carbon Dioxide COMESA Common Market for Eastern and Southern Africa COP Conference of the Parties CoSSE Committee of South African Development Community Stock Exchanges CSA Climate Smart Agriculture CSH Cooking and Space Heating CSO Civic Society Organisations DAM Day Ahead Market DOE Department of Energy DSM Demand Side Management DRC Democratic Republic of Congo EAPP East Africa Power Pool EDF European Development Fund EE Energy Efficiency ERB Energy Regulations Board ESAP Electricity Services Access Project ESCOs Electricity Services Companies ESI Electricity Supply Industry ESMAP Energy Sector Management Assistance Programme EU European Union FAO Food and Agricultural Organisation FDI Foreign Direct Investment FREL Forestry Reference Emission Level GCF Green Climate Fund GCTC Grid Code Technical Committee GDP Gross Domestic Product GHG Greenhouse Gas GMG Green Mini Grids
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GRMF Geothermal Risk Mitigation Facility GRZ Government of the Republic of Zambia GTF Global Tracking Framework GW Giga Watt GWh Giga Watt hours HFO Heavy Fluidised Oil HIO High Impact Opportunity IAEREP Increased Access to Electricity and Renewable Energy Production ICCS Interim Climate Change Secretariat ICS Improved Charcoal Cookstoves ICT Information Communication Technology IDC Industrial Development Corporation IFC International Finance Corporation INDC Intended Nationally Determined Contribution IP Investment Prospectus IPLR Institutional Policy Legal and Regulatory IPP Independent Power Producer IPS Independent Power Systems IRENA International Renewable Energy Agency ITPC Itezhi Tezhi Power Company JFM Joint Forest Management JICA Japan International Cooperation Agency KFL Kafue Gorge Lower KfW Kreditanstalt für Wiederaufbau KPI Key Performance Indicator kV kilo Volts kW kilo Watt kWh Kilo Watt hours LCMS Living Conditions Monitoring Survey LED Light-Emitting Diode LPG Liquefied Petroleum Gas M&E Monitoring and Evaluation MCL Maamba Colliery Limited MD Maximum Demand MEPS Minimum Energy Performance Standards MER Monitoring, Evaluation, Reporting MEWD Ministry of Energy and Water Development MFW4A Making Finance Work for Africa Mio. Million MSW Municipal Solid Waste MW Mega Watt
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MWh Mega Watt hours NAMA Nationally Appropriate Mitigation Actions NBFI Non-Bank Financial Institution NDA National Designated Authority NEP National Energy Policy NFMS National Forestry Monitoring System NGO Non-Governmental Organisation NJP National Joint Programme OGS Off Grid Solutions OPPPI Office for Promoting Private Power Investments PAYG Pay As You Go PFC Power Factor Correction PFM Participatory Forestry Management PFM Public Finance Management PIDA Programme for Infrastructure Development in Africa PPA Power Purchase Agreement PPCR Pilot Programme for Climate Resilience ProBEC Program for Biomass Energy Conservation PSDMP Power System Development Master Plan PV Photovoltaic RAERESA Regional Association of Energy Regulators in Eastern and Southern Africa RAGA Rapid Assessment and Gap Analysis RE Renewable Energy REA Rural Electrification Authority RECs Regional Economic Commissions REEEL Renewable Energy and Energy Efficiency Partnership REFiT Renewable Energy Feed-In Tariff REMP Rural Electrification Master Plan RERA SADC Regional Electricity Regulators’ Association RES Renewable Energy Systems RIDMP Regional Infrastructure Development Master Plan – Energy Sector SACCO Savings and Credit Cooperative Society SACREEE Southern Africa Centre for Renewable Energy and Energy Efficiency SADC Southern Africa Development Community SAPP Southern Africa Power Pool SDP Systems Development Plan SEforALL Sustainable Energy for All Initiative SHS Solar Home System SI Statutory Instrument SIS Safeguards Information System SME Small Medium Enterprise
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SNDP Sixth National Development Plan SPD Strategic Petroleum Depots SREP Scaling-Up Renewable Energy Programme SSA Sub-Sahara Africa TDAU Technology Development and Adaptation Unit TOE Ton of Oil Equivalent TORs Terms-of-Reference UN United Nations UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change UNIDO United Nations Industrial Development Organization UN-REDD United Nations Reducing Emissions from Deforestation and Forest Degradation UNZA University of Zambia US United States USAID United States Agency for International Development USc United Sates cents USD United States Dollar WHO World Health Organization WWF Worldwide Fund ZABS Zambia Bureau of Standards ZAM Zambian Association of Manufacturers ZDA Zambia Development Agency ZEMA Zambia Environmental Management Agency ZENGO Zambia Energy and Environmental Organization ZMW Zambian Kwacha ZPL Zengamina Power Limited
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4. TABLE OF CONTENTS
1. FOREWORD ...... ii 2. ACKNOWLEDGEMENTS ...... iv 3. LIST OF ACRONYMS AND ABBREVIATIONS ...... 1 4. TABLE OF CONTENTS ...... 5 5. LIST OF TABLES ...... 7 6. LIST OF FIGURES ...... 7 I. PREAMBLE ...... 9 II. EXECUTIVE SUMMARY ...... 10 1. INTRODUCTION ...... 1 1.1 Country Background……………………………………………………………………………………………………………….1 1.1.1 Country Overview ...... 1 1.1.2 Socio-economic indicators ...... 1 1.1.3 Investment Climate ...... 3 1.1.4 Financial Sector ...... 4 1.2Zambia’s Energy Sector ...... 5 1.2.1 Overview of Zambia’s electricity supply industry (ESI) ...... 5 1.2.2 Energy resources ...... 5 1.2.3 Institutional, policy, legal and regulatory (IPLR) framework ...... 9 1.2.4 The power sector ...... 17 1.2.5 The process heat sector ...... 19 1.2.6 Energy efficiency ...... 19 1.2.7 Energy supply and demand ...... 20 2. VISION AND TARGETS UNTIL 2030 ...... 22 2.1.Zambia's Overall Vision for the SEforALL Initiative ...... 22 2.2...... Baseline and targets23 3. PART II – PRIORITY AREAS ...... 26 3.1 Scaling Up Access to Electricity Services ...... 27 3.1.1 Vision and trajectories 2019-2030 ...... 27 3.1.2 Existing gaps for electricity access ...... 32 3.1.3 High impact initiatives/opportunities for scaling-up electricity access ...... 34 3.1.4 Risk management for scaling up electricity access ...... 34 3.2 Increasing Access to Clean and Modern Cooking Solutions ...... 36 3.2.1 Vision and trajectories 2017-2030 ...... 38 3.2.2 Existing gaps for clean and modern cooking solutions ...... 46 3.2.3 High impact initiatives/opportunities for increasing access to clean and modern cooking solutions ...... 47
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3.2.4 Risk management for increasing access to clean and modern cooking solutions ...... 48 3.3 Increasing Renewable Energy Generation Technologies ...... 50 3.3.1 Vision and trajectories 2017 - 2030 ...... 50 3.3.1 Existing gaps for renewable energy technologies ...... 52 3.3.1 High impact initiatives/opportunities for renewable energy ...... 52 The following high impact initiatives/opportunities are proposed for implementation under the SEforALL Initiative: ...... 52 3.3.1 Risk management for increasing and diversifying the contribution of renewable energy ...... 53 3.4 Improving Energy Efficiency ...... 55 3.4.1 Vision and trajectories 2017 – 2030 ...... 55 3.4.2 Existing gaps for energy efficiency ...... 56 3.4.3 High impact opportunities and Initiatives for achieving the overarching objectives of improving energy efficiency ...... 62 3.4.4 Risk management for improving energy efficiency ...... 64 3.5 Additional Nexus Actions ...... 65 3.5.1 Status and trajectories ...... 65 3.5.2 Risk management ...... Error! Bookmark not defined. 3.5.3 Existing gaps for energy nexus ...... 65 3.5.4 High impact initiatives for achieving the overarching nexus objectives ..... Error! Bookmark not defined. 3.5.5 Relevant high impact opportunities ...... Error! Bookmark not defined. 3.6 Enabling Action Areas ...... 69 3.6.1 Energy planning ...... 70 Specific strategies and roadmaps...... 71 3.6.3 Business models and technology innovations ...... 72 3.6.4 Financing mechanisms and risk management ...... 72 3.6.5 Institutional strengthening and capacity building ...... 74 3.6.6 Awareness and knowledge management ...... 75 3.6.7 Stakeholder coordination ...... 75 Critical areas ...... 75 Actions needed ...... 75 4. REFERENCES ...... 1 5. ANNEXES ...... 5 Annex 1: Geographic Map of Zambia ...... 5 Annex 2: – Ongoing energy programmes/projects in Zambia ...... 1 Annex 3: Zambia Statutes ...... 2 Annex 4: Zambia Key Institutions and Roles ...... 1 Annex 5: Zambia Installed Generation Capacity ...... 3
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Annex 6: Mini Hydro Projects Proposed for Pre-Feasibility Studies ...... 3 Annex 7: Proposed mini-hydro projects under NAMA ...... 4 Annex 8: Action Agenda and Investment Prospectus Implementation Arrangements ...... 5 Annex 9: Guidelines for developing the SEforALL action agenda ...... 5 Annex 10: Indicators for the Zambia SEforALL initiative ...... 6 Links with the Investment Prospectus ...... 10
5. LIST OF TABLES
Table 12: Urban 20-40-20-20 cooking scenario ...... 34 Table 13: Charcoal use as main fuel, improved stoves and trends in urban areas–situation and objectives ...... 34 Table 14: Biogas size and cost ...... 37 Table 15: Risk management for improving access to clean and modern cooking solutions ...... 43 Table 16: Risk management for increasing and diversifying the contribution of renewable energies .. 46 Table 17: Energy intensity in Zambia, Tanzania and Uganda 2000-2014 (in MTOE/trillion GDP 2005 US$) ...... 47 Table 18: Risk management for improving energy efficiency ...... 54 Table 19: Risk management of the nexus initiatives ...... 56 Table 20: Nexus actions and likely impacts ...... 58 Table 21: Financial support for the management of the SEFORALL programme (2017-2021 period) .. 68
6. LIST OF FIGURES
Figure 1: Total Projected Population for Selected Years (Medium Variant), Zambia 2011-2035 ...... 1 Figure 2: Share of the financial sector to GDP ...... 4 Figure 3: Sectoral distribution of NAMAs ...... 6 Figure 4: Sources of Domestic Energy Supply (2014) ...... 9 Figure 5: Final Energy Consumption by Sector (2013) ...... 9 Figure 6: Electricity Consumption by Sector (2013) ...... 10 Figure 7: Illustrative Generation Mix – 2030 ...... 20 Figure 8: Priority Action Areas and Supportive Framework ...... 21 Figure 9: National, urban and rural electricity access 2014-2030 according to the REMP (%) ...... 23
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Figure 10: Trends in national, urban and rural population (2015-2030) ...... 23 Figure 11: Urban electrification trajectory – access and connections 2016-2030 - 24 ...... 24 Figure 12: Rural electrification trajectory – access and connections 2016-2030 ...... 25 Figure 13: Rural electricity access – grid and off-grid connections 2016-2030 (1,000) ...... 26 Figure 14: Number of mini grids to be deployed, 2016-2030 ...... 27 Figure 15: Access to modern fuels for cooking in Zambia and selected Southern African countries, 1990-2012 ...... 30 Figure 16: Urban and rural access to modern fuels for CSH in Zambia and selected Southern African countries in 2012 ...... 31 Figure 17: Energy sources for cooking and space heating – urban, rural and nationwide 2015 (%) ..... 32 Figure 18: Energy sources for cooking and space heating in 2010 ...... 32 Figure 19: Multi-strata breakdown and energy sources for CSH in 2010 ...... 33 Figure 20: Improved stoves and charcoal use, 2016-2030 ...... 35 Figure 21: LPG access rate and stoves deployment in urban areas, 2016-2030 ...... 35 Figure 22: The 20-40-20-20 scenario and LPG imports, 2106-2030 (1,000 tons)...... 36 Figure 23: Access and deployment of rural improved stoves, 2016-2030 ...... 38 Figure 24: Household investment for LPG stoves acquisition ...... 38 Figure 25: Access and LPG stoves deployment, 2016-2030 ...... 39 Figure 26: Access and deployment of biogas units, 2016-2030 ...... 39 Figure 27: Action Agenda and Investment Prospectus Implementation Arrangements ...... 66
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I. PREAMBLE Zambia opted into the SEforALL Initiative in 2016. The Action Agenda builds on the National Energy Policy of 2008, which promulgates diversification of the energy mix, creation of the conditions to ensure availability of adequate supply of energy from various energy sources, promotion of modern use of biomass for electricity generation, liquified petroleum gas (LPG) and biofuels. The Policy also supports the expansion of the generation and transmission capacity in line with the Power Systems Development Master Plan (PSDMP, 2010). The NEP 2008’s primary focus on sustainable energy is to increase the utilization of renewable energy sources by addressing the barriers to their wider deployment and adoption, promotion of efficient energy uses through energy conservation and substitution, promotion of cost reflective tariffs and developing Renewable Energy Feed-in Tariffs (REFiT), and development of an effective legislative and regulatory framework providing guidance to energy stakeholders. The Government has since developed a REFiT Policy (2016) and the REFiT Strategy and Regulatory Support Mechanisms (2016).
The SEforALL AA is furthermore the product of a broad consultation process. Consultations were conducted through five inter-sectoral Working Groups, which focused on:
1. Access to Electricity; 2. Access to Modern and Clean Energy for Cooking; 3. Developing Renewable Energies; 4. Improving Energy Efficiency; and 5. Enabling Environment (Regulatory Framework and Financing Mechanisms).
Key stakeholders will continue to be consulted periodically to ensure accountability and transparency throughout the country’s SEforALL implementation process.
The Action Agenda also builds on existing programmes/projects. These include: the programme on scaling up renewable energy for low income countries aimed at supporting innovative developers to scale up their green energy programmes; the Zambia South to South Project on Technology Transfer focusing on solar and small hydro; the Renewable Energy Resource Mapping Project aimed at mapping the resource potential of solar and wind energy resources; and the Scaling Solar Programme aimed at a higher uptake of solar technologies to reduce high dependence on hydro power and related climate change and hydrology risks.
The AA considers all key aspects of Zambia’s energy sector relevant to the SEforALL goals. It highlights key interventions that can meet multiple SEforALL goals and national development objectives, including nexus energy issues such as health, education, gender, agriculture and food security, clean water and climate change, as well as and addressing enabling environment and regulatory framework and financing mechanisms gaps.
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II. EXECUTIVE SUMMARY
Access to sustainable energy underpins national economic development goals, which extend far beyond the energy sector to include education, public health, access to clean water, food security, women and youth empowerment and climate change. The GRZ recognises this, and in 2016 the country opted into the SEforALL Initiative. Zambia’s Action Agenda (AA) is a strategy-driven document, which presents the long-term sector-wide vision towards the three goals of SEforALL, covering the period 2019-2030 to be implemented over two cycles: the first one being from 2019 – 20251 and the second one from 2026 – 2030. It outlines how Zambia will achieve its three inter-linked SEforALL objectives of 100% universal access to modern energy services, of diversifying the renewable energy mix by reducing the dependence on hydro from over 80% to 60% and increasing the contribution of other sources to 30% while maintaining the contribution of fossil fuel based resources at 10%2, and increasing the rate of energy efficiency by 2030. It also discusses nexus issues of food security, gender, health and poverty.
The Government of the Republic of Zambia (GRZ) developed this AA building on existing plans / programmes / strategies, embracing SEforALL’s guiding principles (see Annex 1) and following wide stakeholder consultation approach. The targets for 2030 presented in Table 1 below are set against a 2015 baseline.
Table 2: Baselines (2015) and 2030 targets for the SEforALL programme in Zambia SEforALL Sector Baseline Target Access to Electricity National: 31.4% Urban: 90% Urban: 67.3% Rural: 50.6% Rural: 4.4% (on-grid), 7.4% (off- grid) Access to Modern Clean National: 17% Urban: 100% Cooking Solution Urban: 38.5% Rural: 100% Rural: 2% Electricity Generation from Less than 2% 30%3 Renewable Energy (94% of installed capacity is from Diversification: Large Hydro 60%; PV large hydro) 14%; Thermal Fossil –diesel and coal 10%; small hydro 7%; Wind 5%; Biomass 3%; Geothermal 1% Energy Efficiency Energy Intensity: 11.84 Energy Intensity: 8.4 (MOE/Trillion (MOE/Trillion GDP in 2015 US$) GDP in 2015) in 2030 (-2.4%/year decrease in energy (-2%/year decrease over the 2019 - intensity) 2030 period)
1 The first cycle will stretch slightly over five years and overlap with the remainder of the 7th National Development Plan, 2017 - 2021. The effective implementation will be Q3 of 2019 after validation of both the AA and the IP in April 2019. The remainder of the year will be dedicated to planning and institutional establishment. 2 Based on the coal fired Maamba project and other operating heavy fluidised oil plants, and no further new investment is anticipated 3 Excluding large hydro
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For the purpose of the SEforALL Initiative, universal access to electricity services by 2030 has been targeted for the urban areas, and an objective of 51% in the rural areas has been set to account for the relatively low starting base, the historically slow progress in rural areas and the institutional and financing constraints to rural electrification in Zambia. Significant efforts, therefore, will be required to scaling up access to electricity services in the urban areas, and much more in the rural areas. For the rural areas, grid extension and decentralised solutions (mini grids relying on mini-hydro and solar PV, stand-alone solar systems (SHS) are the approaches that would need to be combined to meet the electricity access objectives.
To advance the targets laid out in the AA, the SEforALL Investment Prospectus (IP) compiles and presents projects and programmes expected to contribute directly towards Zambia’s Sustainable Energy for All goals. This includes studies of policy and regulatory gaps and options to catalyse and leverage private sector funding and innovation. The IP further highlights risks that could potentially derail effective implementation of projects and proposes concrete risk management measures.
The AA further proposes a set of high impact initiatives and strategies for addressing the specific gaps for each of the five (5) SEforALL Zambia thematic areas as follows: Access to electricity ▪ Accelerated development and strengthening of the national power grids, in particular of the distribution networks. ▪ Mobilisation of pre-investment and investment financing available to ZESCO and REA to develop bankable investments. ▪ Accelerated development of mini grids and individual systems (inc. solar-home systems, solar lanterns) adapted to the demands and the ability of end users to pay, while allowing for modular upgrading. ▪ Development and financing of an electricity access programme targeting health, education and water-pumping facilities. ▪ Development of financing mechanisms to provide credit and subsidies to households that cannot afford the upfront costs of access to electricity services, while also providing credit, subsidies, and risk mitigation options to project developers.
Access to modern and clean cooking solutions
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▪ Development of a comprehensive strategic plan and roadmap, as well as a comprehensive assessment of the charcoal value chain. ▪ Increase awareness and information on the benefits of switching to clean and modern cooking solutions. ▪ Technical and financial assistance to local manufacturers to improve the quality and energy efficiency of the improved wood and charcoal cookstoves. ▪ Assessment of alternative cooking options, such as biogas digesters ▪ Introduction of regulations for charcoal and technical and financial support to charcoal producers to shift to more efficient charcoaling kilns.
Doubling the share of renewable energy in the energy mix ▪ Development of a renewable energy strategy ▪ Assess required grid strengthening and development investments to increase the contribution of intermittent power (solar and wind in particular). ▪ Carry out prefeasibility and feasibility studies to build a bankable portfolio of micro-hydro, solar and wind projects for presentation to investors and financiers. ▪ Expand the approach used for the Scaling Solar Initiative to other solar projects, as well as to other renewable energy technologies such as also wind and geothermal. ▪ Provide partial risk mitigation for risks associated with the exploration and development of geothermal resources. ▪ Implement tariff adjustments to ensure cost-reflective electricity tariffs that improve projects’ financial viability, while protecting vulnerable groups.
Improving energy efficiency ▪ Prioritisation of low investment/low-cost measures. ▪ Promotion of awareness and demonstration programmes. ▪ Increase in electricity grid efficiencies. ▪ Increase the efficiency of the industrial, commercial and residential sectors. ▪ Establish minimum energy standards for electrical appliances for residential and commercial buildings.
In all areas it is important to design approaches that appropriately address the dual divide of the economy and the imbalance between urban and rural areas so that energy planning and financing are inclusive and far reaching. Furthermore, a more detailed assessment inventory of initiatives that contribute to the SEforALL targets and to nexus issues is required.
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1. INTRODUCTION
1.1 Country Background
1.1.1 Country Overview Zambia is a 752,614 square kilometre landlocked country located in Southern Africa on the great plateau of Central Africa. It shares borders with the Democratic Republic of Congo (DRC), Tanzania, Malawi, Mozambique, Namibia, Zimbabwe, Angola and Botswana (Annex 2). Most of the country is classified as humid subtropical or tropical wet and dry, with small stretches of semi-arid steppe climate in the southwest and along the Zambezi valley. Rainfall patterns are the key determinants of the type and distribution of eco-regions of the country, and vegetation is mainly made up of savannah woodlands and grassland.
The country is divided into ten administrative provinces namely Central, Copperbelt, Eastern, Luapula, Lusaka, Muchinga, Northern, North Western, Southern and Western. These provinces are further subdivided into districts. Zambia is a multi-party democracy with separation of powers across the three arms of Government: Executive (President and Cabinet); Judiciary (Courts of Law) and Legislature (Parliament). As a unitary state and constitutional democracy, Zambia acknowledges the supremacy of the Constitution in its governance and accedes to international conventions and agreements.
Central location in the region, abundance of natural resources and manpower, political stability since the abolition of price controls, interest rates and foreign exchange rates liberalisation, free repatriation of debt repayments and dividends; promotion and facilitation of both local and foreign direct investment (FDI) and membership to regional trading blocs which improve market access makes Zambia an appealing investment destination.
1.1.2 Socio-economic indicators Total population is projected to grow from 15 Mio. in 2014 to 17.9 Mio.4 in 2020 and to 23,576,21 4Mio. by 20305. The population in rural areas is expected to grow to 10.1 Mio. in 2020 and to 14.5 Mio. by 2035, while the population in urban areas is expected to grow from 7.8 Mio. in 2020 and to 12.4 Mio. by 2035. This upsurge in population will invariably result in increased demand for energy and service delivery. While it is the 30th largest country, Zambia is sparsely populated with just 23 people per square kilometre.
The Living Conditions Survey reports that 54.4% of the population is poor and classified 45.6% of the population as non-poor, with 40.8% and 13.6% categorised as extremely poor and moderately poor, respectively6. At least 41.2% of the population is unemployed, of which 42% are male and 56.1% are female. Youth unemployment stands at 48.6 % nationally.
4 World Population Review, 2019 reports that Zambia’s population has already surpassed the 17.9 Mio. mark 5 Central Statistical Office, 2017 6 Central Statistical Office, 2018
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The rural-urban divide, as well as the gender differentials in literacy rates, are also instructive of the foregoing trends: according to CSO (Zambia in Figures 2018) comparison of literacy rates by rural-urban and by gender between 2007 and 2013/14 shows that while literacy rates for both males and females in urban areas increased over that period (90% and 81% for males and females in urban areas in 2007 to 93% and 83%, respectively in 2013/14), that for males in rural areas declined from 75% in 2007 to 73% in 2013/14 while that for females increased from 51% in 2007 to 54% in 2013/14. Low rural women literacy rates can potentially affect the demand for clean energy and adoption of some of the off-grid solutions (OGS) services proposed under the SEforALL framework.
Zambia’s economy has been growing on average by 7.3% annually between 2000 and 2017 with real per capita growth of 4.2% (Figure 1). As the country’s economy continues to grow and the living standard improves, increasing demand for electricity adds pressure to the electricity supply. Macroeconomic performance improved in 2017 with the achievement of low and stable inflation, relative stability in the exchange rate and improved economic growth. Lending interest rates declined, but however, remained high. Inflation averaged 7.9% in 2018, up from an average of 6.2% in 20177. This was mainly driven by reduced supply of selected food items and the depreciation of the Zambian currency, the Kwacha (ZMW): US dollar exchange rate, and the increase in fuel pump price.
The National Vision 2030 document projects Zambia to transition from a lower middle- income country status in 2011 (World Bank classification) to a successful middle-income country by 2030. However, the country has to-date recorded major challenges of creating a positive link between high economic growth and productive employment creation that is critical for sustainable national poverty reduction.8
Figure 2: Gross Domestic Product Trends
Source: CIA World Factbook
The Kwacha is not pegged against any currency and is freely convertible. This is important in the context of private investors in the energy sector who will need unrestricted access to foreign currency financing to meet capital expenditure requirements, and payment for equipment importation and services, while
7 CSO; BOZ, 2019 8 Data from the Labour Force Surveys for 2005, 2008, 2012 and 2014 show that while the labour force increased by 44% from 4.1 Mio. in 2005 to 5.9 Mio. in 2014, the relative share of the formal and informal sectors in total employment almost remained static: the share of formal employment increased from 12% in 2005 to 16% in 2014; while that of the informal sector decreased slightly from 88% in 2005 to 84% in 2014. When these employment number is put in the context of the structure of GDP (i.e. the informal sector was estimated by CSO in 2010 to account for 34% of GDP and the formal sector had 66% share), the high-income inequalities between the two sectors becomes obvious. 2-
also having the flexibility to repatriate dividends. In 2017, the Kwacha appreciated by 7.5% against the USD, and on average appreciated by 6.9% in real terms against a basket of major trading partner currencies. The appreciation was a result of net supply of foreign exchange driven mainly by mining companies and inflows from non-resident investors in Government securities, as well as reduced aggregate demand due to a tight monetary policy stance.
The Ministry of Finance instituted the Economic Stabilisation and Growth Programme consisting of austerity policy measures to help curb fiscal debt accumulation to avert further country credit rating downgrade by the credit rating agencies9. Measures include fiscal consolidation, removal of subsidies, reform of the energy sector, and diversification of the economy through agricultural development and industrialisation. This has subsequently resulted in a revised rating from negative to positive with a stable outlook.
It remains important for Government to continue consolidating its fiscal position, exercise discipline as well as put in place cost reflective tariffs, harmonise the regulatory framework, streamline cumbersome procurement processes and strengthening institutional governance that are key for private sector investment into the energy sector.
1.1.3 Investment Climate Zambia is a private sector driven economy with no restrictions on the current and capital accounts to encourage investments flows across sectors. Further, the laws relating to investment have provided for various incentives aimed at encouraging private sector participation in the economy.
The country's central location in the region, abundance of natural resources and manpower, political stability, liberalised financial markets, which allow for free repatriation of dividends, as well as membership in regional economic markets give the country a competitive edge over other countries in the region.
Zambia is a member of several Regional Economic Communities (RECs), such as the Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community (SADC), with a combined population of over 500 Mio. The country enjoys duty and quota free market access into the United States (US) and to the European Union (EU); development of the capital market through the Lusaka Securities Exchange; and a thriving private sector, following privatisation of most of the previously state- owned enterprises, thus encouraging an entrepreneurial culture.
Government has continued to provide incentives to both domestic and foreign investors. The Zambia Development Agency (ZDA) Act of 200610 offers a wide range of incentives in the form of allowances, rebates, exemptions and concessions. The key drivers for investing in Zambia range from political stability,
9 In 2018 Moody’s Investors Service downgraded Zambia’s long-term issuer ratings from B3 to Caa19 but maintained a stable outlook (reflecting balanced risk) while Fitch maintained a B rating. 10 http://www.zda.org.zm/?q=download/file/fid/74 3-
market access, potential economic growth, ease of doing business, among other factors. The World Bank annual ratings report (2019) ranked Zambia 85 among 190 economies in the ease of doing business.
Furthermore, Government has instituted several policy initiatives aimed at fostering a conducive environment for investment and economic growth, such as the private sector development rapid results initiatives aimed at promoting business and economic growth, which assists the implementation of designed programmes such as the 7th National Development Plan.
Zambia’s net FDI inflows significantly improved, rising from USD 486.1 Mio. in 2016 to USD1,179.6 Mio. in 2017. This growth was spurred by increased investment in the mining and quarrying industry, after a rebound in commodity prices on the international market and improvements in electricity supply11. The ZDA mobilised USD 1 Billion investment into the green economy and mainly towards hydro power projects. This has been achieved through its investment promotion activities of showcasing Zambia as a preferred investment destination.
1.1.4 Financial Sector A well-capitalised banking sector is key to Zambia’s competitiveness on the global market to ensure effective resource mobilisation and capital formation, which is critical for the capital-intensive energy sector. Zambia has a relatively small but growing stable financial sector. The sector comprises banks and non-banking financial institutions (NBFI) and there is a steady growth of the sub-sectors such as microfinance, mobile banking, small- medium enterprise (SME) financing.
At the end of 2018, there were 18 commercial banks, eight of which were subsidiaries of foreign banks and another eight locally owned private banks. There were two partially state-owned banks and 122 NBFIs12 and these are regulated by the Bank of Zambia. There is also a growing presence of other financial service providers like savings and credit cooperative society (SACCO) and several informal rotating savings and credit groups that benefit the rural population and provide relatively cheaper credit, e.g. for procuring energy products.
The financial sector has a growing GDP contribution of 11.6%, coming third after wholesale and retail trade (23.6%) and mining and quarrying (13.4%).
FinScope 201513 reported a significant increase in national financial inclusion (59.3%) compared to 37.3% and 50% in 2009 and 2010 respectively. However, differentials were noted in the rural-urban divide, as well as the salaried vis-a-vis the informal economy operators. Adults in urban areas have higher rates of financial inclusion than their rural counterparts and the former tend to use (regulated) formal financial services, while the latter rely on (unregulated) informal financial services.
11 Bank of Zambia, 2018 12 Bank of Zambia, 2017 13 FSD Zambia, Finscope 2015 http://www.fsdzambia.org/wp-content/uploads/2016/05/FINSCOPE-REPORT-2015.pdf. When compared to other nine African countries FinScope 2015 data (p. 19), ranks Zambia 8th way below South Africa (1st); Uganda (2nd) and Zimbabwe (3rd).
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As a member of the SADC, Zambia is also pursuing regional financial integration to broaden and deepen financial links within the region through market-driven and institutionalised processes, while also focusing on reducing barriers to cross-border investments and harmonising legislation, policies and institutions.
1.2 Zambia’s Energy Sector
1.2.1 Overview of Zambia’s electricity supply industry (ESI) ZESCO dominates the power generation industry, which also consists of independent power producers (IPPs) who supply electricity to the national grid or generate for own consumption. OGSs are not widespread and have an insignificant contribution to the generation mix, which comprises hydropower (82.9%), coal (10.4%), solar (0.04%), diesel and heavy fuel oils (HFO), (3,8%).
In 2018, ZESCO owned four large hydro power plants; Kafue Gorge (990MW), Kariba North Bank (720MW), Kariba North Bank Extension (360MW), and Victoria Falls (108MW). Maamba Collieries Limited (MCL), Itezhi-Tezhi Power Corporation (ITPC) and Zengamina Power Limited (ZPL) are independent power producers with a combined capacity of 596.75MW (see Annex 5).
The Zambian power grid has five voltage levels: 330 kV (2,241 km), 220 kV (571 km), 132 kV (202 km), 88 kV (734 km) and 66 kV (1,037 km). Power transmission is dominated by ZESCO, who still enjoys a monopoly, and CEC, who has exclusive rights and ownership of part of the grid and supplies to the mining sector mostly in the Copperbelt region. The latter also has international wheeling rights within the Southern Africa Power Pool (SAPP). Zambia is centrally located for SAPP and key to regional interconnections, which reduce congestion. Electricity distribution has essentially remained a monopoly under ZESCO and North Western Energy Company operates a 33kV line.
1.2.2 Energy resources Zambia is well endowed with renewable energy resources particularly hydropower, solar and biomass; other resources that are undergoing assessment and monitoring, such as geothermal; agro-industrial biomass residues, geothermal and wind. Resource assessment data is also being updated and validated to improve accuracy to better to support policy interventions and project development. Geothermal exploration in the Kafue trough has been underway since 2010.
▪ Large Hydro
Zambia has a total hydro potential estimated at 6,000 MW, about 2,400 MW of which have been commissioned. Sites for new hydropower generation projects have been identified by ZESCO and will be undergoing further assessment. They include Mpata Gorge (540 MW), Devil’s Gorge (500 MW), Mumbotuta Falls (300 MW), Mambilima Falls Site I (202 MW), Mambilima Falls Site I (124 MW), Kabwelume Falls (62 MW), Kundabwika Falls (101 MW) Mutinondo (40 MW), Luchenene (30 MW) and Mkushi (65 MW).
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In February 2019, the Zambezi River Authority (ZRA) Council of Ministers shortlisted three developers for the Batoka Gorge Hydro Electric Scheme development, a 2 400MW trans-national project between Zambia and Zimbabwe. The project will be developed under a build-operate-transfer (BOT) financing model. Key project preparation documents are being finalised and award to the preferred developer is scheduled for September 2019.
▪ Small Hydro
There are plans by the private sector to develop additional off-grid projects at Chavuma (15MW), West Lunga (3MW) and Chitokoloki Mission (15MW). In addition, the Rural Electrification Authority (REA) is undertaking a feasibility study and detailed engineering design for a 3.5MW off-grid hydropower plant at Chikata Falls. Some feasibility studies were conducted almost 10 years ago and are now outdated after having failed to secure funding for implementation. They will need to be extensively reviewed in order to secure financial resources. ▪ Biomass
A 2016 assessment of the bioenergy potential from crop and forest residues, livestock waste, semi-arid areas energy crops, municipal solid waste (MSW) and water hyacinth in Zambia estimates a total technical bioenergy potential of about 310PJ per annum. Crop residues contribute 64%, forest residues 17%, livestock waste 9%, jatropha cultivation in semi-arid land 8% and 2% from MSW and water hyacinth. Zambia has approximately 50 million hectares of forest, however, the country has a high deforestation rate, estimated at 250,000 to 300,000 hectares per year14. The Nakambala Sugar factory generates almost 40 MW of electricity from bagasse for own-consumption. The factory consumes 13 MW, 23 MW are used for irrigation, while the balance is fed to the national grid. Similarly, Consolidated Farming Limited operates a 24 MW bagasse fired combined heat and power captive facility in the Nampundwe area, which provides electricity and heat to sugar mill operations. The Ministry of Energy is undertaking a Bioenergy and Food Security Assessment and capacity building in collaboration with the Food and Agriculture Organisation (FAO). ▪ Solar Energy
Zambia has an average solar insolation of 5.5 kWh/m2/day with approximately 3,000 sunshine hours annually providing good potential for photovoltaic and solar thermal applications (including electricity generation, solar home systems, solar water pumping, solar water heating, etc.)15. A preliminary evaluation of the solar energy potential was carried out by the International Renewable Energy Agency (IRENA)16, and further by the Energy Sector Management Assistance Programme (ESMAP) Solar Renewable Energy Resource Mapping and Geospatial Planning study17, over two years. The results of the solar resource mapping program were incorporated into the Global Solar Atlas18, which provides readily
14 http://mptf.undp.org/factsheet/project/00074834 (Multi Partner Trust Fund Office – UNDP). 15 Singh et al., 2013) 16 IRENA (2013), Zambia Renewables Readiness Assessment 3 17 World Bank (2014). The eight identified sites are University of Zambia School of Agricultural Sciences, Chilanga, Kabwe, Nanga, Mochipapa, Msekera, Longe, Misamfu, Mansa, Copperbelt and Mutanda. 18 https://globalsolaratlas.info/ 6-
available access to solar resource data, an aspect that reduces uncertainty about the resource and reduce financial and technical risk for developers during implementation of photovoltaic solar projects. The results have also informed the formulation of the Scaling Solar program. In 2013, REA developed a 60kW solar mini grid in Samfya District (Luapula Province), which provides electricity to a school, rural health centre and 480 households. REA also implemented Phase I of the Sustainable Solar Market Packages Programme in 2016. The programme involved procurement, installation; commissioning and provision of maintenance services for Solar Home Systems (SHS) and electrification of public institutions and 700 installations in the Northern, Southern and Western Provinces. Two PV projects with a combined capacity of 100MW were auctioned under the IFC / World Bank support of the Scaling Solar Programme (2016). NEOEN S.A.S. / First Solar Inc (54MW) and Enel Green Power S.p.A. (28.2MW) emerged as the preferred independent power producers (IPP) bidders. The NEOEN S.A.S. / First Solar farm was commissioned in March 2019 and is producing power at a tariff of US¢ 6.02 / kWh while the Enel Green Power, which will be commissioned by the end of 2019, will provide power for US¢ 7.84 / kWh fixed for 25 years.
▪ Geothermal Reconnaissance studies carried out in the 1970s19 identified about 80 hot and mineralised springs in Zambia. There is currently only one small geothermal generation plant in the country (2 x 120kW), which was developed under an Italian Government initiative in 1987 and is located at the Kapisya hot springs. Recent estimates indicate that the plant can be upgraded to produce 2MW of electricity. Efforts are underway by ZESCO to revive and expand the plant, pending the construction of a 22 km access road by Government20.
Kalahari GeoEnergy Ltd, a private company has been involved in geothermal research, exploration and drilling since 2010 to estimate the number of commercially viable geothermal sites. The company is currently working on the feasibility study of a 10-20MW power plant, as part of the first phase to demonstrate commercial feasibility of geothermal power. Based on the exploration program by Kalahari GeoEnergy, it has been estimated that the Kafue trough, which stretches over an area of 14,000 km2, may have enough resources for as much as 1,000MW21.
More work, however, is required for a comprehensive resource assessment to guide policy formulation for geothermal development and technical capacity for design, construction and operation of geothermal facilities, as well as the development of risk mitigation strategies and instruments. At sub-regional level, a geothermal risk mitigation facility (the GRMF) is operational and supporting Ethiopia, Kenya, Rwanda, Tanzania and Uganda geothermal strategies and roadmaps,22 and collaboration with the GRMF could significantly benefit development efforts in Zambia.
19 Vivian-Nea (2014), Exploration for Sedimentary Basin Hosted Low-Enthalpy Geothermal Systems in Zambia, Proceedings of the 5th African Rift Geothermal Conference, 20 Silwamba, et. al, 2017. 21 http://www.thinkgeoenergy.com, Mike Krahmer, (2014) 22 http://www.grmf-eastafrica.org/about. 7-
A sustainable tariff to sufficiently de-risk the project and balance with the returns is under discussion with the relevant GRZ steering committee.
▪ Wind Energy
Wind speeds in Zambia average 3 m/s at a height of 10m above ground, and such speed is only suitable for mechanical applications. However, indications are that higher speeds may be available at heights between 70-100m. ESMAP has produced wind atlases and an interim report covering the period November 2016 to December 2018. The results of the two-year wind resource study have indicated measurements for eight identified sites averaging between 5.6 m/s and 6.5 m/s at a height of 80 metres23, and further monitoring of the resource is ongoing.
Access Infra Africa, a private company has also been undertaking wind feasibility studies as part of its plans to develop the Pensulo Wind power project in the Central province.
▪ Municipal Solid Waste (MSW)
It is estimated that Lusaka City alone generates almost 600 tons of waste daily24, and the volume could increase through more effective waste collection and management services to include informal settlements. An MSW resource assessment and waste characterisation study are necessary to assess the technical and economic feasibility of exploiting energy from landfill sites. A NAMA on integrated waste management has been developed. A summary of the availability and utilization of renewable energy resources (other than large hydro) in Zambia is provided in Table 3. Table 4: Summary of the Availability and Utilization of Renewable Energy Resources in Zambia Renewable Opportunities /Use Resource Potential Energy Output Energy Availability Solar Thermal (water heating), 6-8 sunshine hours 5.5 kWh/m2/day (modest electricity (water pumping, potential especially for lighting, refrigeration) limited irrigation) Wind Electricity, mechanical Average 3 m/s at Modest potential, especially (water pumping) 10 m height for irrigation Mini hydro Small grids for electricity Reasonably extensive Quantification underway supply Biomass Electricity generation Agro wastes, forest wastes, Assessment of potential (combustion and sawmill wastes ongoing gasification) Biomass Electricity generation, Animal waste, agro-and Assessment of potential (bio-digestion) heating and cooking industrial waste, ongoing wastewater Biomass Ethanol and biodiesel for Sugarcane, sweet sorghum, Assessment of production (biofuels) transport and stationary jatropha potential ongoing 150 km2 engines
23 World Bank 2018 24 Ghimire, SNV, Energy from Wastes (EfW) in Cities and Town: A Viable Business Case for Lusaka City 8-
of agricultural land to meet current demand Biomass Improved charcoal Sawmill waste and Reasonably extensive, but (household production, improved cook indigenous trees from assessments of production energy) stoves sustainable forest underway management Geothermal Electricity generation Hot springs Requires elaboration and quantification Source: MOE, 2019
The installed renewable energy capacity for Zambia and SADC by technology as of mid-2018 is presented in Table 5. Zambia’s renewable energy contribution is still dominated by (large) hydro, and apart from hydro and biomass which registered 16% and 8% of the regional capacity respectively, contribution from other technologies remains insignificant and largely unexploited.
Table 6: Installed Renewable Energy Capacity by Technology in Zambia and SADC Region as of mid-2018 Countr Renewable energy technology capacity contribution (MW) Total Total Change y & Biomass/ Other Hydro Onshore Solar Solar 2018 2015 2015/2018 region waste bioenergy power26 wind PV CSP (MW) (MW) (MW) 25 Zambia 43.0 - 2,552.8 - 2.0 - 2.597.8 2,302.0 295.8 SADC 515.3 23.4 15,996.2 2,122 2,502.8 600.0 21,759.7 14,468 6,901.7 Source: SADC-SACREEE, 2018
1.2.3 Institutional, policy, legal and regulatory (IPLR) framework As a member of the SADC, Zambia is automatically a member of SAPP, the Southern Africa Centre for Renewable Energy and Energy Efficiency (SACREEE) and the Regional Electricity Regulators Association of Southern Africa (RERA). The country benefits from regional energy integration and the harmonization of regulatory policies, legislation, standards and other best practice initiatives and institutional frameworks to create a conducive environment to accelerate sustainable transformation and modernization of the energy sector. As such, the governing legislations and regulations for Zambia’s energy sector are guided by and are aligned to regional frameworks.
The key legal and regulatory framework that directly supports the development and operations of the energy sector include Energy Regulations Act (1995), Rural Electrification Act No. 20 (2003), Statutory Instrument (SI) No. 79 (2013), Grid Code Technical Committee (GCTC), SI 79 (2013), Zambezi River Authority Act Chapter 467 and the Petroleum (Exploration and Production) Act No. 10 of 2008 are presented in Annex 3 along with other institutional legislation that supports investment promotion into the energy sector.
The comprehensiveness and competitiveness of Zambia’s legal and regulatory environment is consistent with World Bank annual ratings report (2019). It follows, therefore, that the major challenge facing
25 Other bioenergy may refer to landfill gas or other technologies, depending on the country. 26all hydropower (large or small) is considered as renewable energy in the SADC / SACREEE Report. However, under SEforALL, the size of mini hydro is lower than 30MW.
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Zambia’s policy level is not necessarily the lack of appropriate legal framework but rather that of weak implementation capacity.
The Government is aware of this shortcoming and is committed to prioritising institutional reforms and streamlining processes and procedures and capacity building programmes to improve policy delivery that will narrow the gap between policy and statutory pronouncements and the actual implementation of sustainable energy and electrification programmes on the ground. Under the 7NDP implementation approach, Zambia is implementing institutional reforms to move away from individual institution and/or sector to a cluster approach of implementing national development programmes. In that regard, the Government has already begun to reform the planning and budgeting system by drafting bills for tabling in parliament to give effect to such reforms.
The main policies for promoting investment in the sector include the National Energy Policy (NEP 2008)27, the Renewable Energy Feed-in-Tariff (REFiT) Strategy (2017) and Regulatory Support Mechanisms (2016).
The NEP is currently being reviewed and updated to sufficiently provide for the fast-evolving (renewable) energy sector. The revised policy will be finalised by the end of 2019 and it is expected to provide a new guiding framework that will include, among other things, the following elements:
1. Diversification of the energy mix through the use of renewable energy, to reduce the risks of over reliance on large hydro (which in 2018 constituted about 82.9% of installed capacity);
2. Creation of the conditions to ensure availability of adequate supply of energy from various sources, that are dependable and at financially sustainable, least cost economic, social and environmental costs consistent with the national development goals;
3. Biomass: Promotion of modern use of biomass for electricity generation, LPG and biofuels; putting in place a biofuels framework and appropriate blending proportions, such as ethanol 10% and biodiesel 5%;
4. Electricity: Expanding generation and transmission capacity in line with the least-cost PSDMP to generate 4,337MW by 203028; increasing access to electricity in line with the Rural Electrification Master Plan (REMP, 2008) to 66% countrywide, (91% in urban areas and 51% in rural areas) by 2030 in line with the National Vision 2030 projections;
5. Petroleum products: Provision of adequate, reliable and affordable supply of petroleum products at competitive and fair prices and reduction of importation costs, as well as applying Uniform Petroleum Pricing (UPP) implemented and development of Strategic Petroleum Depots (SPD);
6. Coal: Increasing the contribution of climate change compliant coal power generation technologies to diversify and ensure electricity generation security as demonstrated by the recent commissioning of the 300MW Maamba Coal Fired Power plant. In view of Zambia’s recent climate change induced hydro
27 The 2008 National Energy Policy’s review and update process is receiving support under the European Union’s 11th EDF Project that commence in the first quarter of 2018. The Policy that has been in existence for almost a decade requires some urgent attention to respond to the changed situation and structure of the energy sector in the country. 28 PSDMP, 2010 10-
electricity shortages, it is imperative that clean coal be part of the generation mix with a target of 1,000 MW coal fired power stations from the Zambezi valley. The contribution of coal is not projected to increase beyond this and will progressively be substituted by biofuels and biomass;
7. Renewable energy sources (RES): Increasing the utilization of RES by addressing the barriers to their wider deployment and adoption; development of a Renewable Energy Strategy supporting the development of the geothermal resources; and carrying solar and wind resource mapping studies;
8. Energy Efficiency/Energy Management: Promoting efficient energy uses through energy conservation and substitution; putting in place a committee on lighting standards; enacting Statutory Instruments offering tax waivers on energy efficient equipment;
9. Energy pricing: Promoting cost reflective tariffs; developing REFiT to strike a balance between investor risk-return considerations and the capacity of the customers to pay for the electricity; and
10. Legal and Institutional Framework: Developing an effective legislative and regulatory framework providing guidance to energy stakeholders; review of the Electricity Act and Energy Regulation Act of 2003; Enacting a Grid Code establishing technical requirements for the connection and use of an electrical transmission system by parties other than the owning electricity utility.
Key players in Zambia’s energy sector institutional framework include government institutions; quasi- governmental institutions; private sector; CSOs; financial institutions and cooperating partners. Key Ministries are the Ministry of Energy (MOE), Ministry of Finance (MOF), and the Ministry of National Development Planning (MNDP). Quasi government institutions that have the mandate to implement national energy programmes are REA and ZESCO. The ERB regulates operations in the sector while Zambia Environmental Management Agency (ZEMA) and the Zambezi River Authority (ZRA) are among other functions responsible for licensing and permitting.
The Office for Promoting Private Power Investments (OPPPI) and Zambia Development Agency (ZDA) have the strategic role of facilitating and mobilising investment into infrastructure development, and energy is among the key priority sectors. The Industrial Development Corporation (IDC) and other financial institutions, such as commercial banks, could play an increasingly leading role in mobilising private sector investment and to some extent transaction advisory for energy projects. However, their capacity to finance and execute large energy projects is limited. It is important that they are involved in syndication project financing structures with other regional banks with more capacity, multilateral and regional development finance institutions.
Cooperating Partners primarily have a dual role of funding and providing technical assistance for projects, programmes and activities to complement Zambia’s initiatives. They include the World Bank Group (World Bank and International Finance Corporation (IFC)), the EU, AfDB, Kreditanstalt für Wiederaufbau - German Development Bank (KfW) and the United States Agency for International Development (USAID) among others, and their roles are discussed further in subsequent sections. The private sector includes developers / IPPs and other private companies who are increasingly becoming involved in providing
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innovative solutions and financing to energy projects. Key players in the energy sector and their roles are summarised in Annex 4.
Energy Policy and Strategies The Government has policies, strategies, programmes/ projects and plans which are delineated in various initiatives and documents that have been validated or are under development. Annex 2 provides details on existing programmes/projects of relevance to Zambia’s SEforALL Initiative.
The REFiT Strategy aims to harness Zambia’s renewable energy potential to drive economic growth and reduce poverty by providing a dedicated policy framework for expanded renewable energy uptake through private sector participation and contribute to the creation of a diversified energy mix for increased national energy security. The REFiT strategy and regulatory support mechanisms include standardised Power Purchase Agreements (PPAs) and regulatory tools such as permitting and licensing frameworks and procedures; REFiT rules; REFiT Guidelines; Model Grid Connection Agreements; Grid Connection Guidelines; and Model Generation Licences.
The Zambian Global Energy Transfer Feed in Tariffs (GET FiT) was adopted and launched by the Ministry of Energy in 2017 and the REFiT Strategy was subsequently launched. The programme aims to improve the investment framework for renewable energy through diversifying energy resources and promoting private sector involvement in small and medium-sized renewable energy projects, targeting projects with a maximum capacity size of 20MW.
A total of 200MW are being procured over a three to five-year time horizon with 100MW 29 each allocated to solar PV and mini hydro projects under support from the KfW. In April 2019 six winning bids were awarded to:
▪ Bulemu East and West two projects of 20MW at a tariff of US¢ 3.999/kWh ▪ Aurora Sola One and with two projects of 20MW each for US¢ 4.52/kWh ▪ Garneton North and South Solar with 20MW each at US¢ 4.80/kWh
The tariffs were more competitive than the Scaling Solar Programme, and the projects will contribute further to the goal of access to energy by generating an estimated 360GWh in the first year of production. All the projects will be developed under joint ventures of reputable solar companies and will generate alternate current. They will provide capacity building as part of their contribution to the local content component of the programme.
The National Climate Change Policy (2017) aims to address the adverse effects of climate change on the economy, and related reduction of the country’s annual economic growth in different sectors. It gives special consideration to vulnerable groups such as poor rural women, children and the youth in Zambia.
According to a UNFCCC Report from 2012, Zambia ranked 124 (out of 179 countries) in terms of CO2 emissions with a small share of 0.01% of global emissions30. Zambia submitted its Nationally Determined
29 Two consortia were awarded ‘reserve’ status of 40MW each in the event of any of the awarded developers being unable to either meet pre-established timeframes and/or meet compliance requirements. 30 UNFCCC, 2012 12-
Contribution (NDC) and signed the Paris Agreement on Climate Change in 2015. Zambia committed to maintaining a low carbon pathway to avoid an increase in CO2 equivalent emissions. Programmes will be implemented in various sectors and these include energy, forestry, agriculture, water, rural and urban planning, sanitation and transport. The NAMA provides space for diversifying the energy mix as renewable energy development constitutes part of the mitigation strategies.
The National Policy on Environment (NPE) (2009) was developed with the objective of harmonising different sectoral development strategies, rationalise legislation concerning the use and management of land, and attain an integrated approach to environmentally sustainable development. The NPE was designed to create a comprehensive framework for effective natural resource utilisation and environmental conservation. It supports biomass production as well as nexus issues, however, the use of standardised efficient improved charcoal cookstoves (ICS) is a key consideration.
Decentralisation Policy (2002) provides for citizenry to exercise control over its local affairs and foster meaningful development through some degree of decentralisation of authority to provincial, district and sub-district levels as well as Councils. It is guided by the principles of de-concentration, delegation, devolution and privatisation by open, predictable and transparent policy making and implementation processes at all levels of the public service. Effective local community participation in decision-making and development administration with emphasis on sufficient linkages between central and local government ensures inclusivity and full representation.
The National Water Policy (1994) contains seven principles governing the state's water and sanitation sector; separation of water resources management from water supply and sanitation; separation of regulatory and executive functions; devolution of authority to local authorities and private enterprises; achievement of full cost recovery for the water supply and sanitation services in the long-run; human resources development leading to more effective institutions; the use of technologies more appropriate to local conditions; and increased budget spending to the sector.
Gender Policy (2014) ensuring the attainment of gender equality in the development process by redressing the existing gender imbalances. It also provides for equal opportunities for women and men to actively participate and contribute to their fullest ability and equitably benefit from national development. The main strategies supporting the energy sector include:
▪ National Vision 2030: provides Zambia’s developmental aspirations up to 2030 and provides a framework and context for the other strategic documents listed below that underpin the Vision 2030 objective of transforming and sustaining Zambia as a prosperous middle-income country. It is widely recognised that the strategic repositioning of the electricity infrastructure and related policy measures and actions to increase the supply of affordable energy services nationally are critical for the attainment of 2030 development objectives.
▪ National REDD+ Strategy of 2015: anchored on sustainable management and utilisation of Zambia’s natural resources towards improved forest and land management. The strategy is intended to ensure equitable sharing of both carbon and non-carbon benefits among
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stakeholders, in order to realise a prosperous climate change resilient economy by 2030 and will implement measures and actions to address deforestation and forest degradation. Two of its 10 strategic objectives relate to the production and utilisation of wood fuel (charcoal and firewood) and the adoption of appropriate and affordable alternative energy sources by 2020.
▪ Nationally Determined Contribution (NDC) to provide to the 2015 Paris Agreement on Climate Change: Under the NDCs Zambia committed to switch from diesel/heavy fuel oil (HFO) to biodiesel and from coal to biomass, as well as from existing isolated diesel generators to mini-hydro where possible. Blending of biofuels with fossil fuels is foreseen and there is commitment to expanding off-grid renewable energy to non-electrified rural areas by deploying addition solar photovoltaic and wind technologies, supported by grid expansion.
Zambia’s NAMAs include i) Integrated waste management; ii) Green urban mobility solution for Zambian city integrated tramway; iii) Sustainable agriculture through integrated crop and livestock farming; iv) Increasing efficiency in harvesting, processing and use of charcoal; and v) small hydro projects development.
The following plans are geared towards supporting policy implementation and operationalization of the strategies outlined above: ▪ Zambia Power System Development Master Plan (PSDMP) of 2010 prioritises least cost power generation, transmission and distribution plans for socio-economic development of Zambia. Priority power generation projects are expected to contribute 4,337MW to the national grid at an estimated cost of USD12.1 billion, USD9.5 billion of which are allocated for large scale thermal and hydro generation projects, USD2.3 billion for transmission and USD179.7 Mio for distribution projects over the 2010 to 2030 investment horizon. Kariba North Bank was commissioned in 2013, while Itezhi-tezhi and Maamba were commissioned in 2016. Kafue Gorge and Lusiwasi Lower and Upper are scheduled for completion in 2020. Most of the projects in the PSDMP remain unimplemented due to ZESCO’s inability to mobilise private sector funding.
▪ Rural Electrification Master Plan (REMP) of 2008 provides a systematic rolling implementation plan for rural electrification projects to increase rural electricity access rate from 3.1% in 2006 to 51% by 2030. The plan identified 1,217 Rural Growth Centres (RGCs) as targets for electrification over the period 2008 to 2030. The total investment requirement for the plan is estimated at USD 1.1 billion translating to an equivalent of USD 50million annually. Projects and technologies to be deployed include mini hydro (from 200kW to 10MW) solar mini grids, solar home system biomass and biogas and wind.
Since 2006, REA has implemented a number of rural electrification projects to supply electricity to rural communities. The plan was developed before the SEforALL and alignment would be important.
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Additionally, various initiatives and programmes relevant to the goals of the SEforALL Initiative are being implemented, as summarised below and detailed in Annex 2.
Table 7: Energy policies / strategies and SEforALL objectives Focus area SEforALL Policy / strategy objective addressed* The Increased Access to Electricity and increase access to clean, reliable, more Goals 1-3 Renewable Energy Production equitable and affordable energy, promote (IAEREP) project (2016 -2022) renewable energy production and energy efficiency The Beyond-the-Grid initiative (2017 – accelerating off-grid renewable energy Goal 1 and 202131 electricity access to at least one million nexus issues Zambians by 2021 targeting rural and peri- urban areas China-Zambia South-South Technology support improved access to electricity for Goal2 Transfer Project (2014 – 2018) rural communities The Renewable energy resource mapping of solar and wind resource Goal 2 mapping project (2016 – 2018) potential The Scaling-up Renewable Energy Plan energy access in rural and peri-urban areas; Goal 2 (SREP), 2017 – 2018 wind power promotion; and geothermal development projects The Electricity Services Access Program increasing electricity access to Zambia’s Goal 1 and 2 (ESAP), (2017 – 2022) rural areas on and off grid connections The Bioenergy and Food Security develop an action plan for the development Goal 1, 2 and (BEFS) Assessment (2018 – 2020) of the bioenergy subsector nexus issues Energy for Agriculture (2015 – 2019) increase households’ access to clean Goal 1 and 3 cooking energy solutions and improving and nexus livelihoods through increased fuel savings issues and income generation. The Forest Regeneration Project (2017 regeneration of forests by reducing Goal 1 – 2020) charcoal production, production and use of fixed stoves and improved cook stoves *Legend: Goal 1: ensuring universal access to modern energy services; Goal 2: doubling the share of renewable energy in the global energy mix; Goal 3: doubling the global rate of improvement in energy efficiency
The programmes and initiatives being implemented by the Cooperating Partners are in alignment with the SEforALL objectives. OGS are progressively becoming important contributors to improving quality of life and they bring electricity access relatively faster and more cost-effectively to rural communities. Some of the innovations depend on mobile phone coverage, connectivity and data costs and it is important that they are kept within the reach of the poor rural communities to avoid countering the objective of access. The MOE and other inter-ministerial policy makers and experts should intensify collaboration on effective policy initiatives to support investment and upscaling especially in rural areas.
31 Annex 6, Box 1 15-
Clear goals and strategies, technical and managerial competencies, and improved coordination and information sharing and management amongst government agencies, project sponsors / developers and other key stakeholders will underpin the success and added value of the various programmes outlined above and the ultimate attainment of development national goals.
At Regional level, the various SADC policies, plans and instruments seek to harmonise national and regional policies and regulatory frameworks to coordinate and collaborate in energy development and trading to exploit the region’s vast energy potential.
Furthermore, SACREEE was established by the SADC Member States in 2015 to contribute towards increased access to modern energy services and improved energy security across the SADC Region through the promotion of market-based uptake of renewable energy (RE) and energy efficient (EE) technologies and energy services.32
Table 8: Supporting Regional policies and plans Policy / plan / programme / Provision and objectives initiative SADC Regional Energy Access The REASAP is fully operational. Its first operational stage expires in Strategy and Action Plan 2020 and has two broad goals for energy access for the region: i) (REASAP), 2010 strategically harness regional energy resources to ensure, through national and regional action, that all the citizens of the SADC region have access to reliable, least-cost, environmentally sustainable energy services; and ii) halve the proportion of people without access within 10 years for each end-use and to reduce by half again in successive five- year periods until universal access for all end-users is achieved. Regional Infrastructure The RIDMP is the Infrastructure Development Blueprint for the SADC Development Master Plan region and is aligned to the Programme for Infrastructure Development and Energy Sector Plan in Africa, as well as the COMESA-EAC-SADC Inter-Regional (RIDMP), 2012 Infrastructure Master Plan. It sets the foundation for the development of the African Economic Community, guides development in key infrastructure sectors and acts as a framework for planning and cooperation with cooperating partners and the private sector. The master plan will be implemented over three five-year intervals; short term (2012-2017), medium term (2017-2022) and long term (2022- 2027) in line with the SADC Vision 2027 and the African Union's Programme for Infrastructure Development in Africa (PIDA). SAPP Regional Generation Identifies several major transmission investments with major benefits and Transmission Expansion to the region including projects to link non-operating members of SAPP Plan Study (2009) (the Zambia-Tanzania and Mozambique-Malawi interconnections), reduce congestion (Kafue–Livingston Upgrade in Zambia), or related to generation projects (for example, the Mozambique Transmission Backbone System Project). SAPP is receiving technical assistance and
32 See http://www.sacreee.org/content/objectives-and-mandate on the objectives and mandate of SADC- SACREEE. 16-
grant funding from the World Bank and other development finance institutions (DFIs) to undertake related studies. Over the Action Agenda period up to 2030, Zambia expects to build on SADC regional energy projects and initiatives – especially given the country’s strategic location in the region and important role in the SAPP Generation and Transmission Network and Day Ahead Market (DAM) electricity trading systems.
Other regional institutions governing the energy sector, which Zambia has ratified, include the:
Protocol on Energy acknowledges the importance of energy in pursuit of the vision of SADC of economic well-being and poverty eradication in Southern Africa and need for Member States to cooperate on energy development, harmonising policies, strategies, and procedures throughout the region. It also advises that these policies ensure the security, reliability, and sustainability of the energy supply, as well as cooperate on research and development of low-cost energy sources applicable to Southern Africa.
Southern Africa Power Pool facilitates the development of safe, efficient, reliable and stable interconnected electrical systems in the southern African region, while coordinating and enforcing common regional standards of quality of supply, measurement and monitoring of systems performance; harmonising relationships between member utilities; facilitating the development of regional expertise through training programmes and research; increasing power accessibility in rural communities; and implementing strategies in support of sustainable development priorities. The focus is on reducing costs and creating a competitive common market for electricity in the region.
Regional Electricity Regulatory Association of Southern Africa (RERA) harmonises regulatory policies, legislation, standards and procedures, as well as effective cooperation among the Member States. RERA is developing guidelines for cross-border electricity trading and investment in this sector among member states and this sets the framework for their respective national regulators.
Zambezi River Authority (ZRA) is an interstate organisation between Zambia and Zimbabwe responsible for effectively managing, improving and intensifying the utilisation of the river; including the production of energy and economic, industrial and social development from the natural advantages offered by the river for the benefit of the citizens of the two countries.
All policies, strategies, plans and programmes contribute to the SEforALL goals. Although some of them are outdated, their objectives and principles remain relevant.
1.2.4 The power sector Key data on Zambia’s power sector are provided in Table 9.
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Table 10: Key power sector data Indicator33 Value Electricity Generation Sources (2018) Hydroelectricity: 82.93% Peak Electricity Demand (2015) (*) 2,616MW Installed Power Capacity (2018) 2,891.91MW Total electricity generation sent out (ZESCO and IPPs) 7,859.07 GWh National electricity consumption 6,313.45 GWh Electricity Access (2015): Nationwide 31.4% Urban 67.7% Rural 4.4% Grid Connected, 7.4% Off-Grid Electricity Consumption (2018) Mines: 51.67% Residential: 33% Transmission and distribution technical losses (2018) 18-20% Number of electricity Customers served by ZESCO (2018) 911,798 Average retail electricity tariff (June 2018) USc 6.33/kWh (June 2018: Tariff increase of 50%) * Estimated demand includes estimates of load shed. Source: ERB, 2019
Electricity generation is heavily dependent on large hydroelectric plants, which account for 82.93% of total installed generation capacity in 2018 and estimated to decrease to about 77% by 202034. The remainder of the generation capacity consists of a mix of coal (10%); HFO (4%); diesel (3%); and solar (less than 0.1%)
Electricity generation has been growing steadily over the period 2013 to 2017. In 2015 and 2016, low rainfall put Zambia’s hydropower generation under strain and created a significant gap between demand and supply and caused serious and costly load shedding. The sector has since recovered, and Zambia emerged to be a surplus power generator and a net exporter of electricity. The national installed capacity increased by 2.5% from 2,826.91 MW in 2016 to 2,897.21 MW in 2018 (see Table 11), against demand of 2,100MW, thus creating excess capacity of almost 200MW for export. The growth in 2018 was mainly due to the expansion of the Ndola Energy HFO power plant by an additional 60 MW and a Musonda Falls power station upgrade to 10 MW as well as other new generation and transmission infrastructure projects.
Generation sent out rose from a low of 13,299 GWh in 2013 to 15,195 GWh in 2017, which represents a 14.3% increase. ZESCO’s large hydro power plants increased their energy sent out by 10.6% from 10,244 GWh in 2016 to 11,334 GWh in 2017. Energy sent out from small and mini hydro plants owned by ZESCO declined following the decommissioning of some diesel plants in North-Western Province. Luangwa, Lukulu and Zambezi recorded the highest generation of 3.3 GWh, 1.9 GWh and 1.1 GWh respectively. Generation from the four IPPs Maamba Collieries Limited (MCL), Itezhi-Tezhi Power Corporation (ITPC), Lunsemfwa and Ndola Energy Company Limited jointly contributed 305.0 GWh.
33 All 2018 data are half year covering January to June 2018 34 http://www.zesco.co.zm/projects/generation 18-
Plans for the launch of the 2,400MW Batoka Gorge Hydro Electric Power Scheme are at an advanced stage. The Kafue Gorge Lower (KGL) project is expected to steadily produce 750MW. As various projects that are underway are completed, they will see new renewable generation capacity coming on stream from IPPs, ZESCO and the REA. Against this background, Zambia’s electricity generation capacity surplus position is expected to persist in the medium to long term and the completion of some of the transmission development and reinforcement projects will secure the country’s position as a long-term net exporter of electricity.
1.2.5 The process heat sector
In 2013, biomass energy covered about 73% of the country energy needs35. Industries, agro-processing, cottage industries, commercial activities and charcoal production use significant quantities of wood fuel and biomass residues.
About 98% of Zambia’s rural population uses firewood for cooking and 65% of the urban population uses charcoal for cooking. Unsustainable logging to produce wood fuel and charcoal and woodland conversion to agriculture are the main causes of deforestation in the country, causing land degradation and destruction of major water catchment areas and carbon sinks36. Charcoal consumption is increasing rapidly driven by urbanisation, its availability, relative easiness to use and relative low cost. Charcoal production is however very energy inefficient.
The energy efficiency of traditional cookstoves is also very low (estimated at 10-15%). Zambia’s market for cookstoves is not well developed; it is fragmented and dominated by the informal sector with no enforcement of minimum energy efficiency or quality standards. A scale-up in the production and distribution of ICS is therefore a priority as it would yield large economic and social (mostly health) benefits. Substitution of charcoal and fire wood by other fuels (biomass pellets, briquettes, LPG and biogas), as well as the introduction of more energy efficient charcoal production techniques are also a priority.
1.2.6 Energy efficiency
While there is no comprehensive energy efficiency strategy and roadmap, nor specialised energy efficiency institutions, the government is seeking to improve energy efficiency in various ways. This includes the banning of the importation and manufacturing of incandescent lamps in 2015, the distribution of CFL lamps, the introduction of a power factor penalty and pilot projects for the deployment of water heaters.
Transmission and distribution network power losses decreased considerably from between 18-20% in 201637 to an annual average of 5.5% in transmission losses, and annual average distribution losses of
35 Singh et al., 2013. 36 Matakala et al., 2015 37 ERB, 2016 19-
11.25%38. Reducing technical and non-technical transmission and distribution losses remains an important area for the Government and for ZESCO, who benefits from power savings, which can potentially translate to deferred capital investment in new generation capacity.
The implementation of energy efficiency measures, such as raising awareness about the benefits of increasing energy efficiency, has, however, been hampered by the low electricity tariffs, which are significantly below the costs of producing, transporting and distributing electricity39. The Government has reiterated its commitment to the principle of cost reflective tariffs. In May 2017, the Energy Regulations Board (ERB) approved a 75% electricity tariff increase for ZESCO, which was implemented in two phases of 50% and 25% effective May 2017 and September 2017, respectively. An increase in the average tariff across companies in the mining sector was approved, resulting in tariffs increasing from below USD0.06/kWh to USD0.093/kWh, effectively ending the need a government subsidy40. Government has commissioned a cost of service study, which will provide a framework for moving to cost-reflective electricity tariffs. The study is expected to be completed by the end of 2019. It is projected that the effective average tariff will increase by about 48%, reflecting the increase in the lifeline threshold from 100 kwh to 200 kWh.
An important area for energy efficiency improvements is associated with the scale-up in the production and distribution of quality and more energy efficient solid biomass and ICS, as described in the previous chapter.
1.2.7 Energy supply and demand The national installed generation capacity slightly decreased from 2,897.21MW to 2,891.91MW between January 2018 and end of June 2018 mainly due to ZESCO decommissioning some diesel power plants. Over the same six-month period ending June 2018, the generation mix continued to be dominated by hydropower, accounting for 82.93% followed by coal (10.37%); HFO (3.80%); diesel (2.86%) and solar (0.04%).
38 ERB, 2017 39IRENA, 2013 40 IMF, 2017 20-
Figure 3: National Installed Electricity Generation Capacity by Technology
Source: ERB Statistical Bulletin, 2019
Electricity generation from IPPs increased from 1,310.7 GWh in 2016 to 3,006.3 GWh in 2017, a 129.4%, attributed mainly to Maamba, which increased by 292 % from 326.4GWh in 2016 to 1,279.4 GWh in 2017. LHPC also recorded significant increase in power generation of 140%, rising from 121.9 GWh in 2016. to 292.6 GWh in 2017. NECL also recorded an increase in generation of 116.95% between 2016 and 201741. Total generation sent out from ZESCO’s large hydro power stations amounted to 17,140.83 GWh between January 2017 and June 2018, while small and mini hydros produced 269.51GWh during the same period. As of July 2018, the water levels at Lake Kariba, Itezhi-Tezhi and Kafue Gorge were reported 86.2%, 96.9% and 96% full42.
The peak demand for electricity is projected to increase to 3,00MW by 2021 and to 3,525MW by 203043 The national electricity consumption increased by 7.6% to 6,313.45 GWh during the first half of 2018 compared to 5,869.70 GWh over the same period in 2017. During the first half of 2018, mining customers consumed 51.4% of energy, followed by residential customers (33.4% of consumption) and finance and property (5.3%), manufacturing (3.4%), agriculture (1.96) and the quarrying sector (1.1%). The balance was consumed by the energy and water, construction, trade, transport and other sectors (see Figure 3).
41 ERB Statistical Bulletin, 2019 42 /www.lusakatimes.com 43 ZESCO, 2017 21-
Figure 4: Gross Domestic Product Trend 1999 - 2017) Electricity consumption by economic sector, January to June 2018
Source: ERB Statistical Bulletin, 2019
In 2017, residential consumers derived 77%44 of their domestic energy needs from biomass, with 11% being accounted for by hydropower sources. The remaining 11% was met from refined oil products, crude oil and coal, Figure 545.
ZESCO had a total customer base of 911,789 for the period ending June 2018, dominated mostly by domestic customers, 825,519 of whom reside in Lusaka. ZESCO transitioned from a power generation deficit and net import position to a net exporter of electricity 93.39GWh against 1.3GWh imports in June 2018. This was mainly attributed to the improved rainfall which increased the capacity of the major hydro power reservoirs.
2. VISION AND TARGETS UNTIL 2030
2.1. Zambia's Overall Vision for the SEforALL Initiative The economic growth objectives are presented in Zambia's Energy Vision 2030 and in the 7NDP, which is explicit about the need to enhance the generation, transmission and distribution of electricity, promote renewable and alternative energy such as solar, wind, biomass, geothermal as a way of diversifying the energy mix and improving supply, as well as to improve electricity access to rural and peri-urban areas. The proposed SEforALL AA and IP are fully aligned with the national planning cycles and development objectives. The timeframe of the first IP overlaps with the remainder of the 7NDP implementation period (2017-2021) and will run from 2019 – 202546.
44 http://www.fao.org/africa/news/detail-news/en/c/1161914/ 45 MOE 2018 46 There was consensus among the stakeholders on the need to keep the alignment of the SEforALL targets and the 7NDP as the latter acknowledges the important contribution of SEforALL towards universal access to energy and overall contribution to economic growth and development. Moreover, the objectives and components of 22-
The SEforALL Initiative has ambitious objectives to be reached by 2030: universal access to electricity services and to clean and modern cooking solutions; doubling of the contribution of the renewable energies in the energy mix; and doubling the rate of improvements in energy efficiency. Table 12 captures the specific SEforALL 2030 targets the Government of Zambia has committed to pursuing, as well as the baseline these targets will be measured against.
2.2. Baseline and targets Table 13: Baselines (2015) and 2030 Targets Access to Modern Energy Services Renewable Energy Energy Efficiency
Access to Electricity Access to Modern Clean Electricity Generation Cooking Solutions
Baseline 2015
National: 31.4% National: 17% Less than 2% Energy Intensity: 11.84 (MOE/Trillion Urban: 67.3% Urban: 38.5% (Currently, 82.93% of GDP in 2015 US$) installed capacity is Rural: 4.4% (on-grid), Rural: 2% from large hydro) (-2.4%/year decrease 7.4% (off-grid) in energy intensity)
Targets 2030
Urban: 100% Urban: 100% 30%47 Energy Intensity: 8.4 (MOE/Trillion GDP in Rural: 50.6% Rural: 100% Large Hydro 60%, mini 2015) in 2030 hydro 7%; Solar 14%; Thermal fossil (coal (-2%/year decrease and diesel) 10%; Wind over the 2019-2030 5%; Biomass 3%; period Geothermal 1%
The targets above and strategic directions will be incorporated in an updated energy strategy and implementation roadmap anchored in a revised policy document that will replace the 2008 Energy Policy. The 2008 National Energy Policy is being updated under the EU’s 11th European Development Fund (EDF) project on "Support to the Zambia Energy Sector: Increased Access to Electricity and Renewable Energy production" and will be completed by the end of 2019. Part of the new NEP will include energy resource assessments and cost optimization scenarios to inform the SEforALL implementation plans.
Population growth, the projected economic growth of 5-6% between 2017 and 2030 and urbanization trends continue to drive the fast-increasing demand for energy in the different economic sectors. By 2030,
the SEforALL are already embodied in the overall development framework and the energy sector where implementation of projects and initiatives are making complementary contribution. 47 All renewables excluding large hydropower 23-
Zambia’s population is expected to reach 23.6 Mio., an increase of 8 Mio. from the 2015 level. These effects have been taken into account in preparing the AA.
Electricity Access: Considering the large urban-rural differentials in electricity access in 2015 (67.7% urban, 7.4% rural), the Government took a decision to target an electricity access rate of 100% in urban areas and 51% in rural areas. This takes into consideration the low 2015 baseline, finance mobilization constraints and implementation, as well as the projections of the Rural Electrification Master Plan (REMP). The following strategies will be priority in increasing access:
1. Grid extension particularly in rural areas; 2. Ensuring effective targeting and providing indigent households the life-line electricity tariff, especially to those who are within the proximity of the grid; and 3. Promoting OGS to rural areas while ensuring adequate fiscal support to developers to maintain viable operations.
Renewable Energy Generation: The Government intends to reduce the country’s overdependence on hydro power and diversify its generation capacity to better manage risks. The Government’s SEforALL Initiative therefore aims at supporting the development of different renewable energy technologies and increase their contribution from the current 2% to 30% to achieve a more diversified energy mix, thus reducing the current hydropower dominance from 82.9% to 60%. The desired illustrative electricity generation mix by 2030 is provided in Figure 6.
Figure 7: Illustrative Generation Mix - 2030 Target generation mix - 2030
10% 1% 3% Large hydro
14% Mini hydro
Wind 5% 60% Solar 7% Biomass
Geothermal
Thermal fossil
The key drivers for achieving a diversified energy mix with renewable energy capacity will be spurred by:
1. Scaling up the deployment of renewable energy through mobilising the private sector to invest in the sector;
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2. Promulgating effective policies and creating an enabling environment that stimulate the renewable energy sector; 3. Ensuring access to resource assessment studies and relevant information; and 4. Ensuring grid absorption capacity for the new capacity.
Energy Efficiency: The SEforALL goal of doubling the rate of energy efficiency is measured by the global energy intensity indicator defined as the total energy consumed divided by the GDP. It is recognised that the energy intensity indicator is only an imperfect proxy to energy efficiency level, and it can be affected by a number of factors not necessarily linked to pure efficiency, such as the geography of the country, climate, the country’s economic structure and the share of the extractive industries. Over the 2000-2014 period, Zambia’s energy intensity decreased by 39%, a decrease of about 2.4% per year. Government is forging ahead with the implementation of several energy efficiency initiatives although there is still no concrete energy efficiency strategy to achieve the set SEforALL goals, and these target the electricity and modern cooking solutions:
1. Strengthening the institutional and regulatory framework and implementing proven energy efficiency measures, including working closely with energy efficiency promoting institutions, such as the SADC- SACREEE Secretariat to design and implement regionally harmonised national energy efficiency programmes; 2. Introducing demand side management (DSM) measures and the dissemination of light-emitting diode (LED) bulbs; 3. Improving the electrical system power factor, installing solar water heaters, and reducing transmission and distribution losses; 4. Doubling the efficiency of biomass energy use and increasing the use of improved charcoal production techniques and substitution to biogas / LPG; and 5. Retrofitting buildings and adopting minimum energy efficiency standards in buildings and built environments.
Access to Modern and Clean Cooking Solutions: The 2030 Government goal is to achieve 100% access to modern and clean cooking solutions for urban and rural areas, including uses of improved cookstoves and biomass substitutes for wood fuel, such as biomass pellets and briquettes (MNDP, 2017). To reach this target by 2030 will require implementing a five-pronged strategy including:
1. Offering and supporting the dissemination of high efficiency, modern cooking solutions, such as ICS that use wood fuel, pellets and other biomass residues, and charcoal biomass stoves in urban areas; 2. Deploying biogas at scale and developing LPG where feasible in rural areas. While in recent years LPG is mostly sold at petroleum service stations in urban areas, the spatial distribution of these service stations is concentrated in urban and peri-urban areas. For the rural areas, biogas would yield better uptake results than LPG as the former has the potential to provide digested manure that can substitute chemical fertilisers and the distribution network for LPG will take longer. 3. Strengthening the regulatory framework through enacting minimum standards, labelling certification, supporting the producers and distributors of improved cookstoves; and
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4. Carrying out a nationwide awareness and communication campaign on available programmes and the benefits of switching to improved cookstoves and other clean and modern cooking solutions.
3. PART II – PRIORITY AREAS The four priority action areas of Scaling-up access to electricity services; Increasing access to clean and modern cooking solutions; Supporting the development and diversification of renewable electricity generation and Improving Energy Efficiency form the core of Zambia’s Action Agenda (AA). The implementation of the action areas will be supported by an enhanced enabling environment and regulatory framework, robust and sustainable financing mechanisms and a resources mobilisation framework. Furthermore, the implementation of the Zambia AA over the 2019-2030 period will be supported by two Investment Prospectuses that present short (5 years) to medium term (10 years) investment opportunities, for 2019-2025 (overlapping with the remainder of the 7NDP timeframe) and 2026-2030, respectively. Figure 5 below illustrates the architecture of Zambia’s SEforALL Action Agenda.
Figure 8: Priority Action Areas and Supportive Framework
The details on Zambia's overall vision, the existing strategies and gaps, the relevant high impact initiatives and opportunities, risk assessment and mitigation options for each of the priority areas are presented below.
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3.1 . Scaling Up Access to Electricity Services
3.1.1 Vision and trajectories 2019-2030 Different trajectories for universal access need to be deployed for urban and rural areas to reflect the baselines and the different socio-economic conditions of the population. The methodological approach to determining the access baselines and the trajectories to 2030 is based on the GTF’s Multi-tier Framework (MTF). The methodology assumes a multidimensional approach and a departure from the traditional binary count anchored on connections to a multi-dimensional definition of access. With that approach, having an electricity connection alone does not necessarily mean having access to electricity, as other aspects, such as reliability and affordability, must be in place for a connection to be effective.
The 2030 targets for access to electricity are 100% and 50.6% for urban and rural areas respectively, given the relatively low access rate for the 2015 base year and the projected average population growth of 2.8% per year over the 2016-2030.
Energy access is therefore measured in the tiered-spectrum, from Tier 0 (no access) to Tier 5 (the highest level of access).
Table 14: Multi-tier electricity access / consumption framework Tier Provision
Tier 0 No access Tier 1 Task lighting & phone charging; about 4.5kWh/year Tier 2 General lighting, phone charging & television and Fan; about 73 kWh/year Tier 3 Tier 2 & any medium power appliances; about 365 kWh/year Tier 4 Tier 3 and high-power appliances; about 1,250 kWh/year Tier 5 Tier 2 and any very high- power appliances; about 3,000 kWh/year Source: (CSO, 2016)
For urban areas, the selected 2019-2030 trajectory assumes universal access by 2030, fully reflecting the global SEforALL objectives. However, for rural areas, preliminary modelling shows that such a universal target may not be realistically achievable within that timeframe. An electricity access target of 50.6% in rural areas, including access provided by individual systems (SHS, solar lanterns), is more attainable in view of the specific challenges of rural electrification. This target is aligned with the 2008 REMP, which had grid-based access forecast rate of 25.3%, however with an actual rate below 12% achieved by 2018 (see Figure 6). Though ambitious, the 50.6% target is considered feasible over the SEforALL horizon assuming that financing, institutional capacities and the implementation framework for the various interventions being proposed are in place. Financing is premised on the roll out of investment in programmes, such as Scaling Solar, and GETFiT.
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Figure 9: National, urban and rural electricity access 2014-2030 according to the REMP (%)
National, rural and urban electricity access rates 2010 - 2030
Rural Urban National
120 100 100 84.5 71.1 80 67.3 67.00 59.75 60 49.8 50.6 41.64 Access % 40 31.4 22 17.5 20 3.1 4.4 6.1 0 2005 2010 2015 2020 2025 2030 2035 Year
Source: https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=ZM; Rural Electrification Master Plan 2008
Typology of access: All new connections in urban areas are expected to be grid based. In rural areas access will be provided by a combination of the extension of the national grid, off-grid systems, mini grids and stand-alone SHS. REA has implemented some electrification projects in rural areas, however, due to a lack of experience and data, REA is not able to produce an informed and robust scenario for the mix of electricity access solutions in rural areas. To date REA has relied mostly on grid extension but has also developed solar-based mini grids at Mpata in Luapula Province (commissioned in 2012), Chunga and Lunga in Central province and Luapula (2016). REA has also started to identify potential sites for mini hydro power for deployment of off-grid decentralised power systems.
A. Electricity access in urban areas Based on an extrapolation of ZESCO’s approximately 957,762 customers in 201848, an average 102,000 new grid connections will be required per annum in order to reach urban universal electricity access target by 2030. Almost 73,000 households need to have been connected by 2019. This number will drastically increase over time to 147,000 annual household connections by 2030 (see Figure 10). Staying on this trajectory implies a significant access scale-up effort to connect at least 1.535 Mio. urban households between 2018 and 2030 (735,000 new connections over the first Investment Prospectus period - 2019 and 2025) and providing services to approximately 8.4 Mio. people in urban areas.
48 Energy Regulation Board, 2019 28-
Figure 11: Urban electrification trajectory – access and connections 2016-2030
160.0 100.0% 89.1% 147.0 140.0 80.0% 120.0 80.4% 100.0 69.5% 113.0 60.0% 80.0 91.0 40.0% 60.0 71.0 Connections 40.0 51.0 Acces rate 20.0% 20.0
0.0 0.0% 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
B. Electricity access in rural areas The LCMS 2015 states a grid-based electricity access of only 4.4% in rural areas. However, the LCMS estimated that 7.4% of the population had access to electricity from stand-alone SHS and 0.3% from other systems (such as gensets). SHS are to be included in the rural electricity access estimates although they mostly fall under Tier 2, given their low level of service. For the purpose of developing the SEforALL electricity access trajectory, the rural electricity access baseline estimates have therefore been readjusted to take into consideration stand-alone (off-grid) systems.
The REMP sets the rural electrification objectives at 50.6 % by 2030. In rural areas, 1,217 un-electrified growth clusters were identified by the REMP for electrification by 2030, mainly through grid extension. The REMP target is regarded to be ambitious yet attainable. Reaching an access rate of 50.6% by 2030 will require a significant scale-up to provide services to about 75,000 rural households on average per year over the 2016-2030 period (about 51,100 in 2016 rising to 92,800 in 2030 Figure 12). To achieve such an outcome, an increasing role of the private sector and a significant upscaling of both Government and Cooperating Partners’ resource mobilisation are key.
Figure 13:Rural electrification trajectory – access and connections 2016-2030
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100,000 92,847 Connections Acces rate 60.0% 80,000 75,090 50.6%
60,000 37.5% 40.0% 60,824 40,000 51,089 20.0%
No.of connections 24.5% 20,000
0 0.0% 2016 2018 2020 2022 Yaer 2024 2026 2028 2030 Source: Ministry of Energy 2018
Modes of Electrification: The following three modes of electrification will be deployed to reach the 2030 electricity access target in rural areas: grid extension; stand-alone systems (SHS, solar lanterns, diesel generators); and mini grids (micro and small hydro, solar PV, large and small wind, biomass, etc.). The process will be guided by technology-neutral approaches as they are arguably cost effective and they promote priority deployment of the cheapest renewable energy sources. The distribution between the three modes49 is expected to be as follows, Table 15.
Table 16: REMP (2008) 2030 projected modes of rural electrification Mode of Electrification % of Households Electrified Grid extension 80 Off grid/stand-alone (Solar Home Systems, Solar Lanterns, Diesel Gensets) 18 Mini grids 2 TOTAL 100
Pursuing the REMP (2008) with its reliance on grid extension as the main approach to increasing electricity access in rural areas would be a highly capital-intensive undertaking. Experience over the last decade of pursuing this approach has demonstrated that it is not viable, given the binding resource constraints faced by Zambia over that period and the sparse and low-density population distribution in rural areas.
It is therefore imperative that REMP is updated and revised to consider new realities that should include a mapping of resources for decentralised off-grid power systems, SHS and other renewable energy options. In the meantime, Cabinet is expected to consider REA’s proposed interim rolling masterplan to construct 7,000 km of grid extension in rural areas that include components of off-grid networks and other renewable energy approaches. Any grid extension projects undertaken by REA will be transferred to ZESCO who is the custodian of the grid at no cost.
49 JICA Study, 2008; MEWD, 2010 30-
The distribution of new connections to be provided through grid extension and through off-grid solutions for the rural areas over the 2016-2030 period is illustrated in Figure 14.
Figure 15: Rural electricity access – grid and off-grid connections 2016-2030 (1,000) 80,000 Off grid 74,278 70,000 Grid 60,072 60,000 48,659 50,000 40,871 40,000
Connections 30,000
20,000 10,218 12,165 18,569 10,000 15,018
0 2016 2018 2020 2022 2024 2026 2028 2030 Year Source: Ministry of Energy 2018
The number of mini grids to be commissioned will depend on the average number of households available for connection. Assuming on average 200 households (approximately 1,100 people, assuming five people per household) per mini grid, 106 mini- grids must be developed between 2016 and 2030, i.e., on average about 9 mini grids per year. If larger size villages are prioritised (e.g., an average of 250 year households per village), then only 84 mini grids will need to be deployed for the period, i.e., 7 mini grids per year (Figure 16).
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Figure 17: Number of mini grids to be deployed, 2016-2030
No. of mini grids by village size
No. of mini grids per 200 h/holds No. of mini grids 250 h/holds
18 7 16 6 14 5 12 4 9 9 10 8 7 8 6 5 6 4 No.of grids mini 2 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Years
Source: Ministry of Energy 2018
3.1.2 Existing gaps for electricity access The main challenges/gaps that Zambia faces to reaching the selected goals on access to electricity by 2030 are as follows: Current low access to electricity services in rural areas, which makes reaching universal access by 2030 very difficult. Fragmented energy access market: The majority of the population that lacks access to modern energy services, particularly electricity, is dispersed and not properly mapped, which is a challenge for the utilities and companies providing the services. Affordability of connection fees: The initial connection cost is often a deterrent for poor households, especially female-headed households. Subsidy and credit mechanisms, as well as efforts to reduce connection costs are therefore required to meet the objectives of scaling up electricity access. Programmes like the World Bank Electricity Services Access Project (ESAP)’s Last Mile Project, which is being implemented by ZESCO and REA, are already addressing this issue. The project seeks to help Zambia boost electricity supply by focusing on-grid and off-grid connection of at least 22,000 low income households and approximately 1,000 medium and small-scale enterprises in rural areas. Affordability of OGS, such as SHS and mini grids, is also a hurdle to off-grid access. Subsidy, credit facilities, innovative payment schemes such as Pay-As-You-Go (through mobile phones) and efforts to reduce connection costs are required to achieve quick electricity access results. Financial viability: the financial viability of universal access is not guaranteed, particularly with Zambia’s current low electricity tariffs. Grants and concessionary finance to cover part of the capital investment and/or operating costs will certainly improve viability. Mobilising such financial grants to implement the access scale-up programme may be a significant challenge.
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Lack of access to affordable longer-term finance: Financiers and investors are risk averse and tend to shun projects where there are insufficient incentives and enabling environment to offset / mitigate risk associated with renewable energy projects and solutions. Mini grid policy and regulations. A mini grid strategy and associated regulations need to be developed in consultation with the private sector, REA, local communities, households and other cooperating partners undertaking related initiatives. There is currently no comprehensive strategy for mini grids and stand- alone systems roll-out. Such a strategy will boost the development of micro-decentralised systems that are a cost-effective solution to many small settlements in Zambia. Reinforcement of the transmission and distribution network. ZESCO's distribution network does not have adequate capacity to meet the present demand for electricity, leading to load shedding and intermittent power supply. Additional demand on the network will require investment to reinforce and extend the existing networks and prevent deterioration of the quality of service. In addition, an assessment of the grids’ absorption capacity and investment needs to transport alternative levels of intermittent power (from solar and wind farms in particular) is needed. The unavailability of bankable distribution projects also constitutes a constraint to scaling-up electricity access through grid extensions. Electricity generation shortage: While Zambia currently has excess generation capacity, it remains exposed to the possibility of reduced supply due to over-reliance on hydro, which is susceptible to droughts. While the Government and the utilities are committed to diversifying the generation mix, this process requires high investments outlay in generation projects and adaptations to the grid that can only be made gradually. Private sector participation and support from Cooperation Partners will be key in the deployment of renewable energy options. Regulatory landscape constraints: The energy sector is characterised by gaps, constraints and uncertainty in the policy and regulatory framework. Inadequate regulation and / or policy uncertainty for mini grids, as well as possible changes in electrification plans, and discrepancy between the promised necessary incentives and the actual delivery of incentives are evident. The inability to charge cost-reflective tariffs has largely remained a barrier that needs to be addressed with expedience to improve the competitiveness of Zambia to attract international developers. Early stage market fragmentation and information management: There is limited availability of renewable energy sector specific market data; unmade linkages, particularly between local/national businesses and communities with demand for power, and the international developers, technology providers and financiers. They are all important stakeholders who each hold different parts of the necessary elements for successful renewable energy development and access to energy. There is need to strengthen the MOE’s energy data and information management systems platform and link it to other related strategic institutions to facilitate ease of access to information required by developers to reduce cost and risk at early stage project development. Inadequate human and institutional capacity: There is a general lack of project preparation and delivery experience and a need for a market ecosystem with more standardised technology and operational elements. Project preparation is generally costly and needs to be adequately resourced for quality project documentation.
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Lack of customised proven commercial business models: A solid knowledge and evidence base is required for developing projects and appropriate business models, customised for the Zambian market. Models, such as public-private partnerships, should be tailored to the development and economic dynamics of the country and this will be particularly important to demonstrate the ability to generate reliable cash flows in remote locations that are not serviced by the grid so as to support and leverage private sector investment.
3.1.3 High impact initiatives/opportunities for scaling-up electricity access The following high impact initiatives/opportunities are proposed: a) Accelerate development and strengthening of the national power grids, in particular of the distribution networks to provide access to urban, peri-urban and rural areas. b) Strengthening of implementation mechanisms and capacities within public and private institutions; c) Mobilization of pre-investment and investment financing available to public and private institutions to develop bankable investment projects; d) Accelerate development of mini grid regulatory framework, project development templates and financial incentives to support developers and project preparation activities; e) Accelerate the proliferation of individual systems (SHS, solar lanterns) offering a suite of solutions to consumers adapted to the demands and the capacity to pay, and also allowing for upgrading; f) Development and financing of an electricity access programme targeting social services, such as health, education and water-pumping facilities including strengthening of coordination mechanisms; g) Development of financing mechanisms to provide credit and subsidies (output-based-aid) and risk mitigation strategies to mini grid developers and households that cannot afford the upfront costs of access to electricity services; h) Improve business and enabling environment to attract private sector participation in SEforALL electricity supply activities through IPP concessions; improved tariff structures; grid-codes for island systems; transparent and competitive IPP procurement guidelines; product and service standards; etc.; i) Create awareness and information access, product knowledge and financing options for consumers to make informed purchasing decisions about stand-alone systems and other sustainable energy products; and j) Undertake studies and research focused on informing the formulation of relevant regulatory framework for mini grids and energy storage to support the deployment of renewable energy technologies at scale, as the global cost of energy storage continues to decline, and its importance as a flexibility instrument for the country’s future energy system.
3.1.4 Risk management for scaling up electricity access Table 17 lists risks related to a fast tracked scaling up of electricity access, as well as measures that Zambia could consider to mitigate them.
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Table 18: Risk management for scaling-up electricity access Risk Source Mitigation Action Responsibility Limited investment Inadequate resources for Provide the enabling policy and GRZ, ZESCO, IPPs, inflows into electricity infrastructure regulatory environment to attract REA electricity development investment electricity infrastructure infrastructure (generation, transmission and Weak policies to attract distribution networks) investment Protracted Inadequate planning, Capacity building for planning and GRZ, ZESCO, CEC, implementation of preparation of projects implementation REA electrification projects Inadequate Investment grants or concessionary implementation capacity financing, and lack of financial resources High rural electricity Low population density, Use of appropriate alternative options GRZ, ZESCO, CEC, supply costs scattered settlements such as solar lanterns and SHS REA, Provision of appropriate financing CSOs, Private mechanisms sector
Low uptake and high High poverty levels due to Combine cost-recovery tariffs and default levels lack of income and subsidies to ensure sustainable cost seasonal incomes as well recovery + minimal price distortions. as low power consumption profiles Development of micro-grids
Promotion of productive use of electricity through livelihoods support programmes Low return margins Low electricity tariffs Implement cost-recovery tariffs but GRZ, financiers, and repayment protect vulnerable groups. Cooperating default on High cost of borrowing partners investment in Implement smart subsidies for private electricity sector infrastructure projects Optimise design standards costs
Increase access to affordable financing and reduce transaction costs Revenue loss due to Power supply Increase capacity to match demand. GRZ, ZESCO power interruptions interruptions Introduce cost-reflective tariffs to resulting in economic ensure regular infrastructure Low willingness to pay maintenance
Assess consumers’ willingness to pay levels
Minimise power cuts and reliability of supply
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Increase the coverage of pre-payment metering systems
Create awareness campaigns and information updates and schedules on power supply interruptions.
3.2 Increasing Access to Clean and Modern Cooking Solutions Clean and modern cooking solutions comprise cooking with LPG, electricity, and with cook stoves with high energy efficiency (improved woodstoves, high energy efficiency stoves using pellets, briquettes, etc.) and biogas installations. It however excludes stoves using kerosene, coal, etc. with significant emissions and negative health impacts.
The monitoring indicators will be the adoption clean cooking stoves and the percentage of the population using LPG, biogas, electricity and Improved Biomass Cookstoves based fuels such as wood fuel, charcoal in the form of pellets and briquettes. This indicator is underpinned by the World Health Organisation (WHO) household energy data base which measures the percentage of the population relying mainly on solid fuels for cooking (however, WHO does not list the equipment used for cooking).
In 2012, only 17% of the Zambian households had access to modern fuels for Cooking and Space Heating (CSH) (Figure 18). In Zambia, access to modern fuels for domestic CSH is still very largely dominated by traditional biomass (firewood and charcoal), however, with notable disparities between rural and urban areas and between provinces. These differences need to be taken into account when developing and implementing the strategies.
Access to modern energy fuels for CSH was just over 2 % in rural areas in 2015. In urban areas, 34.5 % of the households (17 times more than in rural areas) used electricity as their main cooking energy source in 2015 (Figure 19). The use of LPG as a DSM measure to reduce peak load has generally not been effective. This is due to the relatively low and subsidised electricity tariffs which have failed to influence behavioural change and fuel shift toward more economically efficient cooking solutions. However, the penetration of other modern fuels for CSH is likely to increase when fully cost reflective tariffs are applied and electricity subsidies are reduced or phased out as per Government policy.
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Figure 20: Energy sources for cooking and space heating – urban, rural and nationwide 2015 (%) 90 % 84.5 80 Urban 70 Rural 59.1 60 All Zambia 50.7 50
40 34.5 32.9 30 20 16 13.2 6 10 2.1 0 Electricity Firewood Charcoal
Source: MOE, 2018
The access to modern energy fuels for cooking has not improved much since 2010; it has even declined. In 2010, 42% of the population in urban areas had access to modern fuels against approximately 35% in 2015 (Figure 21). In rural areas, access to modern cooking fuels (electricity for cooking) was just 2.1% in 2015 against 2.6 % in 2010. Collected firewood remains the main cooking and space heating source of energy (79.3%); however, the share of charcoal has slightly increased from 11.3% in 2010 to 13.2% in 2015. This dynamic might be considered as a positive trend towards more convenient cooking fuels. However, a shift from firewood to charcoal in rural areas will increase pressure on forest resources, if the current low energy efficiency of charcoal kilns is not improved and sustainable forestry management is not promoted. Apart from contributing to deforestation, it is estimated that inefficient stoves are responsible for close to 25% of emission of black carbon which contributes to climate change50 . Figure 22: Energy sources for space heating and cooking
100 % 79.3 Urban Rural 80 60 49.3 42.5 40 20 11.3 3.9 1.8 2.0 2.1 4.6 2.6 0 Firewood Firewood Charcoal own Charcoal Electricity collection purchase production purchased Source: MOE, 2018
50 UNEP, 2009
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The multi-tier analysis reveals very clearly the huge consumption pattern differences between rural and urban areas and within each broad stratum (tier). In rural areas, over 84 % of both small and medium scale farmers’ tiers use firewood as the main source of energy for cooking (Figure 23). However, large-scale farmers and ‘non-agricultural households’ tiers mostly use electricity and charcoal as their primary sources of energy for CSH (Figure 24). Electricity caters for almost a quarter of CSH needs for large-scale farmers and 13% of non-agriculture tiers. Charcoal also meets a quarter of the needs of large-scale farmers and more than a third of non-agriculture households. In urban areas, electricity and charcoal are the main energy sources for CSH. However, there are sharp differences between the two fuels.
Electricity meets 77 % of the CSH needs of the high cost tier and only a third of the low-cost tier while charcoal covers 60% of the CSH needs of the low- cost tier and only 19% of the high cost stratum (Figure 12).
Figure 25: Multi-strata breakdown and energy sources for CSH in 2010
% Firewood Charcoal Electricity 100 86.4 90 84.1 77.7 80 66.8 70 60.2 60 52.2 47.8 50 40 34 32.6 30 24.4 30.7 19.2 20 13.3 6.9 10 1.8 2.9 0
Source: MOE, 2018
3.2.1 Vision and trajectories 2017-2030 For 2030, the target is to reach 100% access to clean and modern cooking solutions countrywide.
A. Modern and clean energy solution for cooking in urban areas: the 20-40-20-20 scenario51 An urban ‘20-40-20-20’ cooking scenario has been used to delineate strategic options and the trajectories that could be considered for cooking solutions in urban areas.
In most urban areas, current cooking options are electricity, biomass (mainly charcoal and to a much lesser extent firewood) and LPG, although the use of the latter is still limited due to distribution infrastructure constraints. It is highly likely that electricity will remain the preferred source of energy for cooking in urban
51 The unit of account is the household as equipment is used by households, not by individuals. The household average size in urban areas is 5 and 5.2 in rural areas. Population figures are extracted from the LCMS for 2015 and UN statistics which give a projection breakdown between urban and rural areas until 2030.
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areas in the short to medium term, even though subsidies have been reduced. However, the scenario will change in the medium to long term as tariff adjustments take effect and reduce use of electricity from 34.5% (2015) to 20% by 2030. It is projected that LPG will provide 40% of the cooking fuel while charcoal usage will decrease from 59.1% level to 20%. The contribution of firewood will be about 20% over the same period (see Table 19).
Table 20: Urban 20-40-20-20 cooking scenario Energy Source 2015 2030 Electricity 34.5% 20% LPG <1% 40% Charcoal, firewood 59% Charcoal 20% Charcoal 6% Firewood 20% Firewood
This proactive urban scenario would allow to:
• Dramatically reduce the pressure on forest resources due to reduced firewood and charcoal consumption in urban areas. Furthermore, the number of improved stoves needed to reach universal access will be much lower compared with the business as usual scenario due to fuel switching from charcoal to LPG.
• Decrease electricity demand and therefore investment in new power generation capacity given the fact that currently electricity is widely used for cooking in urban areas and the power consumption of electric stoves is particularly high.
• Deploy a large scale and more cost-effective LPG supply chain. However, this is a major challenge as it requires upstream (bottling facilities, transport) and downstream infrastructure (cooking equipment, distribution networks) and involves different stakeholders. For urban areas, universal energy access to modern and clean cooking solutions implies that all households cooking with solid fuels are equipped with an improved stove by 2030. Households relying on modern sources of energy (e.g., electricity and LPG) are not accounted for. Table 21 below presents the expected trends in urban areas for charcoal and ICS.
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Figure 26: LPG access rate and stoves deployment in urban areas, 2016-2030 120 45% thousand 40% 40% 100 99 35% 80 27% 30%
71 25% 60 49 20% 40 15% 14% 10% 20 35 LPG stoves Urban LPG access 5% 0 4% 0% 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
Apart from stoves acquisition, the '20-40-20-20' scenario implies a sharp increase in LPG imports to meet demand. Imports are likely to continue until 2020 but thereafter the substitution effect will become noticeable as local production will increase. In 2030, total LPG consumption for urban areas is expected to reach 139,000 tons (See Figure 27). This means the GRZ needs to plan for increasing local LPG production capacity, as well as addressing LPG related infrastructure challenges, including cylinder exchange and maintenance networks for the entire country. Data for 2015 and 201652 show some volatility in LPG production and consumption. Another challenge is changing the rural and peri-urban mind set where firewood is traditionally collected rather than purchased. Promoting a switch to LPG may require a combination of incentives to lower its cost and forestry regulations to sanction the excessive harvesting of firewood.
Figure 28: The 20-40-20-20 scenario and LPG imports, 2106-2030 (1,000 tons) 150 139 thousand LPG consumption
100 76 50 32
0 7 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
In rural areas it would imply the installation of an average of 176,000 improved cook stoves (using solid biomass) per year with 193,000 stoves to be installed in 2025 (68% access) and 261,000 stoves in 2030 (Figure 29).
52 ERB 2016 40-
This is a major challenge, given the 4% rate of penetration in 2015 and the low purchasing power of rural households. Clay stoves are the most suitable existing type of improved stoves for rural areas, as they are low-cost and have relatively high efficiency rates. An output-based subsidy should be offered to entice households to switch to improved cookstoves.
Table 22: Charcoal use as main fuel, improved stoves and trends in urban areas–situation and objectives Fuel / Technology Type 2015 Objective 2030 Charcoal as main fuel (% of 59.1% 20% households) Improved stoves* 5% 100%* for charcoal users, e.g., 20% of total urban households *Improved stoves account only for households using charcoal as the main fuel. This means that reaching 20% of households in 2030 will translate in universal access as 80% are already cooking with modern fuels.53
Under this strategy, the number of improved stoves to be deployed in urban areas including replacement stoves between 2016 and 2030 is illustrated in Figure 30.
Figure 31: Access and deployment of rural improved stoves, 2016-2030 300 100% thousand 100% 250 261 80% 68% 200 193 60% 150 141 40% 100 104 36% 20% 50 Deployment Access (%) 0 10% 0% 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
53 ICS lifetime estimated at 3 years before its replacement. The annual production will include population growth and the replacement of ICS after their lifetime. Selling price of the improved stove is US $ 11.
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Figure 32: Improved stoves and charcoal use, 2016-2030 45 60% thousand 41 39 40 56% 37 50% 35 30 46% 40% 33% 25 30% 20 15 20% 17 20% 10 ICS including remplacement HH with charcoal as cooking fuel 10% 5 0 0% 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
The deployment of LPG is crucial, in order to reach the objectives of the "20-40-20-20" scenario, which will require a more aggressive expansion of the infrastructure and enhance nationwide penetration of LPG and create room for participation by other LPG sector stakeholders
The “20-40-20-20" scenario will further be achieved by diversifying to other energy sources, such as briquettes, pellets, biogas etc.
B. Modern and Clean Energy Solutions for Cooking in rural areas: Universal access to improved cookstoves and development of biogas and LPG Given the current low electrification rate in rural areas and the relatively low prices of fuels for cooking, electricity for cooking will not be a preferred choice and will therefore remain insignificant for the lower tiers of rural households. Much of the distribution is single-phase distribution which can only cater for small loads, such as lighting and charging of appliances. It is therefore assumed that the current 2.1 % rate of electricity use for cooking in rural areas will remain unchanged between 2016 and 2030 and will be limited to tier 5.
LPG use in rural areas of Zambia is currently marginal (0.2%). Prices of firewood and charcoal use may increase overtime and the uptake of LPG for cooking could reach 5% penetration.
There is potential to deploy biogas for cooking in rural areas, although the current deployment of biodigesters is limited to 500 units installed countrywide (less than 0.1%). Biodigesters have high upfront investment costs (see Table 23), which make them hardly affordable for rural households without financial support or predictable steady incomes.
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Table 24: Biogas size and cost Size Quantity of cow dung (kg) Daily production Estimated cost (US$)* 4m3 20-40 0.8-1.6 m3 700-800 6m3 40-60 1.6-2.4 m3 800-900 9m3 60-90 2.4-3.6 m3 1,000-1,100 14m3 100-140 4-5.6 m3 1,150-1,250 21m3 150-210 6-8.4 m3 1,400-1,500 *1 US$= 10 ZMK. Source: DoE/SNV/Hivos/TDAU; 2012
The 6m3 capacity with 40 to 60kg feedstock and a yield of between 1.6-2.4 m3 would be ideal for household needs, notwithstanding the investment of between US$800 and US$900, which far exceeds the average rural household monthly income of US$81 in 201554. Notwithstanding this, biodigesters have been found to be viable for rural households. Uptake has mainly been driven by increasing knowledge and awareness of the technology’s considerable social, environmental, and health benefits as well as economic savings which offset the relatively high initial investment cost.
A feasibility study conducted in 2012 by the Department of Energy (DoE), SNV Netherlands Development Organisation, HIVOS and TDAU/UNZA55 concluded that a small-scale domestic biogas programme is possible with a technical potential of about 90,000 biodigesters across the country. The study was followed by the installation 3,308 biodigesters in eight provinces under the Energy for Agriculture (E4A) by SNV between 2015 and 2018. The E4A was able to demonstrate the technical feasibility and financial viability of the biodigester technology while also proving its social acceptability and environmental sustainability.
According to the study, there was demand for biodigesters and generally enough feedstock from cattle- dung or pig manure to meet the requirement of a small family size biodigester. An estimated 2.2%56 of the total households in Zambia reportedly meet all the conditions favourable for installation and these are mostly confined to the Southern, Eastern, Central, Lusaka and Western provinces livestock ownership is relatively high. In order to achieve optimal deployment, awareness on the cost and benefits of the technology need be stepped up and assistance with upfront investment could unlock a four to five-year roll out of 5,000 to 7,000 national biodigester installation programme.
There is also potential for the development of medium scale digesters of 50 m3 capacity from at least 8,520 farmers who permanently have a herd of more than 20 cattle kept in well-managed paddocks. This translates to 69,970,500 m3 of biogas 57. According to SNV, 800 to 1,000 units could be installed every year58 and the number could increase if credit provision is availed to the livestock farmers.
54 Chiwama et al. 2012 55 Feasibility Study of Domestic Biogas Programme in Zambia; DoE/SNV/Hivos/TDAU; 2012 56 SNV market study, 2018 57 assuming 20kg dung production per day per cow effectively producing 37.5 litres of biogas per year which is equivalent to 41,982,300 m3 of methane per year and this amount of methane can generate 38,349 kW of (theoretical total) heat energy or 920,160 kWh of (theoretical total) electrical energy. 58 Chiwama et al. 2012 43-
The strategies to reach the SEforALL objectives need to respond to the differences in consumption patterns, equipment and technologies, rates of penetration of cooking fuels in urban and rural areas outlined above and are therefore presented separately.
Scenarios and Trends for Modern and Clean Cooking Solutions for Rural Areas: A three-pronged strategy is proposed to improve rural households’ access to modern and clean energy and decrease the pressure on biomass resources, taking into consideration the financial constraints and the current energy situation. The proposed strategy includes:
Increasing LPG access from a marginal use in 2015 (0.3 to 0.5 %) to 5% in 2030. This is an increase of more than ten times compared with the baseline. Rural areas will require more than 19,500 tons of LPG by 2030 to in order to achieve a 5% target. This is approximately four times Zambia’s current LPG household consumption. Furthermore, LPG stoves and cylinders must be purchased, will compound the cost of the investment, and can only be afforded by a small fraction of the rural population, mostly the relatively richer tier.
Scaling-up the deployment of biogas units. The objective is to reach 0.5 % of rural households. This will translate into several hundred biogas units being installed each year. The main challenge will be to find and develop the requisite skills to build and maintain biogas units and the solutions to overcome the high up-front investment of biogas units. The strategy will require basic training for households to ensure that energy efficiency is maintained at the same level as stoves are self-maintained by the households. The financial outlay and support expected is not expected to be high given the low cost of US$1.5 for rural stoves. There may be no willingness and ability to pay for the cooking appliances. Furthermore, the roll-out of an effective awareness and demonstration campaign model in rural areas is still lacking.
Figure 33: Household investment for LPG stoves acquisition 450 USD thousand 400 Deployment 350 391.5 300 289.5 250 211.5 200 150 100 156 50 0 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
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Figure 34: Access and LPG stoves deployment, 2016-2030 25.0 thousand 10.0%
Deployment Access (%) 9.0% 20.0 8.0%
19.5 7.0%
15.0 6.0%
11.3 5.0% 5.0% 10.0 4.0%
3.0% 5.3 3.5% 5.0 2.0%
0.7% 1.9% 1.0% 1.7 0.0 0.0% 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
Biogas Deployment: Biogas can be a suitable energy source for providing clean cooking (and lighting) solutions. This would significantly reduce pressure on the use of firewood. However, the impact is expected to remain low due to limited implementation capacity, but above all, because of the initial cost of the bio digesters. Biogas will therefore remain limited to a small segment of rural households (see Figure 35).
Figure 36: Access and deployment of biogas units, 2016-2030 1400 1.50% Deployment Access (%) 1320 1200 1.25% 979 1000 1.00%
800 714 0.75% 600 537 0.50% 400 0.50%
200 0.34% 0.25% 0.04% 0.17% 0 0.00% 2016 2018 2020 2022 2024 2026 2028 2030 Source: Ministry of Energy 2018
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3.2.2 Existing gaps for clean and modern cooking solutions The main challenges/gaps that Zambia faces to reach the SEforALL goal of universal access to clean and modern cooking solutions by 2030 include the following: Lack of strategy and road map: The lack of strategy and roadmap validated by the main partners from the public, private sector and with the Cooperating Partners is a key challenge to be addressed as an important first step; Awareness and knowledge issues: The lack of awareness of indoor pollution and its impacts on health among the population limits the rate of adoption of efficient cooking stoves, especially by the rural population. This is compounded by a lack of affordable alternatives to traditional cooking energy sources for rural consumers, where households tend to prefer traditional cooking solutions because of cultural heritage. Therefore, in order to increase the use of modern cooking solutions it is necessary to raise awareness about the associated benefits so that households can start to shift to cleaner or improved cooking. Information and sector analysis: There is lack of up-to-date and specific information on cooking fuels and cooking practices to adequately inform policy. A comprehensive sector and market assessment is therefore required to inform policy decision makers. This should also include an analysis of the charcoal value-chain and of the actions needed to establish and maintain stronger linkages among the main actors; Improved Cookstoves Performance: There is anecdotal evidence that basic ICS perform poorly, partly due to the difficulty of accessing high quality materials and maintaining quality consistence and assurance for appliances’ production, as well as due to a lack of systemic support for innovation; Regulation and Standards: There are limited performance standards for energy products and cookstoves. The enforcement mechanisms and capacity for enforcement of standards is generally weak, where they exist. Consumers are therefore unprotected against sub-standard equipment and services. High initial costs: Switching to modern and clean cooking solutions such as LPG, biogas, highly efficient pellet or briquette stoves is often prevented by the initial costs of the appliance or of the digester. Financial support through appropriate financing mechanisms (credit or partial subsidy) should therefore be offered to interested households. An assessment of cost-reduction opportunities for bio-digester installation should be carried out to explore cost reduction opportunities. Charcoal production sector is largely unregulated and informal with low energy efficiency in transforming biomass into charcoal; and Monitoring and Evaluation Mechanisms. There are no protocols/mechanisms to monitor the activities related to: a) the collection and distribution of wood fuels and charcoal in the urban areas; b) the resources collection and production of charcoal in the charcoal producing areas of Zambia; and c) the quality of the improved cookstoves.
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3.2.3 High impact initiatives/opportunities for increasing access to clean and modern cooking solutions To achieve the targets of universal access to clean and modern cooking solutions, Government has opted to implement the following strategies through the framework provided by the revised National Energy Policy (NEP 2008). The NEP advocates for environmentally sustainable exploitation of biomass resource, efficiency through better management and introduction of new sources such as biofuels. 1. Providing appropriate financial and fiscal instruments for stimulating the production of charcoal and biogas and the use of other biofuels through the formulation of comprehensive and innovative financing mechanisms. These will include smart subsidies, concessional loans, loan guarantees, provision of tax incentives and waivers on biomass energy capital equipment. Blended financing and programmatic approach for supporting the sector will reduce the high cost of financing 2. Raising public awareness on the benefits and opportunities of other modern biomass energy sources and develop capacity for their implementation through: a) provision of information to stakeholders (financiers, planners, politicians and civil society) on the benefits and opportunities of biomass energy; b) education and creation of awareness about the potential of biomass energy through dissemination of information on the economic, environmental and social benefits of biomass energy technologies and applications and c) development of the regulatory framework; intensified advocacy and awareness activities that involve women are likely to increase the deployment rate and adoption and influence peer behaviour change. 3. Ensuring better management of woodlands and forests as sustainable sources through the introduction and administration of penalties to discourage the indiscriminate cutting down of trees; 4. Improving the technology for charcoal production and utilization of wood fuel through: a) training of charcoal producers in better organization and management of charcoal production using the traditional kiln method; b) encouraging the adoption of other production techniques, which are more efficient and cost effective; c) developing stoves that are efficient and convenient to users and produce minimal emissions; d) ensuring that stove testing and certification is undertaken on all new designs entering the market; e) ensuring that information on emission levels and efficiency of stoves is disseminated to promote public awareness; and f) facilitating participation of various stakeholders, such as women clubs and cooperatives, as well as other gender based organizations, non-governmental organizations, industry, researchers and other Government Departments; 5. Deployment and implementation of gender responsive policies and measures that involve women to promote and ensure accelerated deployment, given that women and girls will be the primary beneficiaries from access to improved energy services because of their traditional responsibilities in the household. 6. Promoting appropriate alternatives to wood fuel and reduce its consumption through: a) encouraging the use of alternative renewable sources of energy; b) encouraging the use of LPG and cooking gel as household fuels and agricultural fuel as a means of reducing that industry’s consumption of wood fuel; and c) encouraging utilization of agricultural, forest and sawmill residues for combustion;
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7. Implementation of a Sustainable Forest Management Programme through: a) forest enhancement together with natural regeneration and afforestation/reforestation including the planting of indigenous trees; b) sustainable charcoal production incorporating improved kilns; c) improved cooking devices to include improved biomass stoves, use of ethanol and LPG stoves; d) switch to electric stoves partially using generated electricity from forest waste and residues; e) participatory forest management (CFM, JFM, PFM); and f) integrated forest fire management; 8. A Sustainable Agriculture Programme seeking to promote conservation/smart agriculture activities leading to adaptation benefits and enhancing climate resilience especially in rural areas, generation of electricity from agricultural waste by implementing conservation/smart agriculture, rural biogas plants and rural biomass electricity generating facilities; 9. A Renewable and Energy Efficiency Programme seeking to promote the switching from conventional and traditional energy sources to sustainable and renewable energy sources and practices, and use of off grid renewable energy technologies for rural electrification as decentralised systems; and 10. Implement the NAMA for increasing efficiency in harvesting, processing and charcoal usage. 11. Auditing all programmes on modern cooking and undertake data collection to inform policy interventions to support the development of the sector.
3.2.4 Risk management for increasing access to clean and modern cooking solutions The potential risks associated with the implementation of access to clean and modern cooking solutions projects and are listed in Table 25 along with some mitigants.
Table 26: Risk management for improving access to clean and modern cooking solutions Risk Source Mitigation Action Responsibility Low end-user Households not Develop an awareness/ GRZ acceptance and adequately informed communication strategy backed adoption of new about the health and by policy and financing support cooking methods impacts of traditional actions. cooking methods.
Traditional and cultural beliefs Safety concerns Lack of product Provide consumer education Private sector, about cleaning knowledge and ZABS cooking solutions information Constraints in the Distribution networks Allow some financial GRZ expansion of the currently largely compensation for LPG distribution infra- restricted to urban distribution beyond urban areas. structure for LPG areas. to serve customers in rural and peri- urban areas
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Inability to supply Lack investment to Provide low cost or subsidised GRZ, private end user establish semi production facilities sector, community customers industrial production cooperatives, facilities to scale up Offer financial incentives for ZABS production to meet producers to improve improved consumer demand cookstoves quality and scale-up production.
Issue quality standards Inferior production methods and poor- quality standards Competition and High establishment Offer consumer financing GRZ, private high establishment costs for setting up products and delivery channels sector costs distribution networks for consumers to switch to modern and clean cooking Low borrowing solutions. capacity due to low on non- existent incomes to purchase durable modern cookstoves
Production inefficiencies and competition with substitutes to LPG, biogas, high efficiency biomass stoves (using pellets, briquettes, etc.). Market entry of Weak enforcement of Strengthen and decentralise GRZ poor-quality standards ZABS and other standards products infiltrate regulatory agencies and ban the the market free entry of sub-standard products Failure to provide Inadequate supporting Improve business environment to GRZ, private customer care infrastructure in rural attract private sector sector areas participation
Lack of facilities across the supply chain from production to after sales services and maintenance
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3.3 Increasing Renewable Energy Generation Technologies Doubling the contribution of renewable energies to the energy mix by 2030 is one of the goals of the SEforALL Initiative. Although there has been an 11.1% reduction in Zambia’s dependency on hydroelectric plants between 2015 and 2018 (94% to 82.9%), there is potential for more diversification to other technologies under the SEforALL initiative.
3.3.1 Vision and trajectories 2017 - 2030 For the purpose of the SEforALL Initiative in Zambia and the Action Agenda, renewable energy is defined as energy derived from: hydro (less than 20MW); solar; wind and geothermal; agricultural and forestry residues; and waste-to-energy.
Through progressive deployment of renewable technologies Zambia is expected to achieve 30% deployment of renewable energy technologies, which will dilute the dominance of large hydropower to 60%. While thermal fossil fuels will still contribute 10%, the mix of renewable energy technologies will be composed of solar 14%; small hydro 7%; wind 5%; biomass 3% and geothermal 1%.
The Government’s vision and strategy is to diversify the energy portfolio benefitting from the availability of large and mini hydroelectric resources, solar, geothermal, biomass and wind energy, capitalising on the favourable outcomes of the solar and wind resources mapping studies.
By 2030, it is expected that solar, geothermal, wind and other renewable technologies will represent about 17% of the installed generation capacity (Figure 7 above). Table 27 presents a breakdown of the hydropower projects and their potential capacity contributions. The technology will still dominate the future energy mix reflecting the country’s huge endowment of the resource.
Several potential project options from different renewable energy technologies (RETs) are being considered as listed below, which are at different stages of the project development cycle. Most of these projects still in need project preparation work and funding.
▪ Hydro A portfolio of 16 projects with an estimated total capacity of 13.01MW is planned for pre-feasibility studies and preliminary environmental and social impact assessments (ESIA) for private sector development by 2021, (see Annex 3). They are discussed in more detail in the accompanying Investment Prospectus.
▪ Biomass Previous studies have reported an estimated 500MW bio-energy potential from biomass. The Ministry of Energy and FAO are collaborating in a Bioenergy and Food Security (BEFS) Assessment and Capacity Building Project aimed at assisting the country to define the extent to which sustainable bioenergy can contribute to Zambia’s energy mix and the share of renewable energy. The assessment is being financed at an estimated cost of US$ 32.6 Mio. A preliminary bioenergy action plan for the sector based on a comprehensive analysis of the agriculture, energy, food security and the economic context of the country will be developed.
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A programme for the promotion of biofuels in the transport industry was initiated following the adoption of the National Energy Policy (NEP). A Statutory Instrument legalising biofuel, standards and a regulatory framework on biodiesel, and pricing methodologies was developed, and a zoning exercise was completed, with the support from the Government of Brazil. This initiative subsequently saw the establishment of the Biofuels Association of Zambia (BAZ), the Civil Society Biofuels Association (CSBA), and district and provincial biofuels farmers networks. Government has declared biofuels a priority sector, and this will see investors benefit from the appropriate incentives.
However, economic and financial viability of production costs, land requirements to meet the mandates, and environmental benefits have not yet been studied although the FAO resource assessment will to some extent incorporate these aspects. A viable biofuels industry will depend on sustained supply of cost- effective feedstocks.
▪ Wind The Energy Sector Assistance Management Program (ESMAP) and DNV GL are jointly undertaking studies to compile accurate data and a wind atlas that will guide policy makers, potential developers and investors for policy formulation and investment decisions. Eight meteorological wind measurement masts have been stationed at Choma, Mwinilunga, Lusaka, Mpika, Chanka, Petauke, Mansa and Lundazi where wind speed is considered to be sufficiently high to support power generation. Studies will be concluded by the end of 2019.
▪ Geothermal Three sites at Bweengwa river, Kapsya and Chinyunyu have been identified as potential sites for geothermal fields. These sites possess the critical characteristics of sufficient heat, high volume of fluid and rock porosity for resource exploitation. Resources need to be channelled towards developing expertise and drilling of wells to demonstrate the commercial viability of the resource.
▪ Solar Zambia has an average solar insolation of 5.5 kWh/m2/day which translates to approximately 3,000 sunshine hours annually (IRENA, 2013), making it ideal for solar thermal and photovoltaic applications. A preliminary solar energy potential assessment for Zambia was undertaken and the highest solar irradiance is of up to 2,750 kWh/m2. In 2013 REA developed a US$ 1.3 Mio solar mini grid project in the Mpata fishing community (Samfya District, Luapula Province) with 60kWp generation capacity for offtake by a cluster of villages with a population of about 6,000 inhabitants.
Based on lessons learnt, the Authority developed two more solar mini grids in 2016 in Chunga and Lunga in the Central and Luapula provinces respectively. The Lunga and Chunga solar mini grid project have capacities of at least 300kWp and 200kWp respectively. The projects directly benefit public institutions, businesses and private households, and an estimated 2,170 households benefit indirectly from these projects through improved quality of life, access to information and entertainment (radio and television), time saving and use, and more time available for children to study, among other things. These projects provide a sound knowledge base for upscaling of the technology.
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The Energy Sector Management Assistance Program (ESMAP) just carried out solar and wind Resource Mapping and Geospatial Planning studies under the global initiative on Renewable Energy Resource Mapping59. The studies have concluded that both solar and wind are technically viable to support commercial development of projects.
3.3.1 Existing gaps for renewable energy technologies Lack of diversification in the energy mix: Zambia is endowed with a good mix of renewable energy resources which include solar, wind, geothermal, biofuels and hydropower, however, the contribution of these technologies is still less than 2%.
Limited resource assessment data: These include renewable resource assessments that will reveal the technical feasibility of the resources to inform their commercial harnessing for energy production. The gap is being addressed through detailed assessment studies for the different technologies.
Lack of an enabling environment to attract private capital: Outdated plans, policy and regulatory gaps and poor harmonisation have in the past resulted in lack of interest from the private sector, and as a result failed to mobilise private capital. While fiscal capacity to undertake investment in infrastructure development in general is limited, the private sector which is an important source of investment capital has not been actively involved.
The development of a comprehensive electrification plan that will map out the on-grid and off-grid opportunities is underway to address the gaps. The latter is underpinned by the scaling solar PV, large and small/mini hydro, geothermal, mini grids (solar and hybrid systems), SHSs, and the implementation of the REFiT mechanisms. A list of the main activities to drive the development of renewable energies is provided in Annex 2 where the scope of the efforts being undertaken by the Government are highlighted.
Institutional capacity gaps: Institutional gaps at government and financial sector levels to develop the relevant frameworks and undertake the relevant project preparation and financing still remain a challenge.
3.3.1 High impact initiatives/opportunities for renewable energy The following high impact initiatives/opportunities are proposed for implementation under the SEforALL Initiative: ▪ Development of a renewable energy strategy; ▪ Assessing grid strengthening and development investment requirements, in order to increase the contribution of intermittent power (solar and wind in particular); ▪ Carrying-out prefeasibility and feasibility studies of micro-hydro, solar and wind generation sites to offer investors and financiers a portfolio of bankable projects; ▪ Expanding deployment approaches and initiatives used for the diversification of the country’s energy generation mix, such as the Scaling Solar and the Renewable Energy Financing Framework; the Zambia Renewable Energy Financing Framework; GETFiT policy to develop 100 MW of
59 World Bank, ESMAP 2017 52-
renewable projects, mostly solar power, through long-tenor project loans to all the renewable energy technologies ▪ Provision of at least partial risk mitigation for exploration risk is necessary to catalyse the development of the geothermal resources. A reference point could be the existing Geothermal Risk Mitigation Facility (GRMF) supported by the African-Union and KFW. The GRMF programme shares exploration risks by co-financing surface studies and drilling programmes aimed at developing geothermal energy projects; and ▪ Implementing the Government policy of cost-reflective electricity tariff to ensure projects’ financial viability while protecting the vulnerable groups.
3.3.1 Risk management for increasing and diversifying the contribution of renewable energy Zambia faces risks associated with increasing the contribution of renewable energies in the energy mix. Table 28 lists some of the risks and potential measures to mitigate them.
Table 29: Risk management for increasing and diversifying the contribution of renewable energies Risk Source Mitigation Action Responsibility Low interest of the Low and non-cost Migration to cost reflectivity GRZ, ERB private sector to reflective tariffs and tariffs invest in RE in single buyer model Zambia Support the development of Dependence on low other renewable energy cost large hydropower technologies and develop plants integrated resource plan
Sensitivity and Create awareness on the cost of consumer resistance on unserved energy the economic implications of increasing tariffs Credit risks The single buyer model Introduce alternative off-taker OPPPI, Ministry associated with deters private capital as models, such as intermediary of Finance, weak financial there is fear for default aggregator to attract sustainable MOE, ESCO, ERB position of ZESCO which would affect investments and the current project revenue and limited cash flows and ability to Reduce fiscal burden for host creditworthy off- service debt. governments; and catalyse takers private sector debt and equity investment. Undetermined Transmission network Assess and upgrade transmission GRZ, Utilities absorption capacity inadequate for level of grid to accommodate renewable for trans-mission intermittent power energy power. network to (solar and wind in transport particular) intermittent power Delays in project Lack of planning, Use pre-determined standard GRZ, Utilities implementation inadequate project procurement documentation
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preparation, financing (PPAs, licence/concession and procurement and agreement, risk mitigation inadequate project instruments) preparation Decision making is Outdated and Streamline, harmonise and align GRZ delayed and unharmonised legislation across relevant affected by regulatory framework institutions and SADC incoherent and inconsistent regulatory framework Low quality project Inadequate technical Provide capacity building GRZ, documentation and skills to support project programmes to support project Cooperating unbankable preparation and preparation and development Partners and / projects bankability, making and work closely with project or Development them unattractive for developers and cooperating Finance funding partners Institutions (DFIs) High capital outlay Project implementation Develop robust project structures GRZ, OPPPI, IDC, to undertake pro- is delayed or fails to that sufficiently mitigate risk and other financing jects and lack of happen due to limited use blended financing options in institutions, funding funding order to reduce the cost of DFIs financing projects Low return on Insufficient mitigation Build in credit enhancement GRZ, Project investment to compensate for the mechanisms and facilities as part developers, risk of undertaking of project financing structures financiers projects in a relatively and ensure optimal risk allocation uncertain environment and mitigation. discourages potential developers High project Project financing is an Develop projects under a pro- GRZ, preparation costs expensive model of grammatic approach to achieve Cooperating especially for small financing projects as economies of scale and reduce partners, DFIs projects transaction costs are project preparation and trans- high regardless of the action costs project size Secure project preparation funding (grants and TA) Delayed or failure Communities and Awareness campaigns for GRZ, REA, to implement interest groups may affected people to appreciate ZESCO, ZEMA projects disagree with the development and associated co- construction of RE benefits. projects in or near their Conduct environmental social community impact assessments (ESIA) that involve highly participatory stake- holder engagements and public participation programmes to secure buy-in
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Delayed project Protracted regulatory, Provide a clear roadmap for GRZ (Ministry of implementation as permitting and licensing authorizations, permitting and Community there are long lead procedures licensing Development, times to secure Ministry of Secure all relevant permits in approvals Chiefs and advance Traditional Affairs), ZEMA, ERB,
3.4 Improving Energy Efficiency The EE indicator selected in the GTF is the energy intensity, defined as the ratio of total primary energy supply to gross domestic product (GDP) at purchasing power parity (PPP). The GTF recognises the limitations of such an indicator, as energy intensity provides only a macro indication of how much energy is used to produce one unit of economic output.
3.4.1 Vision and trajectories 2017 – 2030 The SEforALL Initiative seeks to double the rate of Energy Efficiency (EE) by 2030. In 2014, the energy intensity for Zambia averaged 11.4 MTOE/trillion GDP (2005 USD) (Table 30). Zambia’s energy intensity decreased by about 32.5% since 2000 but comparatively above other regional states with an average of 28 MTOE/trillion GDP (2005 USD) in 201460. Zambia’s energy intensity level of primary energy (MJ/$2011 PPP GDP) improved from 9 to 7 between 2012 and 2015.
Zambia is participating in the Swedish International Development Agency (SIDA)’s Energy Efficiency Lighting and Appliances project in Africa. Implementation of phase I of the project, which entails a market study, commenced in August 2018. Phase II includes the development of minimum energy performance standards (MEPS), appliance labelling, mapping and building capacity in regional test laboratories to be implemented with an estimated budget of EUR 7 Mio. over five years. During the course of 2019, the Climate Technology Centre and Network and SAPP will coordinate an energy efficiency lighting project for 10 SADC countries61.
1. Currently Zambia neither has a specific energy efficiency strategy nor energy efficiency goals in the national development or sector plans, or specialised institution(s) mandated to improve energy efficiency. The EU is currently providing technical assistance to the GRZ to develop the National Energy Efficiency Strategy and work will be concluded at the end 2019. 2. Zambia’s NDCs for Climate Change were signed in 2015 and they contain climate mitigation measures for energy efficiency interventions 3. There are different sectors in which energy efficiency can be applied (production, transformation, transmission and distribution of different forms of energy), different end-uses (such as lighting, productive uses, cooking, transportation) and different appliances and equipment; and
60 World Bank Group https://data.worldbank.org/indicator/EG.EGY.PRIM.PP.KD 61 Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Tanzania (East African Community), Zambia and Zimbabwe. 55-
4. The paramount goal is transforming the economy into a diversified economy and transition towards less energy intense technologies.
However, based on the 2000 - 2014 trend and the regional experience, an annual improvement target of 2% (from the 2014 Energy Intensity estimate of 11.4) has been defined. The approach proposed to effect energy efficiency improvements is based on the following: a. Progressive introduction of policy and regulatory measures, standards and enforcement mechanisms and build consumer awareness about the benefits of energy efficiency. Two key areas could be considered: (a) the supply and uses of electricity; and (b) the supply and uses of energy for cooking and heat; b. Implementation of institutional capacity building measures that lay the platform for implementing an energy efficiency programme; and c. In parallel, implementation of a series of well-proven energy efficiency measures (‘low hanging fruits’) such as: (i) in the electricity sector: continuation of the demand side management measures, reduction of electricity transmission and distribution losses, introduction of a voluntary labelling and certification programme of more efficient technologies, and appliances for lighting, air conditioning, in buildings and in the industry, power factor corrections, etc.; and (ii) with respect to energy for cooking, scaling-up the dissemination of quality ICS, improving charcoal production techniques and laying out and enforcing minimum energy efficiency and quality standards. In built environments, retrofitting of buildings with energy efficient features for existing buildings while embodying the concept of energy efficient green building designs for new buildings to ensure compliance with the dictates of sustainable, climate resilient and carbon efficient economy. Emphasis should be placed on the use of sustainable materials which promote urban greening, as well as energy and water efficiency and sustainable waste management solutions.
3.4.2 Existing gaps for energy efficiency The main Energy Efficiency (EE) actions planned or implemented so far in Zambia are presented below. For the electricity sector EE actions can be categorised as: DSM actions through the power utilities; electricity tariff adjustments; regulatory strengthening; information and communication efforts; institutional and capacity strengthening, and specific energy efficiency projects. Energy efficiency actions associated with biomass uses have been presented in the section addressing energy for cooking and heat production. Existing plans and strategies regarding energy efficiency related to demand-side management actions through the power utilities, electricity tariff adjustments, information and communication efforts, and specific initiatives are described below.
ZESCO is currently implementing a range of integrated DSM initiatives, which had registered noticeable energy consumption savings of 138.62MW by mid-2018 (seeTable 31), slightly below the combined
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capacity of Itezhi-Tezhi - 120MW and Lunsemfwa Hydro 24MW. However, these savings could be reversed if the rated life of CFLs is reached62 and no replacements are made.
Table 32: Electricity Demand side management savings Initiative Description / Activities Savings Compact Fluorescent Lights (CFL) 3.2 Mio. units of CFLs distributed 135MW roll-out under Low pressure solar water Deployment at selected locations 3.5MW Commercial lighting Installation of Light Emitting Diode (LED) lights 0.123MW Total savings 138.623MW
Electricity Tariffs: Up to May 2017, average retail electricity tariffs were equivalent to 5-6 US cents/kWh, well below cost-recovery level. Clearly low electricity tariffs are not conducive to economically and financially justify energy efficiency interventions. For many years, ZESCO electricity tariffs have not been aligned with the local currency costs (long run marginal cost or accounting cost) by a significant margin even when accounting for low-cost hydro commissioned years ago. Current average tariffs paid by ZESCO to IPPs range between 7 to 13.2 USc/kWh; recent solar PV bids have yielded energy tariffs of about 6-8 US c/kWh.
The tariff increases of 75% by the ERB in May (50%) and September 2017 (25%)63 confirmed the commitment to the full cost-recovery principle and to a price-adjustment and correction mechanism reflecting inter alia, local currency depreciation. However, the increase was not effective enough to motivate end users to implement energy efficiency measures, as the majority of the of the households consume within the high threshold of the lifeline allocation. It would be advisable for the margin to be reduced to the basic free electricity threshold of 50kWh.
Tariffs have a key influence on driving private sector investment into increasing capacity and modernising the sector, however, there is need to be balance with social and economic considerations. To address the competing requirements, a new comprehensive cost-of-service study financed by the African Development Bank is currently underway and scheduled for completion by the end of 2019.
Information and Communication Efforts ZESCO is carrying out awareness and information campaigns and providing energy tips to manage the consumption and the demand for electricity. The appliances and end-uses targeted are electric geysers, showers, refrigeration, heating, lighting, and standby electricity. Time-of-use tariffs (TOU) have also been introduced for electricity consumption defined as peak, off peak and standard time, which fall between 18:00 to 22:00 hours, 22:00 to 6:00 hours and 06:00 to18:00hours respectively. Such efforts are directed at balancing demand and available supply.
62 CFLs have a rated service life of 6000 –15,000 hours 63 Excluded the power rates for the mining sector that are governed by specific contracts 57-
Improving EE in lighting: A notable national energy efficiency measure in Zambia has been the ban of imports and manufacturing of incandescent bulbs leading to a large uptake of compact florescent light (CFL) bulbs. ZESCO also executed a programme for distributing 1 Mio. energy saving CFLs estimated to have saved about 200 MW in power at the time of distribution. The programme was initiated in Lusaka in August 2015 and by mid-2018 energy efficient lights were distributed in the North Western Province, parts of Central Province and in Lusaka Province.
This campaign was preceded in 2012/2013 by the distribution by ZESCO of 2 Mio. CFLs at no cost (financed by the Government). The bulbs were manufactured locally by Electrometer Zambia at a cost of US$ 4.6 Mio. over a period of two years. The CFLs distribution was made through ZESCO’s customer service centres and ZESCO teams conducting door-to-door operations. Another campaign in 2011 consisted in distributing six CFLs free of charge to households; the project was supported and funded by the World Bank.
LED roll-out has led to the procurement and the roll-out of 4 Mio. units which have a targeted saving of 150MW. This was supported by Statutory Instrument (SI 74 of 2016) which formalised the ban of importation and local manufacturing of incandescent light bulbs, effective January 2017. As of February 2018, ZESCO had reportedly distributed more than 3.2 Mio. energy-saving bulbs nationwide with a total power savings of 145 MW. Additional efforts are also being considered jointly by Government and ZESCO, in particular the distribution of LED bulbs as provided for in Statutory instruments (SI) 32 and 35.
Solar Water Heaters (SWH): ZESCO planned to undertake a two-phased installation of SWH with an initial investment of US$ 40 Mio. into 100,000 solar in the first phase with expected savings to ZESCO of about US$ 180 Mio. over the estimated lifespan of the solar water of 15 years, and a payback period of 3 years,64. All initial end-user installation costs were borne by the utility, except for the initial solar water heaters rolled out as pilots in the Lusaka area (less than 100 systems). The project has stagnated with no further roll-out of SHW systems on account of higher costs than was initially envisaged.65
In 2014, the Government through the Ministry of Energy implemented a pilot programme in Muchinga, Luapula and the Northern Province to promote the utilisation of SWHs. The aim of the programme was to introduce the use of solar geysers as a modern technology for water heating especially in rural communities that are not connected to the grid and thereby improving energy efficiency and better use of energy from traditional energy sources.
Table 33: Solar Water Heaters pilot programme Province No. of installations Northern Province 25 Muchinga Province 45 Luapula Province 20 Luapula Province 50 Total 140
64 ZESCO, 2011 65 Zambia Renewables Readiness Assessment 2013, International Renewable Energy Agency (IRENA)
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Source: Department of Energy, 2017
Transmission and Distribution Losses: Despite the progress that has been made in terms of reducing commercial network transmission and distribution losses, they are reportedly still high and range between 18-20% from a study that was conducted to assess the reduction of technical and distribution losses through reactive power compensation (RCP) in 2017. The study specifically evaluated the extent of the burden that reactive power puts on Zambia’s electricity system; estimated energy savings / reduction of load dependent technical losses; the transmission and distribution system that could be reduced by RPC interventions of customers operating under a maximum demand (MD) tariff; estimating the reduction of MD payments that electricity consumers could avoid through installing RPC equipment; Estimating investment cost required to realise the energy savings through RPC; Estimating emission reductions that can result from RPC in Zambia. The study’s findings pointed to the following potential feasible results (Table 18).
Table 18: Selected results of the RPC study for Zambia SEforALL Sector Measure / variable Result
Potential economic viable saving in Maximum Demand USD15.7 Mio. per annum with approximately payments (all customers) 98.7% contributed by the customers connected to the distribution system Transmission customer investment costs US$ 9.53 Mio. Distribution customers investment costs US$43.8 Mio. Transmission segment pay back 1.73 years Distribution customer segment pay back 4.3 years Emission reductions (abatement interventions) 196.9 ktCO2/yr Technical losses 16.0%66 Energy savings MWh/yr (Load Dependent Technical Losses) 196 92767 Energy savings 0.27 MWh/ year Emission reduction 0.26 tCO2/year Cost of saving one unit of energy 2.71 USc/kWh Source: GFA, UN Climate Change, 2018
Selected results of the study show a significant departure from the business and usual (BAU) scenario of 515,254MW/year for distribution customers and 11,157MW/year for transmission customers. Results infer that policy interventions and regulatory framework targeting RPC to enable private sector investments into RPC interventions would yield positive results and demonstrate economic viability, and significant potential for GHG abatement.
66 Technical losses: ZESCO transmission system 5%, CE transmission system 3%, Distribution loss 11% (GFA, UN Climate Change, 2018) 67 Distribution customer savings 194 331 MWh/yr Transmission Customer savings 2 596 MWh/yr
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Power Factor Improvement: ZESCO’s current electricity tariff schedule includes a surcharge on maximum peak demand (per KVA) and a penalty for a power factor below 0.92. The surcharge is feared to be regressive and imposing a new financial burden for the private sector.
ERB has extended the grace period for PFC equipment surcharge due to: (a) the challenges associated with the supply and installation of the PFC equipment; (b) the prolonged electricity outages that were being experience then; and (c) the May 2017 50% tariff increase.
Solid Biomass Energy Efficiency: Improved Cook stoves programme It is estimated that in 2015 about 83% of the population was relying on biomass energy (firewood and charcoal) for cooking purposes using low energy efficiency stoves (estimated to be about 10%). Only about 5% of the households were using solid biomass improved cook stoves (with an effective estimated efficiency of about 25%-30%). The production of improved cook stoves is currently carried out by local artisans without assurance and consistency on minimum efficiency standards. Furthermore, as there are no monitoring and evaluation mechanisms in place, making it difficult to ascertain outcomes and their sustainability.
Petroleum Products: Transportation Sector Energy Efficiency Limited information is available on the use of petroleum products by industry (mining in particular). Zambia’s transportation sector, as the main consumer of oil and petroleum products, has been identified and targeted for EE interventions either directly through better public transportation plans in the main cities like Lusaka or indirectly using more energy efficient vehicles.
A 2013 report by the Zambian Institute for Policy Analysis and Research has highlighted that investment in the Lusaka public transportation infrastructure would substantially address a great deal of the emerging local transport challenges. It advocated for a series of measures to reduce travel costs and emissions, such as mass rapid transit systems. The July 2016 NAMA proposal ‘Green Urban Mobility Solution for Zambian City Integrated Tramway’ targets the cities of Lusaka and Kitwe and seek to create an enabling environment to support the construction of tramway systems in the two cities. Further analysis is however needed to design and implement comprehensive measures to improving energy efficiency in transport. Weak institutional framework to plan and implement energy efficiency activities: MOE is mandated to oversee policy formulation and to facilitate implementation of energy programmes, including EE activities. However, the Energy Management unit of the DOE has limited internal capacity dedicated for specific EE responsibilities. An entity/unit entrusted with the long-term goal of improving energy efficiency, such as a dedicated unit within the Ministry of Energy. This could work through a multi-sector task force with private sector participation, an association or an autonomous agency with a clear mandate and resources to advise the Government. The entity will coordinate with other agencies such as the Bureau of Standards (ZABS), design, implement and monitor the selected EE activities, needs to be set-up to support the EE vision and programme, and mobilise support and financing. Comparative assessments and institutional frameworks and experiences of other countries would be a first step towards building a base and strengthening the EE framework and programme in Zambia.
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Embryonic regulatory framework for energy efficiency Currently, the regulatory elements are covered under the Energy Management sections of the National Energy Policy 2008 (sections 5.9 Energy Management and 5.10 Household Energy), however with no specific legislation and strategy guiding the EE implementation. Lack of building codes promoting the efficient use of energy in buildings, with builders and users unaware of the benefits of more energy efficient buildings where the National Construction Council and local government pursue a key role in guiding processes and providing clear sector implementation guidelines. Lack of specialist energy services companies (ESCOs) and expertise operating in the field of EE and/or cogeneration. Although such companies have been successful in other countries, they generally require a mechanism of guarantees to support investment. At present, the Zambian financial system and regulatory framework do not foster this type of structure. However, mining activities - currently representing 55-60% of electricity consumption in Zambia -municipal wastewater treatment works and manufacturing among others should be the priority target candidates for EE initiatives. The 'Energy Efficiency Quick Wins’ initiative, which is financed through the European Union's Technical Assistance Facility of the SEforALL, provided empirical evidence on the decrease of electricity consumption associated with EE practices. The evidence was built on audits and implementation of EE measures through 14 feasibility studies at a bakery, and public and commercial buildings. The 'Energy Efficiency Quick Wins’ initiative is intended to provide a basis for the creation of a National Energy Efficiency strategy and market in support of the Government’s goal of reducing energy usage by 2% per year until 2030.
Zambia’s policy framework will be aligned and mirror that of the SADC regional policy framework, which has a target of reducing the region’s energy intensity over the 2016-2030-time horizon. Policies and programmes which are driven mainly by the SACREEE include the following: ▪ Renewable Energy and Energy Efficiency Strategy and Action Plan (REEESAP); ▪ SADC Energy-Efficient Lighting Roadmap; ▪ SADC Industrial Energy Efficiency Program (SIEP) supported by the EU and implemented through SACREEE to design and develop regional SADC-SIEEP Industrialization Strategy and Roadmap 2015-2063; ▪ SAPP energy efficiency demand-side management programmes and initiatives through utilities (cumulative energy savings of 4,031 MW reported in 2017); ▪ UN Environment on the Global Leapfrogging Program on Regional Efficient Appliance/Equipment strategy - to accelerate the transition to more efficient appliances and equipment to reduce global energy demand, mitigate climate change and improve access to energy and to reduce global electricity consumption by more than 10%, saving US$350 billion annually in electricity bills and
reducing global CO2 emissions by 1.25 billion tonnes per year; and ▪ Development of an energy efficiency database for households through cooperation with the African Union and the Africa Energy Commission.
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3.4.3 High impact opportunities and Initiatives for achieving the overarching objectives of improving energy efficiency To improve Zambia energy efficiency, the following high impact initiatives/opportunities are proposed for implementation under the SEforALL Initiative 2017-2030:
Energy Efficiency Awareness and Demonstration Programmes: ZESCO and other stakeholders should design more effective energy efficiency programmes and strengthen their implementation. This could include the piloting of demonstration energy efficiency programmes.
Electricity Grid Infrastructure and Supply Efficiency: The Government seeks to maximise efficiency in the electricity sub-sector by reducing technical and non-technical losses in the electricity transmission and distribution networks. The aim is to reduce losses to below 15% by 2030, and system reinforcements and modernisation will be necessary to achieve the 2030 target. The high impact opportunities for grid infrastructure and supply efficiency are: 1. Rehabilitating and strengthening the existing transmission and distribution systems through investment in rehabilitation, upgrading voltage levels and installation of appropriate transformers; 2. Supporting the utilities and the large electricity customers in implementing a PFC programme coupled with enforcement of appropriate regulations on Power Factor penalties; 3. Automating the distribution system, which will be achieved through installation of a modern robust and integrated distribution management system; installation of different types of sensors on feeders, transformers and distribution substations; and installation of metering on transformers and smart metres for large customers; and 4. Modernising the grids (smart grid programme) to transform the existing distribution power into a smart grid capable of providing reliable, quality, affordable and sustainable energy. Given the high costs required to make the grid smart, the Investment Prospectus should provide detailed information on cost structure and other indicators such as the internal rate of return and pay back periods. Electrical appliances and buildings: This will entail widespread implementation of best practice policies, building design and technologies, coupled with behavioural change could deliver reductions in energy demand from new and existing buildings of between 30%-50% compared to business as usual (IPCC, 2014). Achieving such savings would not only significantly reduce GHG emissions, but also produce better quality life, health, environmental and economic co-benefits. This would include effecting minimum energy performance standards in key applications: building code; lighting (LED, CFL); motors; refrigerators; solar water heating regulations; public street lighting; and designing and implementing the enforcement, monitoring mechanisms, and the institutional framework.
Transportation: According to the International Energy Agency (IEA, 2016), the transport sector has the highest growth of CO2 emissions than any of the other sectors. Its contribution to energy related CO2 emissions is estimated to increase from the current 25% to 33% by 2050. Black carbon and pollutant emissions are also set to increase similarly with major health and climate impacts. In 2014 petroleum
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products (refined oil products and crude oil) accounted for about 10% of Zambia primary energy supply (ERB, 2016). A large share of the petroleum products is used also in the transport sector, expected to grow rapidly in the years to come. An in-depth analysis needs to be conducted to inform better policy design to switch to cleaner transportation.
Biomass Cookstoves: There is need to promote the use of more solid biomass improved cook stoves by supporting the supply side. The quality of improved cookstoves made by local artisans lacks consistency and does provide guaranteed minimum efficiency standards for the users. A monitoring and evaluation mechanism needs to be in place to ascertain efficiency and sustainability.
Charcoal Production Processes: Charcoal consumption is expected to increase rapidly in Zambia particularly in the expanding urban areas and its production processes are inefficient (energy efficiency of 8-12%). The NAMA ‘Increasing Efficiency in Harvesting, Processing and Use of Charcoal’ has proposed implementation of five core activities: (i) establishment of alternate coupes and shelterbelt strips systems for sustainable forest wood harvesting for charcoal production; (ii) establishment of charcoal retort kilns for sustainable charcoal production and associated sustainable business; (iii) promotion of adoption of improved charcoal cook stoves for sustainable utilization of charcoal and associated sustainable business; (iv) capacity building and awareness campaigns among the stakeholders participating in charcoal production and production; and (v) innovative financing to provide risk capital and development of business model for charcoal producers (private and cooperatives), transporters and traders, and micro credit to enable end users to purchase the stoves.
Enabling Environment: The development of a performing energy market requires in particular a revised electricity tariff structure reflective of the true economic cost of the electricity services and products, as well as energy minimum energy efficiency standards for appliance and building, labelling, testing and other guiding, regulatory actions and enforcement and monitoring mechanisms. These actions do not require large amounts of funding from the government and the donors.
Specific Energy Efficiency interventions: Specific energy efficiency interventions require a higher degree of proactiveness and funding from the Government and the Cooperating Partners. Such interventions include investment for the electricity industry to reduce losses, improve efficiency, increase efficiency in lighting and commercial buildings and industrial processes, and improve cooking energy efficiency in cooking and charcoal production.
Communication and awareness programme and demonstration projects: Consumer awareness, education and information dissemination and demonstration projects through ZESCO will assist customers to realise the benefits of energy savings and the resultant reduced electricity bills.
New approaches and business models for energy efficiency are being implemented across the region, including many that are designed to attract and involve private sector players. These include loans and credit facilities that are linked to the financial value of cumulative energy savings.
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3.4.4 Risk management for improving energy efficiency Zambia faces some risks in implementing its energy efficiency strategy. Table 19: provides initiatives that Zambia could consider to mitigate them.
Table 19: Risk management for improving energy efficiency Risk Source Mitigation Action Responsibility
Failure to attract Lack of a clearly defined Develop a robust energy GRZ investment from ESCOs energy efficiency strategy efficiency strategy and and private sector into and regulatory framework implementation roadmap. energy efficient technologies and Lack of dedicated EE Adopt an institutional framework solutions. institutions to delineate/ conducive to the implementation implement EE of an energy efficiency programmes and enforce programme. EE regulations. Mainstream energy efficiency in Inadequate minimum all processes that contribute to energy efficiency economic activity standards for public procurement. Low adoption of Insufficient information Carry out a comprehensive GRZ, ZABS, private efficient technologies and demonstration of the awareness, communication and sector by energy consumers benefits of energy efficient EE demonstration programme. technologies.
Low electricity tariffs not Implement tariff adjustments providing adequate signals while protecting the vulnerable to consumers to save groups of the society. electricity. Enact and enforce regulations on minimum energy efficiency performance.
Reduction of the life-line tariff allocation to 50kWh to encourage a culture of energy savings and foster effective DSM outcomes.
This would also release more energy for to ZESCO and contribute to revenue generation capacity
Limited interest of Low electricity tariffs Increase tariffs while protecting GRZ ESCOs and other constrain demand for the vulnerable groups of the relevant private sector energy management society. players interest services. Access to and cost of finance is barrier for Enact and enforce regulations on ESCOs minimum energy efficiency performance
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Facilitate financial support and incentives for ESCOs
Unpredicted reliability Insufficient generation and Accelerate the implementation of GRZ, ZESCO and CEC of energy supply and transmission investment a diversified generation portfolio load shedding and accelerate regional Inadequate policy to interconnections and national attract investment grid infrastructure. Slow deployment and Higher up-front costs of EE Provide tax and financial GRZ, ZESCO and CEC penetration of energy technologies. incentives to adopt EE efficient technologies. technologies. Institute penalties for energy inefficient operations Institute minimum performance standards for energy efficient technology to increase penetration and shift and increase derived benefit.
3.5 Additional Nexus Actions
3.5.1 Status and trajectories
Energy is a cross cutting key driver for development and its nexus with other sectors especially health, education, cooking, gender, climate change, food security and water. The status of this nexus is not is fragmented and not sufficiently documented. Under such a scenario, it makes it difficult to plot the 2030 trajectories and beyond.
3.5.2 Existing gaps for energy nexus
The following are the current gaps in the energy nexus: ▪ Inadequate awareness raising and programmes and activities on innovative technical solutions, which have multiple benefits (e.g., lighting, rainwater harvesting, exploitation of alternative sources of energy, etc.), and promote resource efficient solutions, e.g., drip irrigation as water efficient irrigation system, energy efficient pumping systems, etc.; ▪ Insufficiently harmonised action plans between sectors leading to un-coordinated sector interventions and missed opportunities; ▪ Insufficient resource data regarding energy resource availability, hindering planning and the development of projects particularly on renewable energy; ▪ Insufficient involvement and consultations of all the relevant stakeholders during the preparation and implementation of projects (e.g. Ministries other than the MOE), and lack / poor involvement and participation by women; and
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▪ Uncertainties and concerns about implementation challenges and delays by IPPs, as well as lack of readily available information and unfamiliarity of the local environment for IPPs to make investment decisions.
3.5.3 High impact initiatives for achieving the overarching nexus issues Cross sector collaboration through inter-ministerial steering committees and sector advisory groups (SAGs) that meet regularly are important to define policy, strategic planning and integration of nexus issues. This should be underpinned by rigorous quantitative assessments of resource use and cross-sector linkages.
Table 34: Nexus actions and likely impacts Nexus component Issue Actions Health ▪ Indoor air quality from cooking ▪ Awareness programmes about the primarily affects women and negative impacts of pollution children. related to the traditional forms of cooking. ▪ Dissemination programmes of improved cookstoves and when appropriate in rural areas use of biogas and substitution to cleaner fuels such as LPG. ▪ Electrification of health facilities
▪ Low electrification rates (on and ▪ Scale-up of electrification off grid solutions) and low quality programme (through grid of electricity in some areas affect extension and off-grid solutions) maternal and health care should provide electricity services services negatively. Reliable to a large number of urban, peri- electricity supply is required to urban and rural households. operate medical and health care equipment, and staff amenities. Education ▪ Inadequate lighting impacts ▪ The proposed on-grid and off-grid negatively on pupils’ electrification programmes will performance and access to increase the availability of Information and Communication electricity for lighting, ICT, Technologies (ICT). Reliable laboratories and staff amenities in electricity supply is required to schools. operate laboratories, ICT, other equipment and staff amenities in schools. Gender ▪ Lack of access to modern cooking ▪ The dissemination of improved solutions adversely impacts cookstoves (ICS) programme and women particularly relating to the biogas programme should the collection of firewood and reduce the needs for firewood; the household cooking tasks in hence reduce time allocated to the terms of time and has significant
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impacts on health, such as collection of wood needed for respiratory diseases from smoke cooking. inhalation. ▪ Mobilise rural women groups/clubs to be change agents / demonstrators of improved cook stoves. ▪ More energy efficient and cleaner cookstoves with less smoke and emissions of volatile compounds should lead to reduced incidence and prevalence of respiratory and related diseases particularly on women.
Clean potable water ▪ Inadequate clean potable water ▪ On-grid and off-grid electrification due to limited access to energy programmes will allow for for water pumping. increases in the supply of electricity available for potable water needs.
Food production/ Food ▪ Food insecurity due to ▪ On-grid and off-grid electrification Security inadequate energy for irrigation. programmes will allow for increases in the supply of electricity available for irrigation needs. ▪ Strategic allocation of land for production of bioenergy and balancing it with food security
▪ Address the competing use of water for instance for agriculture and energy generation
Climate Change ▪ Lack of climate resilient ▪ The proposed programmes electricity infrastructure supporting the dissemination of negatively impacts Zambia’s ICS, the production of charcoal electricity production. Use of using more efficient kilns, and the woody biomass directly for development of biogas digesters cooking or for the production of would reduce the consumption of charcoal is impacting on the solid biomass and charcoal for sustainability of the biomass cooking purposes, hence reducing cover. Zambia has also signed some pressure on woody the Climate Change Agreement resources. GHGs emissions would and has submitted an NDC. also be reduced (although Zambia is a relatively low emitter of GHGs). ▪ The proposed diversification to other renewable energy sources
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(such as mini-hydro, solar, geothermal and wind) would mitigate the risks of heavy reliance on large hydroelectric power.
3.5.4 Risk management for nexus initiatives
Table 35: Risk management of the nexus initiatives Risk Source Mitigation Action Responsibility Failure to address ▪ Lack of integrated ▪ Improved inter-sectoral GRZ, CSOs, Cooperating nexus issues planning and (cluster) coordination. Partners unharmonised ▪ Cluster advisory/ policies working groups and ▪ Centralised planning committees of energy projects Poor civic society ▪ Outdated planning ▪ Participatory and GRZ, CSOs, Cooperating inclusive methodologies and consultative planning partners engagement strategies and information dissemination ▪ Policy and planning education
Cultural heritage ▪ Cultural beliefs and ▪ Consultations with GRZ, CSOs, Cooperating barriers practices regarding residents, local Partners heritage sites government, traditional leaders and National Heritage Council ▪ Observing heritage sites and balancing their preservation with development ▪ Inclusive project plans
Relocation and ▪ Displacement to give ▪ Consultations with all GRZ, CSOs, Cooperating Involuntary way for project relevant stakeholders partners, communities resettlement development at target project development sites areas ▪ Formulation and implementation of project specific resettlement plans
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Failure to mobilise ▪ Lack of local capacity ▪ Innovative financing GRZ, climate funding resources for and high cost of mechanisms e.g. organizations, Credit funding energy funding by local Public-Private- guarantee companies and projects financial sector and Partnerships (PPPs) financial sector poor investment ▪ Mobilising culture communities – energy ▪ Dependence on donor cooperatives model. funding ▪ Encouraging cross- sectoral financial support for nexus issues ▪ Reduce cost of borrowing to promote sustainable energy projects through Government and donor risk mitigation guarantees and blended financing instruments
Limited ▪ ▪ Develop finance ▪ GRZ, financial sector involvement from instruments for end local banking sector users to improve their level of access to energy services and financing products Political ▪ Policy gaps ▪ Inclusive ▪ GRZ agencies, the ▪ Governance and implementation/ Executive and political interference involvement of all Legislature stakeholders in the awareness ▪ Promoting Zambia as a preferred investment destination. Neglecting nexus ▪ Lack of gender ▪ Mainstream nexus GRZ issues mainstreaming and issues into energy policy to promote policies and strategies gender inclusivity and and programmes to vulnerable groups ensure inclusivity of all stakeholders
3.6 Enabling Action Areas Zambia has a well-structured institutional framework developed over the last 20 years and experienced professionals. This should broadly ensure a successful implementation of the SEforALL Action Agenda and
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Investment Prospectus. However, to ensure satisfactory implementation of Zambia’s Vision 2030 and targets, the sustainability of the outcomes of the proposed activities, and risk mitigation measures and management, decisions and actions are needed with respect to energy planning, strategies, business models (such as carried out by the Ministry of Higher Education) and technological innovation, financing mechanisms, institutional and capacity strengthening, awareness and knowledge management, and stakeholders coordination, as laid out in the following subchapters. These actions would need to be implemented as soon as possible during the first phase of the implementation of the Action Agenda (2019- 2025), and therefore should be included in the first Investment Prospectus.
The various institutional clusters for implementing and monitoring the 7NDP Development Outcome 4 on improved energy production and distribution for sustainable development will be responsible for the coordination of the Action Agenda (led by MOE) and its further refinements to make it relevant to Zambia’s evolving sustainable energy for development issues.
3.6.1 Energy planning
The area of energy planning is important in dealing with the dynamics of energy demand and supply in view of climate change issues and investment considerations to achieve sustainable development. Business models and technology innovations, financing mechanisms and risk management, institutional strengthening and capacity building, awareness and knowledge management and stakeholders’ coordination are important effective inputs into the process of energy planning. These have been identified as critical area and are presented with the necessary actions
Table 36: Energy planning Critical areas Actions needed ▪ Access to detailed and up-to-date ▪ Carry-out periodic energy surveys to build-up an information on energy supply, demand and energy information system end-uses, including easy (on-line) access by ▪ Setting up a database and online platform to support sector stakeholders to a comprehensive the development of specific strategies, programmes energy sector data base and projects for both public and private sector ▪ Information dissemination
Access to up-to-date information on the ▪ Carry out surveys of the sources and uses of biomass biomass sector, particularly regarding in the urban and rural areas, particularly for cooking cooking activities in urban and rural areas and for charcoal production purposes including energy consumed, types of appliances used and penetration and performance of energy efficient technologies, fuels, prices and costs, etc. Updating the REMP ▪ Update the REMP to factor in technological changes, more relevant business models, economic and rural electrification landscape fundamentals and adapting to lessons learnt
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Updating generation and transmission ▪ Update the PSDMP including generation and master plans for the interconnected transmission master plans for the interconnected systems. systems and incorporate integrated resource plans
Promotion and implementation of off-grid ▪ Adopt regulations for independent generators and solutions mini grid connection to the power grids ▪ Develop and implement opportunities and development of relevant strategies
Development and adoption of minimum ▪ Adopt minimum technical standards for rural standards for rural electrification electrification for improved service delivery
Development and adoption of minimum ▪ Adopt minimum technical standards for rural energy efficiency standards for wood fuel electrification for improved service delivery /charcoal stoves and of the enforcement ▪ Enforce compliance mechanisms Development, automation and integration ▪ Establish Monitoring, Evaluation and Reporting of Monitoring and Evaluation (M&E) Mechanisms for implementation of the SEforALL systems and reporting mechanisms Action Agenda ▪ Integrate SEforALL indicators into M&E framework
Development and adoption standards and ▪ Delineate standards and regulations for net metering regulations on net metering ▪ Roll out net metering to different customer categories
Assessment of grid absorption capability ▪ Undertake grid reinforcements and expansion and grid planning studies ▪ Integrate renewable energy capacity to ensure rapid scale deployment
Development of standardised contract ▪ Implement standardised Implementation negotiation, implementation and bankable Agreements (IAs) and power purchase agreements power purchase agreements (PPAs), financing and negotiation toolkits
3.6.3 Specific strategies and roadmaps
Table 37: Specific strategies and roadmaps Critical areas Actions needed Development of biomass sector strategy ▪ Adopt of a detailed strategy, priorities and roadmap for improved use of biomass feedstocks ▪ Implement an improved cookstoves programme which will encourage communities to adopt efficient cooking technologies based on field surveys ▪ particularly regarding energy for cooking requirements in rural and in urban areas
Definition and adoption of financing ▪ Definition of incentives mechanisms and adoption of mechanisms for first-connection costs an electricity access strategy and of its implementation mechanisms for financing mechanisms (credit or grant) to facilitate connections
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Development and adoption of a mini grid ▪ Development and adoption of the National development strategy Electrification Programme and of its implementation particularly of financing mechanisms (credit or grant) to facilitate connections ▪ Adoption of guidelines and regulations for mini grid development and mini grid tariff determination
Development and adoption of an energy ▪ Adopt an energy efficiency strategy including efficiency strategy, financial instruments and institutional and regulatory framework to develop, implementation roadmap prioritise and monitor the implementation of the energy efficiency strategy
3.6.4 Business models and technology innovations
Table 38: Business models and technology innovations Critical areas Actions needed Implementation of Public-Private- ▪ Clarify the rules and modalities of engagement for the Partnership (PPP) models for power various forms of PPPs generation and for mini grids Implementation of Pay-As-You-Go-(PAYG) ▪ Streamline the investment procedures, guaranteeing for individual SHS stable returns to reduce the perceived and real risks to energy infrastructure investment
Establishment of energy service companies ▪ Support the formation of ESCOs through access to (ESCOs) establishment and remuneration financing, establishing an appliance labelling framework programme ▪ Adopt and enforce minimum energy efficiency standards for appliances and in buildings, delineating and implementing minimum energy efficiency standards in public procurement
Implementation of financing mechanisms ▪ Adopt of MER mechanisms based on rigorous such as output / results based, revolving methods and in line with the GTF requirements (such funds often implemented through donor as individual programme evaluations, cross-national supported projects quantitative studies, etc.)
3.6.5 Financing mechanisms and risk management
Table 39: Financing mechanisms and risk management Critical areas Actions needed Reduced dependency on donor funding for ▪ Identify different sources of finance critical energy sector initiatives ▪ Establish a project pre-investment facility and project preparation grants (with an option of cost sharing where relevant) to support prefeasibility and
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feasibility studies to enable projects to reach bankability and project financial close
Involvement in project preparation of local ▪ Establish an Energy Development Fund which will banking sector and micro-finance institutions incorporate the SEforALL and will have multiple in the formulation and financing small and windows, to: medium size energy projects a) finance the preparation of energy projects; b) provide early-stage seed capital and equity to get such projects to the stage of commercial bankability, thereby leveraging more private capital into the sector; c) provide grant-financing as needed for example for electricity access; and d) carry-out demonstration projects ▪ Step up the involvement of local financial sector in financing projects and provision of financing facilities for adoption of clean cooking solutions
Risk mitigation instruments ▪ Development of risk mitigation instruments (such partial risk guarantees, grant financing, (PRGs) etc.) to reduce projects actual or perceived risks, and innovative financing mechanisms available to primary lenders and other financial intermediaries
Provision of collateral to finance household ▪ Conduct prefeasibility and feasibility studies develop access to energy projects (such as mini grids, a portfolio of energy projects (mini-hydro, solar and SHS) wind, mini grids, etc.) available for implementation, and make such information easily accessible
Issues related to an electricity market with a ▪ Establishing and implementing a framework for single public-sector off-taker wheeling on the transmission network to encourage easy entry and competition with other players
Access to climate-finance available for ▪ Ensure adequately funded project preparation countries to tackle the impacts of climate activities and engage skilled technical personnel to change and move toward low carbon more produce credible studies and assessments resilient growth pathways Geothermal exploration risk exposure ▪ Set-up a specific geothermal risk-mitigation instrument to cover some of the exploration risks (following the GRMF model).
Access to project development and ▪ Standardise and publish PPAs and other contractual implementation finance and financial documentation (business-plans, financial models) to increase transparency in processes. ▪ Mobilise finance and provide relevant supporting documentation such as collateral and audited financial statements
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Local banking sector involvement ▪ Increase local banking collaboration with other regional commercial banks, Development Finance Institutions (multilateral and regional) ▪ Develop institution capacity to evaluate projects and resource mobilisation ▪ Mobilise resources through risk sharing and syndication
3.6.6 Institutional strengthening and capacity building
Table 40: Institutional strengthening and capacity building Critical areas Actions needed Inadequate skills ▪ Create an inter-sectoral forum to develop, implement and monitor the energy nexus actions (Section 3.5 above) ▪ Capacity building to support the design and implementation of new energy models and projects
Mobilization of finance for small and ▪ Train and expose the staff of local banks and financing medium size renewable energy projects institutions in order to increase local institutions and programmes interest and lending to energy projects; ▪ Packaging of project to reduce transaction costs
Knowledge enhancement ▪ Create institutional framework and expertise to develop and implement projects ▪ Create and nurture linkages with national and international universities and other research and development institutions ▪ Increase knowledge and understanding of the benefits of quality renewable energy technologies
monitor an energy efficiency programme ▪ Design, implementation and monitor of energy and activities involving energy supply and efficiency activities. end-uses across many economic and social ▪ Decide whether a national autonomous Energy sectors Efficiency/Demand Management Agency should be set-up to implement energy efficiency programme strategies
Creation, institutionalization and ▪ Create an Advisory Board mandated to propose to the resourcing of an SEforALL team decision makers policies, investment priorities and financing strategies and plans, and supporting technically and financially the SEforALL Working Groups. ▪ Establish and resource the SEforALL team at the MOE (DOE)
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Technology adoption ▪ Provide fiscal incentives and rebates for local financing institutions which participate in the financing of the domestic energy projects
3.6.7 Awareness and knowledge management
Table 41: Awareness and knowledge management Critical areas Actions needed Development and adoption of a ▪ Upgrading of the Ministry of Energy website to methodology and implementation plan for include all relevant sector information on resource maintaining an energy sector database availability, applications, strategies and plans and incorporating the SEforALL Activities incorporate the SEforALL related activities
Establishment of an SEforALL website ▪ Develop content for website and activate website linked to the MOE ▪ Continuously update website with relevant information
Development and adoption of monitoring, ▪ Adopt MER and MVR mechanisms based on rigorous evaluation and reporting (MER) and methods and aligned with the GTF requirements (such monitoring, verification and reporting as individual programme evaluations, cross-national (MVR) quantitative studies, etc.).
3.6.8 Stakeholder coordination
Critical areas The critical areas are related to the mechanisms needed to regularly consult relevant stakeholders sector stakeholders: energy suppliers and businesses involved from the public and private sectors; communities and consumers; the cooperating partners; and the financiers.
Actions needed Priority actions will include: ▪ Maintaining active engagements with key stakeholders, in particular the private sector to understand their needs and expectations of an enabling environment for project development ▪ Engage on innovative programme development through knowledge management / information exchange to facilitate and ensure uptake of transformative projects relevant to the SEforALL goals ▪ Ongoing assessment ensure optimal participation by the private sector in mobilising financial resources ▪ Assessment on the GRZ fiscal discipline to maintain macroeconomic stability and not to crowd out the private sector. ▪ Engagements on project implementation modalities and procurement frameworks to improve efficiencies and simplify project development processes
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5. ANNEXES
Annex 4: Geographic Map of Zambia
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Annex 5: – Ongoing energy programmes/projects in Zambia Programme / Initiative Scope / Description Implementer / Cooperating Partner Increased Access to Electricity ▪ to increase access to clean, reliable, more ▪ EU grant and Renewable Energy equitable and affordable energy and promote Production (IAEREP) project renewable energy production and energy (2016 -2022) efficiency across Zambia. ▪ enhancement of policy, legal and regulatory environment and capacity building for renewable energy and energy efficiency ▪ capacity building for renewable and energy efficiency ▪ feasibility studies and demonstration projects through government and private sector capacities to develop gender inclusive renewable energy and energy efficiency projects and energy efficiency at household and industry level by awareness raising and support to economic activities. The Beyond-the-Grid initiative ▪ to accelerate off-grid electricity access through USAID, Swedish (2017 – 2021) two strategic priorities: Development ▪ providing high quality renewable Agency (SIDA) energy services to household (one managed by the Mio. Zambians) by 2021 Renewable ▪ increased private sector participation Energy and and growth through off-grid Energy Efficiency renewable energy generation and Partnership. distribution.
China-Zambia South-South ▪ to support improved access to electricity for MOE, DANIDA Renewable Energy Technology rural communities through the creation of an UNDP Transfer Project (2014 – 2018) enabling environment to up-scale renewable energy technology deployment. Includes the following skills development and renewable energy capacity development: ▪ The University of Zambia (UNZA) Solar Energy Centre of Excellence launched in 2018 to provide skills development, testing of equipment and physical demonstration of solar technologies based on the Chinese experience. ▪ engineering procurement and construction (EPC) contract has been awarded for construction of the
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200kW Chipota hydro project which is scheduled to commence in April 2019.
Renewable energy resource ▪ focusing on mapping of solar and wind World Bank / mapping project (2016 – 2018) resource potential in Zambia. Solar data Energy Sector collection is complete while that for wind is Management being finalised. Interim reports that confirm Accelerated the viability of wind have been produced. Program (ESMAP)
Scaling-up Renewable Energy ▪ identified energy access in rural and peri-urban World Bank, Plan (SREP), (2017 – 2018) areas; wind power promotion; and geothermal International development projects as priority areas to Climate Fund, leverage significant concessional and private MOE sector financing.
The Electricity Services Access ▪ increasing electricity access to Zambia’s rural World Bank, Program (ESAP), (2017 – 2022) areas on a targeted basis. implemented by ▪ increase electricity access through on and off the REA and grid connections ZESCO ▪ provide support to the national electrification strategy. ▪ A project implementation unit was established, and the national electrification strategy was launched.
A Cost of Service Study (2017 - ▪ analysis and determination of electricity cost AfDB 2019) structures including marginal cost for generation, transmission and distribution and supply of electricity to various customer categories in order to shift to cost reflective tariffs.
The Bioenergy and Food ▪ to undertake a bioenergy assessment and Agricultural Security (BEFS) project 2018 – capacity building study Organization 2020 ▪ developing a bioenergy strategy that will (FAO) integrate food security and agricultural needs, taking cognizant of the need to balance food security and energy needs while also ensuring the protection of individual rights and land tenure, and risk assessment associated with the development of the sector.
Energy for Agriculture (2015 – ▪ Development of the biogas market in Zambia SIDA, SNV 2019) in order to increase households’ access to clean cooking energy solutions ▪ improving livelihoods through increased fuel savings and income generation
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▪ stimulate consumer demand for cooking solutions through promotion and access to finance ▪ support demonstration and adaptation of proven bio-slurry processing and application methodologies. ▪ At least 3,375 biodigesters have been installed.
The Forest Regeneration ▪ regeneration of forests by reducing charcoal UNDP Project (2017 – 2020) production induced pressure on forests. ▪ baseline to assess wood fuel was conducted at Chitambo and Serenje. ▪ Awareness and training have also been provided on the production and use of fixed stoves and improved cook stoves, as well as briquette making using twigs, leaves and maize cobs.
Scaling-Up Solar Programme ▪ Development of two solar farms with IFC / World Bank (2016) capacities of 54MW and 28.2MW - Round 1 bidding process. ▪ NEON S.A.S and First Solar and EON Green Power whose bids came at USc 6.02/kWh and USc 7.84/kWh respectively. ▪ Commissioning of the first farm is expected in April 2019 and the second one will be commissioned in at the end of 2019. ▪ contribute to the target of increasing capacity from solar by 600MW
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BOX 1: BEYOND THE GRID FUND FOR ZAMBIA (BGFZ)
BGFZ has contracted four private companies under the first round of financing. A range of innovative product offerings and approaches are used to clean, modern and reliable energy affordable energy solutions. Based on energy data and intelligence geospatial systems, they include: ▪ A pay-go energy system in partnership with MTN, a mobile telecommunications company reaching out to 30,000 Zambian households within nine months of entry; ▪ ReadyPay Solar Power System which is now providing power for clean, lights, phone charging, satellite TV to over 150,000 people in off-grid Zambian households using systems that range between 10 to 34 watts; ▪ the PAYGO solar has spread to 10 provinces with the aim of providing high- quality solar home systems to 100,000 off-grid rural Zambian households by 2021; ▪ Ongoing replacement of charcoal with waste biomass pellets for cooking with a fuel pellet factory s in Copperbelt since 2013. A low-cost pellet stove (“Z- stove”) has been developed in partnership with a Swedish team of experts; and ▪ Pioneering of a scalable model standard microgrid that combines value-based billing and community centric operations to deliver modern electricity. It transforms un-electrified communities with connected hyper efficient smart grids that help grow local economies, improve education and healthcare. Two microgrids have been established, and a target to deliver 150 more grids in the next four years.
IMPACT ▪ 94616 Energy Service Subscriptions sold ▪ 492003 Total beneficiaries ▪ 1165 Jobs created
▪ 227250 Kg of CO2 mitigated annually ▪ US$24 Mio. Co-funding leveraged by ESPs
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Annex 6: Zambia Statutes Statute Main provision(s): Constitution of Zambia (Amendment) Guarantees basis of economic policies and pledges to: No. 2 of 2016 i) create an economic environment which encourages individual initiative and self-reliance among the people, to promote investment, employment and wealth. ii) promote the economic empowerment of citizens so that they contribute to sustainable economic growth and social development iii) promote local and foreign investment and protect and guarantee such investment through agreements with investors and other countries. iv) not to compulsorily acquire an investment, except under customary international law and where the investment compulsorily acquired was made from the proceeds of crime no compensation shall be paid by the Government. Also provides the overall framework for all public financial management (PFM) related legislation and sets out guiding principles for PFM in the country as well as Parliament’s mandate therein (guided by the Public Financial Management Handbook68) The Energy Regulations Act of 1995, Establishes the Energy Regulation Board (ERB), its functions Chapter 436 being repealed to give ERB and powers, rules and procedures for licensing of more power to regulate all consumers to undertakings related to production of energy and handling be finalised in 2019 of certain fuels/energy services Electricity Act No. 14 of 1995, Chapter Regulates the generation, transmission, distribution and 433 supply of electricity; electricity tariff setting procedures; and related matters. Being repealed and to be finalised by end of year to incorporate open access for transmission and distribution and transmission infrastructure Rural Electrification Act No. 20 of 2003 Established REA and its functions; established the Rural Electrification Fund; and other related matters. Being amended to strengthen coordination and oversight for all rural electrification Statutory Instrument (SI) No. 79 of 2013 Zambia Electricity Grid Code Regulations under review and date to be confirmed Establishes technical requirements for the connection to, and use of the electrical transmission system by parties (generator, end- use customer, distributor, supplier, transmission network,
68 The Handbook relates to the overall aggregate fiscal discipline, allocative efficiency, equity, redistribution of wealth and value for money management of the economy and the need for Parliamentary fiscal oversight. It describes the national legal and institutional frameworks, as well as systems and procedures that should guide the effectiveness and transparency and accountability in executing the various components of PFM work within a national and international context. 2-
service provider, embedded generator, system operator or a regional operator) other than the owning electricity utility, in a manner that will ensure reliable, efficient, economic, secure and safe operation. The Grid Code seeks to ensure that investments are made within the requirements of the code and provide access, on agreed standard terms, to all parties wishing to connect to or use the transmission system and applies the principle of non-discrimination through the provision of consistent and transparent criteria and procedures. Grid Code Technical Committee (GCTC), Oversees the implementation of the current grid code SI 79 SI 79 of 2013 of 2013 including the power factor (PF) surcharge; regulates the reciprocal obligations of industry participants around the use of the Transmission System (TS) in order to ensure the safe and efficient operation of the Interconnected Power System (IPS); promote transparency in the industry, thereby attracting structured investment in the sector; and foster competition in the sector, thereby enhancing efficiency and increasing consumer choice and encouraging new entrants. Zambezi River Authority Act Chapter 467 Effects certain provisions of interstate agreement relating to utilisation of the Zambezi River between the governments of the Republics of Zambia and Zimbabwe; continued existence of the Central African Power Corporation and renaming it as the Zambezi River Authority; repeals Part III of the Federation of Rhodesia and Nyasaland (Dissolution) Order in Council, 1963; repeals the Central African Power Act; and related matters Minister of Finance (Incorporation) Act, Gives the Minister powers to acquire and hold in that name Cap. 349 lands, government securities, shares in any company, securities for money, and real and personal property of every description. The Act also gives powers to the Minister to execute deeds, to enter into agreements binding on the incumbent and their successors in office, and to do all other acts necessary or expedient to be done in respect of the above matters or any of them Public-Private Partnership Act of 2009 Provides for public-private partnerships for the construction and operation of infrastructure facilities and systems and for the development of general principles of transparency, economy and fairness in the awarding of contracts by public authorities. The Act also provides for rules governing procurement, contracting and management of public-private partnerships through an efficient and coordinated private sector led economic development strategy. Public-Private Partnership Establishment of the Zambia Development Agency as a one (Amendment) Act, No. 9 of 2018 stop facility which will ensure, among other matters, client focus, dialogue with the private sector and create
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confidence in public sector support for business; to provide for the functions and powers of the Agency; to attract and facilitate inward and after care investment; to provide and facilitate support to micro and small business enterprises; to promote exports and globalisation; to streamline bureaucratic procedures and requirements faced by investors; to facilitate industrial infrastructure development and local services; to promote greenfield investments through joint ventures and partnerships between local and foreign investors; to promote and encourage education and skills training so as to increase productivity in business enterprises. Public Procurement Act of 2008 & Public The law provides for transparency and accountability in Procurement Regulations of 2011 public procurement and the regulation and control practices relating to public procurement in order to promote the integrity of, fairness of and public confidence in the procurement process Zambia Development Agency Act, 2006 Promotes trade and investment through efficient, effective 26 (supersedes ZDA Act Statutory and coordinated private sector led economic development Instrument (SI) No. 15 of 2006) strategy; establish the Zambia Development Agency, functions and powers as a one stop investment facility to attract and facilitate inward investment; facilitate support to micro and small business enterprises; promote exports and globalisation; streamline bureaucratic procedures and requirements for investors; facilitate industrial infrastructure development and local services; promote greenfield investments through joint ventures and partnerships between local and foreign investors; promote and encourage education and skills training to increase productivity in business enterprises; encourage measures to increase Zambia's capacity to trade and enable business to participate in competitive global environment; ensure that private sector takes advantage of and benefits from international and regional trade agreements; and for related matters. Zambia Development Agency Act No.15 Provides for the Board entering into investment protection of 2012 (Amendment) and promotion agreement with investors. Investment protection and promotion agreements include employment creation, local business development and an undertaking to complete the necessary environmental impact assessment required by Zambia Environmental Management Agency where applicable; the financial progression of a proposed project; and any other relevant information on investment as may be prescribed.
Public Finance Act, 2004 Relates to the planning and economic management of the Republic, and control and management of public finances of
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the Republic of Zambia by the Minister and direction of all matters relating to financial resources. Environmental Management Act No. 12 Renamed the Environmental Council as the Zambia of 2011 Environmental Management Agency; integrated environmental management, protection and conservation and use of natural resources; preparation of State of the Environment Report and related strategies and plans for sustainable development; the conduct of strategic environmental assessments of proposed policies, plans and programmes with likely impacts on environment; prevention and control of pollution and environmental degradation; public participation in environmental decision- making and access to environmental information; establish the Environment Fund; environmental audit and monitoring; facilitate the implementation of international environmental agreements and conventions to which Zambia is a party; repeal and replace the Environmental Protection and Pollution Control Act, 1990; and for related matters. Petroleum (Exploration and Production) Exploration, development and production of petroleum in Act No. 10 of 2008 Zambia; title to and control of petroleum in Zambia; continuation of the Petroleum Committee and revise its functions; constitution of the Petroleum Technical Committee and define its functions; establish a Petroleum Environmental Protection Fund; registration of the National Petroleum Company; establish the Petroleum Trust Fund; repeal and replace the Petroleum (Exploration and Production) Act, 1985; and for related matters. Income Tax Act Chapter 323 – Ministry Tax administration in Zambia for all categories of of Finance businesses and employees. Tax brackets and regimes Customs and Excise Act Chapter 322 Imposition, collection and management of customs, excise and other duties; licensing and control of warehouses and premises for manufacture of certain goods; regulating, controlling and prohibiting of imports and exports; conclusion of customs and trade agreements with other countries; forfeitures; and other related matters Standards Act Chapter 416 - ZABS Standards of quality control for certain commodities (including energy products and services); continuation of the Zambia Bureau of Standards and re-define its powers and functions; establish the Standards Council of Zambia; repeal the Zambia Bureau of Standards Act of 1982; and to related matters. Metrology Act No. 6 of 2017 Continue the existence of the Zambia Weights and Measures Agency, rename it as the Zambia Metrology Agency and re-define its functions; establish the Board of the Agency and provide for its functions; provide for the designation, keeping and maintenance of national measurement standards; provide for the use of
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measurement units of the International System of Units and other units; provide for consumer protection, health, safety and environmental management through legal metrology measures; repeal the Weights and Measures Act, 1994; and provide for matters connected with, or incidental to, the foregoing. Weights and Measures Act Chapter 403 Establish standards of weights and measures based on the metric system; enforcement of the standards of weights and measures; repeal the Weights and measures Act and the Metric Systems Act; and related matters National Heritage Conservation Act 13 Repeals and replaces the Natural and Historical Monuments of 1994 and Relics Act; to establish the National Heritage Conservation Commission; to define the functions and powers of the Commission; to provide for the conservation of ancient, cultural and natural heritage, relics and other objects of aesthetic, historical, prehistorical, archaeological or scientific interest; to provide for the regulation of archaeological excavations and export of relics; and to provide for matters connected with or incidental to the foregoing. The Water Resources Management Act Establish Water Resource Management Authority, its No. 21 of 2011 functions and powers; management, development, conservation, and preservation of water resource and ecosystems; equitable and sustainable utilisation and access to water resource; create an enabling environment for adaptation to climate change; constitution, functions and composition of catchment councils; sub-catchment councils and water users associations; international and regional cooperation in, and equitable and sustainable utilisation of, shared water resources; domestication and implementation of the basic principles and rules of the international law relating to environment and shared water resources to which Zambia is a State Party; repeal and replace the Water Act, 1949; and related matters. The Forests Act No. 4 of 2015 Establishment and declaration of national, local, private and community forests and joint forest management areas, botanical reserves; participation of relevant state and non- state stakeholders in sustainable forest management; conservation and use of forests and trees for the sustainable management of forests ecosystems and biological diversity; establish the Forest Development Fund; implementation of the United Nations Framework Convention on Climate Change, Convention on International Trade in Endangered Species of Wild Flora and Fauna, the Convention on Wetlands of International Importance (especially as Water Fowl Habitat), the Convention on Biological Diversity, the Convention to Combat Desertification in Africa and any other relevant international agreement to which Zambia is a
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party; repeal and replace the Forests Act, 1999; and related matters. Competition and Consumer Protection Renamed the Zambia Competition Commission as the No. 24 of 2010 Competition and Consumer Protection Commission; safeguard and promote competition; protect consumers against unfair trade practices; establishment of the Competition and Consumer Protection Tribunal; repeal and replace the Competition and Fair-Trading Act, 1994; and related matters Business Regulatory Review Authority Provides for an efficient, cost effective and accessible business licensing system; and provides a set of principles and interventions to guide regulatory agencies when regulating and licensing business activities in accordance with a law under their mandate, and establish an e-register and assign a control number for laws regulating business. Zambia Revenue Authority Act, Cap. 321 This law gives powers to the Zambia Revenue Authority to collect, on behalf of the Government, taxes that are levied under the different tax laws. The Bank of Zambia Act, 1996 Provides for a licensing system for the conduct of banking or financial business and provision of financial services; to provide for the incorporation of standards, principles and concepts of corporate governance in institutional systems and structures of banks and financial institutions; to provide for sound business practices and consumer protection mechanisms; to provide for the regulation and supervision of banking and financial services; to repeal and replace the Banking and Financial Services Act,1994. Statutory Instrument (SI) No. 74 of 2016 Banned the local production and importation of incandescent (ordinary) electric bulbs and clearance required from ERB LED need conformity licence Statistics Bill, 2018 Establishes an integrated National Statistical System which inter alia provides for mechanisms for coordination, collection, management and dissemination of statistics; promote the use of statistical data and information at individual, institutional, national and international levels; re- establish the Board of the Zambia Statistics Agency and defines its functions; provides for the production and compilation of official statistics in a transparent and impartial manner; ensures the protection of personal data collected for statistical compilation purposes; builds sustainable capacity for the production and use of statistical data and information for planning purposes. Source: http://www.parliament.gov.zm/
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Annex 7: Zambia Key Institutions and Roles Institution Roles Government Institutions Ministry of Energy (MOE) • Development and management of energy resources. • Formulation and implementation of energy policies and regulation. Ministry of Finance (MOF) • Responsible for economic management to foster sustainable national development Ministry of National Development • Coordinating national planning and economic management, Planning mobilising and managing public resources. Ministry of Science and Technology • Policy formulation, implementation and overseeing all training (MST) related to skills development and entrepreneurship. Ministry of Lands and Natural • Issuing licences and permits for feedstock extraction from Resources (MLNR) forests for biomass plants; and provision of land for renewable energy projects. Office for Promoting Private Power • Promotion of private sector funding in the development of Investments (OPPPI) energy projects in Zambia. OPPPI interfaces directly with investors and champions support for private-sector hydropower generation and transmission projects. Ministry of Commerce Trade and • Administers national policy for private sector development as Industry well as coordinate industrial, commercial and trade activities and liaises with various public and private sector organisations to facilitate the implementation of government sector policies related to trade and industry and facilitate and promote growth, development and competitiveness. It administers the Investment Promotion Policy, Privatization Policy and Competition and Fair Trade, among others. Ministry of Water Development, • Development and management of water resources, sanitation Sanitation and Environmental and the environment in a sustainable manner for the benefit Protection of the people of Zambia., and ensure access to clean water and adequate sanitation Quasi-Governmental Institutions Energy Regulation Board (ERB) • Regulating the electricity, petroleum, renewable energy and other energy sources, tariff setting and issuance of licenses to operators including utilities and independent power producers. Water Resources Management • Issuing of Water Rights for off – grid renewable energy Authority (WARMA) projects. Rural Electrification Authority (REA) • Development of off grid systems. • Sharing knowledge, experiences and technical information on off grid systems as they are already running these systems. Zambia Environmental • Advises on policy formulation and makes recommendations Management Agency (ZEMA) for the sustainable management of the environment; ensure the integration of environmental concerns in overall national planning through co-ordination with appropriate authorities; review environmental impact assessment (EIA) and strategic
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environmental assessment (SEA) reports; monitor trends of natural resources, their use and impact on the environment and make necessary recommendations to the appropriate authority; and publicise information on any aspects of the environment and facilitate public access to information on the environment. Zambia Electricity Supply • Currently operate off grid RE projects as well as manage and Corporation (ZESCO) maintain the national grid. • Offer technical support for generation, transmission and distribution. Zambia Development Agency (ZDA) • Responsible for fostering the country’s economic development growth and development through trade and investment promotion through a one stop facility which among other things, ensure client focus, dialogue with the private sector and create confidence in public sector support for business Zambia Public Procurement • Regulates public procurement and promote innovation and integrity in the procurement process in a conducive environment in order to ensure value for money. Industrial Development • Spearheads the Government's commercial investments Corporation (IDC) agenda aimed at strengthening Zambia's industrial base and job creation. Private Sector, Civil Society Organizations, Financial Institutions, Cooperating Partners Independent Power Producers (IPP) • Development of off-grid renewable energy power projects. • Development of off-grid transmission and distribution lines (mini grids). Civil Society Organizations • Advance energy education and awareness • Advocate for gender issues in the energy sector • Mobilise resources for pilot energy projects • Implement pilot projects to demonstrate renewable energy projects e.g., Energy for Agriculture (E4A) under SNV Financial Institutions • Support, mobilization, management and disbursement of funds for implementation of energy projects and programmes, and among them development finance institutions (regional and multi-lateral), commercial banks, credit guarantee companies, risk guarantee companies. Cooperating Partners • Multilateral, bilateral, inter-governmental and non- governmental organizations, or other relevant bodies and entities who include financial, technical cooperation and networking partners supporting the development of the energy sector in Zambia. These among others include the World Bank, UN Agencies, the EU, AfDB, KfW and GIZ, Nordic Fund, JICA and SIDA. Private Companies • To provide financial (investments) and technical support for the implementation of RE programmes and projects.
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Annex 8: Zambia Installed Generation Capacity Licensee Station Installed capacity (MW) ZESCO Limited Kafue Gorge Hydro 990 Kariba North Bank Hydro 720 Kariba North Bank Extension 360 Victoria Falls Hydro 108 Lunzua Hydro 14.8 Lusiwasi Hydro 12 Chishimba Falls Hydro 6 Musonda Falls Hydro10 10 Shiwang’andu Hydro 1 Itezhi-Tezhi Power Corporation Itezhi-Tezhi Hydro 120 Zengamina Generation Plant Ikelengi Hydro 0.75 Lusemfwa Generation Plants Mulunguish Hydro 32 Lunsemfwa Hydro 2 Maamba Collieries Limited Maamba Power Plant Coal 300 ZESCO Limited Generation Plants Kabompo Diesel 2.00 Zambezi Diesel 1.9 Mufumbwe Diesel 0.8 Luangwa Diesel 2.6 Lukulu Diesel 0.5 Chavuma Diesel 0.8 Ndola Energy Company Limited Generation Ndola Heavy Fuel Oil 110 Plant Rural Electrification Authority Generation Plants Samfya Solar 0.06 TOTAL 2,897.21 Source: ERB, 2019
Annex 9: Mini Hydro Projects Proposed for Pre-Feasibility Studies Project Site Location / Province Potential installed capacity (MW) Chipota Falls Lwela River Mansa (Luapula) 1.25 Changwena Changwena River Mkushi (Central) 0.54 Kaudinia Falls Muswema River Serenje (Central) 0.70 Mulembo Mulembo River Mkushi (Central) 1.30 Kampoko Kampoko River Mkushi (Central) 0.70 Mumbuluma Falls Lwamfumu River Mansa (Luapula) 0.30 Chilindi Chipusuka Falls Musumpu River Serenje (Central) 0.55 Upper Site 1 Mufwanze Falls Mufwanze River Mpika (Muchinga) 1.23 Kapanda Lupili Falls Musumpu River Mpika (Muchinga) 1.00 Chipoma Falls Chinamububwe Chinsali (Muchenga) 1.54 River
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Chauka Mantumbu Falls West Lumwana Mwinilunga (North 0.72 River Western) Yaugumwila Falls Mukubwe River Mporokoso (Northern) 1.49 Chinkwazi Falls Kalomo River Livingstone (Southern) 0.01 Luswishi Falls Luswishi River Lufwanysma (Copperbelt) 0.21 Nyambwezyu Falls Nyambwezyu River Solwezi (North Western) 0.58 Kazembe Falls Mujimbezhi River Mwinilunga (North 0.89 Western) Total 13.01 Source: SREP, 2018
Annex 10: Proposed mini-hydro projects under NAMA Project name Capacity Province Project preparation status69 Chavuma Falls, Zambezi district 1MW North western Feasibility completed in 2012 and project Chanda Falls, Chavuma district 14MW North western handed over to MWED in 2013 to find a developer (15MW) Chikata Falls, Kabompo district 3.5MW North western Feasibility completed in 2015, and site not economically viable Zengamina II, Ikeleng’e district 1.74MW North western Feasibility and engineering design completed in 2013 and site handed over to Zengamina Power Company Kasanjiku, Mwinilunga district 0.64MW North western REA is currently developing the site and the project is scheduled for pre-commissioning in Q2 2019 and will be fully operational by end of 2019. Chilinga, Nyimba district 1MW Eastern Feasibility study and engineering design completed in 2015, and site not viable Total 25.59MW
69 Some of the feasibility studies are outdated and will need to be reviewed and updated prior to implementation 4-
Annex 11: Action Agenda and Investment Prospectus Implementation Arrangements Action Agenda and Investment Prospectus Implementation Arrangements
Minister of Energy
Permanent Secretary - MoE
Director of Energy
SE4ALL SE4ALL Advisory/Coordination Hubs/Partners Group
SE4ALL Secretariat – MoE (SE4ALL Focal P oint)
Working Group Working Group Working Group Working Group Working Group Access to Modern and Developing Renewable Improving Energy Enabling Env., Electricity Access Clean Energy for Cooking Energies Efficiency Regulatory Framework, Fin. Mechanisms
Annex 12: Guidelines for developing the SEforALL action agenda Guidelines Principles Response in the AA development Building of existing strategies/plans/programmes Existing policies, plans and strategies in Zambia energy sector have been considered in the AA development Political commitment and leadership At the national Ministry of Energy oversees the SEforALL country process and has assigned staff to manage the process. Balanced and integrated approach The AA development has considered all key aspects of Zambia energy sector relevant to the SEforALL goals. It has also selected interventions that can meet multiple SEforALL goals and national development objectives.
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An inter-ministerial and cross-sectoral approach Working Groups have been formed to work across institutions and include non-government organizations, private sector and Cooperating Partners. Adherence to sustainable development principles The AA development has focused on electricity access and clean and modern energy solutions for cooking, as these measures have a large impact on health, education, gender, climate change, and on the enhancements needed in the enabling environment and regulatory framework and on the financing mechanisms required to address the issues. Participation and meaningful involvement of stakeholders Ministry of Energy has constituted working groups for each of the five AA thematic areas. Key stakeholders have been consulted during the kick-off period and bilaterally during the preparation of the AA Gender equality and inclusiveness The gender perspective has been incorporated in the development of the AA. In particular measures that relate to access to electricity services and to modern and clean solutions for cooking will have a notable impact on women and their children.
Annex 13: Indicators for the Zambia SEforALL initiative Effective Monitoring and Evaluation Guidelines ▪ Designing and implementing an effective Monitoring, Evaluation and Reporting (MER) system ▪ MER system will consist of a Monitoring Framework, an Evaluation Plan, and a Reporting Plan
RESULT INDICATOR Sustainable Economic Growth GDP Growth (% growth/year) GDP per Capita (US$/person/year) and GDP per capita growth (%) Poverty indices in urban and in rural areas Estimated reduction in deaths from indoor are pollution (deaths/year) SEforALL Global Objective 1: Scaling up access to National electricity access (%) electricity services Electricity Access in urban areas (%) Electricity Access in urban areas (%)
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Number of additional persons benefitting from electricity in urban and in rural areas Electricity consumption per capita in urban areas and in rural areas (kWh/person/year in urban and in rural areas) Summary of actions implemented regarding the enabling environment and regulatory framework SEforALL Global Objective 1: Increasing access to Population with access to clean and modern cooking clean and modern cooking solutions solutions (in urban and in rural areas) (%) Additional persons using clean and modern cooking solutions in urban and rural areas (number of persons) Number of persons by type of cooking equipment in urban and in rural areas Summary of actions implemented regarding the enabling environment and regulatory framework SEforALL Global Objective 2: Increasing and National electricity installed generation capacity (MW) diversifying the contribution of renewable energy and available generation capacity (MW) Allocation of the installed and available generation capacity by type of generation sources Off-grid installed and available generation capacity (MW) Summary of actions implemented regarding the enabling environment and regulatory framework SEforALL Global Objective 2: Increasing and Estimate of the Energy Intensity (MOE/Trillion GDP) diversifying the contribution of renewable energy
Implementation timeline ▪ First SEforALL Investment Prospectus Period 2019-2025 ▪ Second SEforALL Investment Prospectus Period 2026 - 2030
Action Agenda and Investment Prospectus Development Process Stage Activities
Stage 1 ▪ Documentation review and initial interactions with MOE and review of the Rapid Gap Assessment. Kick-off meeting including the key stakeholders to enable the identification of Stage 2 initiatives underway (or already undertaken) on which the AA/IP could be built; Creation of five working/thematic groups on: ▪ Scaling-up Electricity Access ▪ Improving access to modern and clean cooking solutions ▪ Developing and diversifying renewable energies ▪ Improving Energy Efficiency ▪ Strengthening the Enabling Environment, Regulatory Framework and Development of Financing Mechanisms.
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Development and review of thematic technical notes on the five thematic areas. Stage 3 Development and review by the Working Groups of draft AA and IP covering the Stage 4 2019-2025 period. Additional data gathering for developing the first IP and including priority Stage 5 projects (physical projects, studies, and capacity building). Revision and Validation of the AA (2019 - 2030) and of the first IP (2019-2025), through Stage 6 workshops with the thematic groups.
Action Agenda Implementation The SEforALL Action Agenda (AA) for Zambia covers the 2019-2030 period and is the overarching Government strategic document towards the achievement of sustainable energy goals. The AA provides a framework guiding planners, financiers and other stakeholders in their own strategies and engagement with Zambia energy sector, and for monitoring, evaluation and reporting. A clear implementation framework for the AA is therefore critical for the achievement of the country’s SEforALL objectives. Implementation of Zambia's SEforALL Action Agenda hinges on four key pillars:
▪ Implementation structures ▪ Programming of actions ▪ Mobilization of resources ▪ Effective monitoring and evaluation.
Proposed national SEforALL coordination framework ▪ The Ministry of Energy - Department of Energy (DOE) will develop and implement the SEforALL programme for Zambia a project team coordinated by the SEforALL Focal Point. The roles and responsibilities of the SEforALL team are to: ▪ Ensure that the Action Agenda and the Investment Prospectus are validated by the relevant parties, and to mobilise financing for implementation; ▪ Assign and coordinate implementation responsibilities for the Investment Prospectus, monitor and evaluate results; and ▪ Update as needed the Action Agenda and the Investment Prospectus (which cover 5-years).
SEforALL Advisory/Coordination Group ▪ The SEforALL Advisory/Coordination Group will be chaired by the Ministry of Energy Permanent Secretary ▪ SEforALL Focal Point will coordinate all activities ▪ Advisory/Coordination Group will include representatives from the Ministry of Energy, the Ministry of Finance, Ministry of National Development Planning, the Climate Change Secretariat, ZESCO, the Copperbelt Energy Company (CEC), REA, ERB, the PPP unit, academic institutions and private sector entities directly interested in the implementation of the AA/IP as well representatives of communities and energy users
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▪ The SEforALL Advisory/Coordination Group will report quarterly to the Permanent Secretary and the Minister of Energy using the SEforALL Monitoring and Evaluation mechanism (M&E and Reporting). ▪ Minister will present to the Cabinet the SEforALL Implementation Report and an annual work plan for the upcoming year before the end of the fiscal year. ▪ Presidential briefing in line with the reporting requirements of the 7NDP
The SEforALL Thematic Hubs and Partnerships ▪ The SEforALL team will collaborate with SEforALL Africa Hub, the Energy Efficiency Hub, IRENA, the Global Partnership for LPG, the Global Alliance for Clean Cookstoves, the Clean Mini-grids, other High Impact Opportunities (HIOs) and other relevant groups successful ▪ At the SADC Regional level Ministry of Energy will collaborate with key energy sector development institutions
The SEforALL Working Groups The five Working/Thematic Groups will continue to exist post validation of the Sfor4ALL AA and these IP and will continue to work on: ▪ Scaling-up Electricity Access; ▪ Improving Access to Modern and Clean Energy Cooking Solutions; ▪ Developing and diversifying the contribution of Renewable Energy; ▪ Improving Energy Efficiency; and ▪ Strengthening the Enabling Environment and Regulatory Framework and developing the Financing Mechanisms.
The initial budget for operationalising the budget for the first IP (2019-2025) is estimated at US$3.6Mio.
Budget for SEforALL programme (2019-2025 period) Activity Cost Estimate (US$ 000) Support to the SEforALL Team at MOE (DOE) 300 Technical Advisors to SEforALL Team (incl. one embedded SEforALL 500 advisor) Presentation of the Investment Prospectus/Financing Mobilization 70 1,500 Support to the Working Groups and Advisory Group Activities 500 Participation in SEforALL relevant workshops /conferences 500 Setting-up the SEforALL monitoring and evaluation (M&E) mechanism 250 Mid-Term and ex-post evaluations of the SEforALL programmes/projects 50 and preparation of next AA and IP TOTAL71 3,60072
70 Locally and internationally marketing of the prospectus 71 An average US$ 720,000 has been budgeted per year over the 1st phase which will include high spending for institutional establishment and marketing. Budget to be finalised during planning process 72 9-
Links with the Investment Prospectus The Action Agenda (AA) is a stand-alone document providing the framework for achieving the national SEforALL objectives over the 2019-2030 period and monitoring progress. It provides for interventions (policy and strategic adjustments, financial allocations, business model developments and capacity building initiatives) that will focus national support on scaling-up electricity access, increasing access to clean and modern cooking solutions, developing and diversifying the contribution of renewable energy and improving energy efficiency.
The Investment Prospectus (IPs) – Two IPs will be developed over the 2019-2030 period - operationalise the Action Agenda by proposing a set of activities (physical investments, financing mechanisms, policy and strategic actions, pre-investment studies, institutional strengthening and capacity building, etc.) that the Government, private sector developers, civil society organizations, finance organizations and other stakeholders support. The IPs contain investment opportunities, studies, institutional roles, capacity needs and priority projects/programmes pipeline emanating from the priority action areas identified in the AA.
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