21 February 2016

Zambia: IDC Moots Solar Power PV

Zambia's electricity supply is heavily dependent on hydropower for most of its demand.

However, expansion of the existing available renewable energy resources is required as the country is facing a diminishing electricity reserve margin.

Zambia is confronted with increasing energy demand resulting from demographic and socio-economic factors.

With about 27 per cent electrification level attained to-date, Zambia faces the challenges of fulfilling its aim to provide universal access to energy.

This has forced the utility company, Zesco Limited to carry out massive scheduled load-shedding which has caused a negative impact on homes and businesses.

However, this has necessitated the country to start aggressively pursuing alternative energy sources such as solar, biomass, wind, thermal, gas and many more.

In July last year, President Edgar Lungu directed the Industrial Development Corporation (IDC) to drive the urgent development and installation of at least 600 MW of solar power, in order to redress the current power deficit in Zambia and resultant national crisis.

This will be implemented through the Scaling Solar Programme and it is the country's first solar photo-voltaics (PV) independent power projects.

The projects are aimed at providing competitively priced, clean power that will reduce Zambia's dependence on hydro resources and diversify the country's supply mix.

IDC anticipates that the first two projects, with a combined initial target capacity of 100 megawatts, will create the opportunity for subsequent and rapid scale-up in renewable energy generating capacity in Zambia.

During the same period, IDC signed a memorandum of understanding with the International Finance Corporation (IFC), a member of the World Bank Group to explore the development of 100 megawatts using solar energy.

President Lungu, who is chairperson of the IDC, said the Government had resolved to address the current hydropower shortages caused by low rainfall through active promotion and increased use of renewable energy technologies.

To this effect, 11 companies pre-qualified to develop the initial 2x 50 MW utility-scale solar photovoltaic IPP projects under round one of the 600 MW Scaling Solar project.

The Scaling Solar is the World Bank Group's open, competitive and transparent procurement model that facilitates the rapid development of privately-owned, utility-scale solar PV projects in Sub-Saharan Africa.

IDC chief executive officer Andrew Chipwende says in order to implement the projects, the body has issued a request for proposals for a combined 100MW of solar PV power under round one of the programme.

This relates to the competitive procurement of two grid-scale solar PV power plants of up to 50MW each project, and both projects will be located in the Lusaka South Multi-Facility Economic Zone.

The request for proposal has been issued to the 11 highly qualified and experienced bidders that successfully navigated an initial pre-qualification phase held in November 2015.

These include EDF Energies Nouvelles, Scatec Solar, Access Eren Zambia Mulilo Zambia PV1 Consortium, Enel Green Power, Globeleq, International Power SA with Engie, Neoen with First Solar, Shanghai Electric Power with Avic, Africa Infrastructure Fund2 with Old Mutual Life Insurance Company, Cobra and CDE and Grupo-T Solar.

"The 11 prequalified bidders are required to submit their final proposals within eight weeks by closing date of April 9, 2016.

"The bids will then be evaluated on the basis of their compliance with technical and commercial requirements as contained in the request for proposals.

"Two winning bidders will then be selected, one for each project. The winning bidders will be selected on the basis of the lowest electricity price such as tariff offered for each of the two projects," Mr Chipwende says.

The winning bidders will be responsible for financing, construction, operation and maintenance of their respective plants under 25-year Power Purchase Agreements.

This means that the construction works are expected to commence in 2016 and Mr Chipwende explains that the Zambian Government, through the IDC, will retain a minority shareholding in each project for later offering to the Zambian public.

On the other hand, IDC will be launching the commencement of round two of the programme which will target a minimum of 200 MW of solar PV capacity, to be divided into four projects of 50MW each.

Round two of the project will see IDC, working through Zesco, identify four suitable locations across the major electricity load centres in Zambia, to ensure the grid can safely absorb the additional capacity.

This will allow us to invest in strengthening the grid where necessary.

"This procurement of solar PV power under round two is expected to be similar in structure to round 1, with an initial prequalification phase followed by a final request for proposal stage.

"Confirmation of the four identified sites and other information for potential bidders is expected to be publicised in April 2016," Mr Chipwende says.

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