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ZESCO Limited says it is prioritising partnerships between Zambians and international investors in its aggressive drive to bolster investments in solar energy to mitigate the negative effects of climate change on the power system. And Eng. Mapani says the utility is targeting investors with own battery storage. Of Zambia’s current 3,600 megawatts installed capacity, 86 percent is water-dependent with the remaining 14 percent apportioned to a coal-thermal fired power station and some solar plants. With weakening rainfall patterns especially in the south of the country which is frequently battered by negative effects of climate change but where key hydropower stations are located, the need to diversify power sources has never been more compelling. On its part, ZESCO Limited is up-scaling investments with a number of procurements in progress. Managing Director Eng. Victor Mapani says the state power utility is currently looking for indigenous companies to support in the drive to boost Solar PV generation in the country. “We've signed off quite a few indigenous IPPs and so it's not just for foreign investments. The local IPPs have limited borrowing capacity, therefore, very few have invested in energy projects, but that has been opened up”. Eng. Mapani told delegates to the Africa Energy Forum in Nairobi last month. He cited the GET FiT Zambia programme where almost all participating companies had an indigenous component. ZESCO is currently working to inject 150-MW Solar power into the national grid this year as part of its aggressive plan to deploy 800-MW of new solar PV sources to help increase the resilience of the power network through a well-diversified energy mix considering the source and geographical location. “We want indigenous SMEs to be part of this and we are seeing that a number of indigenous companies are getting partners from abroad either through Joint Ventures or even through Special Purpose Vehicles,” he said. And Eng. Mapani said despite ZESCO Limited having signed commitments to develop up to 4,500 MW of solar energy in the next 10 years, there is room for other developers to participate. “We are not going to lock capacity to a few people,” he said. Last January, ZESCO announced that it had signed an agreement to form a joint venture with the United Arab Emirates’ renewable energy company Abu Dhabi Future Energy Company PJSC - Masdar to develop solar projects worth US $2 billion starting with the phased installation of 500 MW. Later in April, ZESCO signed a US $3.4bn Power Purchase Agreement (PPA) with China’s Integrated Clean Energy Power Company (CiEG) covering up to 2,400 Megawatts of solar capacity to be developed over several phases. Eng. Mapani explained that ZESCO is targeting developers with renewable energy storage capacity to protect the integrity of the national power system. “The 2,400 megawatts Chinese component is coming with energy storage and so it does not compromise our network,” Eng. Mapani said. “The first tranche of the 500 megawatts from MASDAR is expected to come on in 2026 and so that gives us an opportunity that while you are growing another base load, we have worked out how our energy portfolio will look like.” Eng. Mapani also explained the rationale behind capping of solar photovoltaic energy to be injected into the national grid to 1000-MW against the installed capacity of 3,600 MW. “Between 18:00 hours and 21:00 hours, the power demand is very high. So, we would like to cover that part with backed-up energy storage,” said Eng. Mapani. “With our initial planned percentage solar penetration capping at 27 percent, we don't need energy storage. But that has been exhausted and now, we required addition penetration to be augmented with some aspect of battery storage.”

ZESCO Limited says it is aiming to resolve the US $1 billion it owes Independent Power Producers (IPPs) by 2025 after the new Corporate Leadership Team managed a new agreement on tariffs and interest rates to prevent a further rise in its debt. The IPPs which include Maamba Collieries, Ndola Energy Company, Lunsemfwa Hydropower Company and Itezhi Tezhi Power Corporation account for about 14 percent of Zambia’s installed power generating capacity. By the end of 2021, ZESCO owed IPPs around $1.7 billion and at the time, the figure was expected to continue rising due to the mismatch in power prices. While the IPPs sell power to Zesco at around 0.11 US cents/kWh the utility sells it to domestic consumers for as little as $0.05 U.S cents /kWh. In a plenary session at the African Energy Forum in Nairobi last month, Managing Director Eng. Victor Mapani said the relationship between ZESCO Limited and IPPs had historic challenges entrenched in the mismatch between purchase and retail price for power. However, post 11 August 2021 ZESCO managed to resurrect previous failed attempts to renegotiate the tariffs with IPPs. “The challenge which is there is where you procure electricity at a higher price and sell it at a lower price and that glided ZESCO into a huge debt challenge which as of 2021 December was sitting around $1.7 billion,” Eng. Mapani said. “That has since been moderated, tariffs have been negotiated and that debt has reduced to just about a $1 billion, and progressively that will be resolved we believe by 2025 toward the IPPs...of course there is a genuine debt there and there's just debt that was speculative....because ZESCO is not paying and therefore the escalations are high and therefore the debt is much higher,” he explained.

" There is absolutely no reason to impede developments in the energy sector from coming through when President Hakainde Hichilema is opening up Zambia to business and bureaucracies are being removed," ZESCO Managing Director Eng. Victor Mapani said in Nairobi today at the ongoing Africa Energy Forum that opened on Tuesday, 20 June 2023.