Adding power capacity is a matter of urgency in Zambia, where only one fifth of the
population has access to electricity and two years of drought have crippled
existing hydropower facilities, causing a national electricity crisis.
It was in this context that the southern African country
signed up to try Scaling Solar, a World
Bank Group program designed to make it easier for governments to
procure solar power quickly and at low cost through competitive tendering and
pre-set financing, insurance products, and risk products.
The results of the first auction, which took place in May,
have surpassed even the most optimistic expectations, with seven of the world’s
leading renewables developers competing for the opportunity to build Zambia’s
first large-scale solar plants.
The winning bids were for just 6.02 cents per kilowatt hour
and 7.84 cents per kilowatt hour—the lowest prices for solar power to date in
Africa, and among the lowest recorded anywhere in the world.
“This is a tremendous result for Zambia and for Scaling
Solar, which has proved itself as a vehicle to open up new markets for clean
energy,” said Philippe Le Houérou, IFC’s Chief Executive Officer and Executive
Vice President. “It is now possible for governments across sub-Saharan Africa
to look first to solar power as a solution for inexpensive, quick-to-build
power—something unimaginable outside of South Africa until now.”
Because the 6-cent Zambia tariff is fixed for 25 years and
won’t rise with inflation, it represents about 4.7 cents per kilowatt hour over
the life of the project—on par with recent auctions in Peru and Mexico.
Scaling Solar has also delivered on its promise of speed:
Zambia’s results come just nine months after the government first engaged IFC
to advise on the transaction. The winning bidders—Neoen/First Solar and
Enel—are expected to reach financial close on the projects within three months
and complete construction a year later. This is especially critical in Zambia,
where blackouts happen daily. The two new solar power plants will increase the
country’s available generating capacity by 5 percent and will also help to
restore water levels in its dams.
Zambia has already committed to a second round of Scaling
Solar tendering, and Senegal and Madagascar have also signed up. Given growing
interest in the program, Scaling Solar is now targeting developing 1 gigawatt
of solar power in the next three years. At the tariffs recorded in Zambia, this
would provide African consumers with more than $7 billion in savings compared
to oil-based power, which costs about 20 cents per kilowatt hour.
Scaling Solar has financing support from USAID’s Power
Africa, the Ministry of Foreign Affairs of the Netherlands, the Ministry of
Foreign Affairs of Denmark, and the Infrastructure Development Collaboration
Partnership Fund (DevCo). For more information, visit www.scalingsolar.org.
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