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China’s CiEG Signs 2.4 Giga-Watts Power-Purchase Agreement With Zambia’s Zesco Amidst Debt Crisis

Representatives from Zambia’s state-owned power utility company, signed a Power Purchase Agreement (PPA) with China's Integrated Clean Energy Power Company Ltd on April 3, 2023 in Lusaka. Image via @JitoKayumba.

The Integrated Clean Energy Power Company Ltd (CiEG) of China signed a Power-Purchase Agreement (PPA) on Monday with the Zambia Electricity Supply Corporation (Zesco) for the generation of 2,400 Megawatts (MW) of renewable energy.

In a statement from Peter Chibwe Kapala, Zambia’s minister of energy, the investment costing $3.5 billion will be implemented in four provinces over three years. Zesco Managing Director Victor Mapani and CiEG’s Executive Director, Yong Chi, witnessed the signing ceremony which took place at the Zesco Head Office in Lusaka.

Power generation will be done in phases of 600-800MW. The Southern and Central Provinces will produce 300MW each. The two 300MW power plants in phase 1 of the project are expected to be connected to the national grid by the end of next year.

This new investment follows an earlier 2,000MW plant by the United Arab Emirates (UAE)’s MASDAR, valued at $2.5 billion.

The Zambian government aims to achieve energy sufficiency for its domestic economy. Surplus energy will be exported to enhance foreign currency earnings under an export diversification plan.

CiEG’s investment comes at a time when Zambia is buckling under debt pressures which have affected the country’s economic performance. The Southern African nation is trying to restructure its loans after it became the first African country to default on its foreign debt in 2020. The country owes lenders an estimated $32 billion.

Climate Change Effects on Hydropower Generation in Zambia

In the energy sector, only 31% of Zambia’s 19.47 million people have access to electricity and the majority of these are in urban areas. This creates an enormous opportunity for investors to address the glaring deficits.

85% of Zambia’s 2,800MW installed electricity generation capacity is derived from hydropower. Other sources take up the remaining 15%. Climate change effects have directly affected hydropower generation in Zambia which led to Zesco initiating load shedding for 12 hours daily due to its inability to meet power demand in January this year. Reduced water in the Kariba dam which generates power at the Kariba North Bank Power Station led to reduced output from its installed 1080 MW to below 400MW.

Zambia halted the load shedding nationwide in February after water levels rose at hydropower stations following heavy rainfall in early 2023. However, the experience was an opportunity to look at other options for power generation.

Only 76MW of solar power is generated in Zambia against a potential to generate 2,300MW. Wind power is estimated at 3,000MW but no wind power plant has been installed to date.

To tap into the options available for diversifying Zambia’s energy grid, President Hakainde Hichilema’s government has been pursuing private sector investment in solar projects across the country. The government plans for all Zambians to have universal access to energy by 2030. To achieve this, the government is bringing additional solar, geothermal, hydro and thermal energy online.

In February, Zambia launched the Riverside Solar Plant in Kitwe town in the Copperbelt Province. China’s Sinohydro Corporation did the Copperbelt Energy Corporation project increasing its power generating capacity to 34 MW from 1MW. The annual energy output is 56.5 GWh.

The project entailed installing over 61,320 solar panels and constructing two transmission lines, with an investment of $22 million.

WHY IS THIS IMPORTANT? Zambia has been grappling with energy deficits for years. Attracting foreign investment by the government to the energy sector will enhance energy generation and improve reliability. This will in turn foster economic growth and improve the living standards of the Zambian people In addition, an extra power supply will enable Zambia to export electricity and boost its foreign currency earnings.


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