Zambia’s electricity mix is dominated by hydro generation. Large and mini-hydro stations account for 95% of installed capacity. Droughts caused the country’s power shortage to widen to half of peak demand, or approximately 1 GW in 2015. Approximately 4% of the country’s generation mix is provided by fossil fuels, including diesel-based mini-grids operated by ZESCO, the Ndola Energy Heavy Fuel Oil Plant (50MW), and six gas turbines (80MW) owned and operated by the Copperbelt Energy Corporation.
Zambia’s Electricity Company, ZESCO, a state-owned entity, owns the bulk of generation stations. ZESCO is a vertically integrated company, with its largest customer being the Copperbelt Energy Corporation (CEC); a privately-held company that organizes the electricity distribution to copper mines. CEC purchases more than 50% of all generated electricity on the basis of a long-standing contract with fixed prices, in addition to its own generation.
Due to currently heavily subsidized electricity tariffs, prospects for bringing new capacity online are hindered, as ZESCO is limited in its ability to sign commercially viable Power Purchase Agreements (PPAs). Despite this, the country has indicated plans to increase capacity by 2 GW in 2016 and 2017 and has indicated intentions to move to cost reflective tariffs in 2017, in line with the regional SADC targets. Several energy development opportunities are underway in hydro, geothermal, coal, and solar PV. The first coal power generation has been included in the energy mix in 2016 from the phased 300MW coal fired power project by Maamba Collieries. The IFC’s “Scaling Solar” initiative intends to support up to 300MW of solar in Zambia, in collaboration with the Zambia Industrial Development Corporation (IDC), in addition to a planned 50MW to be supported by KfW’s GetFiT programme.