AfDB Boosts Zambia's Solar Project with $8M Loan

• The African Development Bank boosts Zambia's renewable energy with an $8 million loan for a transformative solar project, paving the way for a sustainable energy future.

The African Development Bank Group (AfDB) has approved an $8 million (EUR 7.4 million) concessional loan to support the construction of a 25-MW solar project in Zambia, called Ilute. This initiative, located in the Sesheke District, aims to mitigate rising costs stemming from the COVID-19 pandemic. The funding is sourced from the Sustainable Energy Fund for Africa (SEFA), which is designed to enhance renewable energy projects across the continent.

Developed by Serengeti Energy Ltd and Western Solar Power Ltd, the Ilute project will serve as a pilot for GreenCo Power Services Ltd's energy aggregator model under Zambia’s open grid access framework. GreenCo will purchase the power generated under a 25-year agreement, which will be supplied to the Southern African Power Pool Day-Ahead Market. AfDB officials emphasize that this project could pave the way for future initiatives in Southern Africa’s energy transition.

How will the Ilute solar project impact Zambia's energy landscape and economic recovery?

• Increased Energy Supply: The Ilute solar project is set to significantly enhance Zambia's energy capacity by adding 25 megawatts (MW) of renewable energy to the grid, which is crucial for a country that faces frequent power shortages.
• Price Stabilization: By introducing more solar power into the energy mix, the project aims to stabilize electricity prices in Zambia. Renewable energy typically has lower variable costs compared to fossil fuels, which could reduce energy prices in the long term.
• Job Creation: Construction and maintenance of the Ilute solar project will create jobs for local communities in the Sesheke District. This can help alleviate some unemployment pressures exacerbated by the pandemic, further supporting economic recovery.
• Attracting Investment: Successful implementation and operation of the Ilute project could serve as a catalyst for attracting further investments in Zambia's renewable energy sector, encouraging both local and foreign investors to explore more projects.
• Energy Independence: The project contributes to Zambia's goals of increasing energy independence by relying more on locally sourced renewable energy, reducing dependency on imported fossil fuels.
• Pilot for Innovation: As the first pilot project for GreenCo Power Services Ltd’s energy aggregator model, the Ilute project could innovate how energy is bought and sold in Zambia, promoting a more competitive energy market that benefits consumers.
• Environmental Benefits: Solar energy generation has a lower environmental impact compared to traditional energy sources. The Ilute project supports Zambia's commitments to reduce greenhouse gas emissions and combat climate change.
• Community Energy Access: Increased energy availability from the Ilute project could lead to improved access to electricity in rural areas, fostering social and economic development at the community level.
• Regional Influence: By successfully demonstrating how renewable energy can be integrated into the national grid, Zambia could influence regional energy policies and inspire neighboring countries to adopt similar renewable projects, aligning with broader Southern African development goals.
• Support for Policy Framework: The project aligns with Zambia’s strategic policies aimed at energy diversification and sustainability, providing a practical example for policymakers on implementing renewable energy initiatives efficiently.
• Enhanced Grid Resilience: By diversifying the energy mix with solar power, the project will contribute to a more resilient energy grid capable of withstanding shocks from climate and economic factors.
• Global Climate Goals: Successfully launching the Ilute project can help Zambia meet its commitments under international climate agreements, further integrating the country into global efforts to transition to sustainable energy solutions.