The International Finance Corporation (IFC), a member of the World Bank Group, has signed a MoU with the Industrial Development Corporation (IDC) of Zambia to explore the development of two 50MW solar photovoltaic (PV) independent power projects through the Scaling Solar programme.
The Scaling Solar programme offers a comprehensive package (see below) implemented across multiple countries, thereby allowing smaller African countries to enjoy the purchasing power of bigger and more developed economies.
The projects would be Zambia’s first utility scale solar PV projects, providing competitively priced clean power that would reduce the country’s dependence on hydro resources and diversify the energy supply mix.
Solar capacity in Zambia
Zambian President Edgar Chagwa Lungu has directed IDC Zambia to develop at least 600MW of solar power in the shortest possible time to address the current power crisis.
IDC Zambia anticipates that the first two projects, with a combined initial target capacity of 100MW, will create the opportunity for subsequent expansion and the rapid scale-up in renewable energy generating capacity.
Reliance on hydropower
President Lungu, who is also the Board Chair of IDC Zambia, said: “The Zambian government is resolved to address the current hydro power shortages caused by low rainfall through active promotion and increased use of renewable energy technologies.”
Low rainfall over the past year has resulted in a national power generation deficit of approximately 560MW. As a result, scheduled power outages are already having a negative impact on homes and businesses.
Solar project partners
The proposed solar PV projects would be situated on separate sites and developed by different private sector sponsors, based on open and transparent selections.
It is expected that both projects would engage Zambian partners in the ownership structure. The commercial structure is expected to follow IFC’s recently-launched Scaling Solar initiative.
Oumar Seydi, IFC Director for Eastern and Southern Africa, said: “IFC is developing this partnership with IDC Zambia to deliver affordable renewable energy that can mitigate the country’s ongoing energy crisis.
“The Scaling Solar programme enables us to apply the full range of World Bank Group services to address Zambia’s challenges quickly and sustainably.”
In the next few weeks, the IDC Zambia and IFC will seek to negotiate a formal advisory mandate. Under this mandate the IFC will be appointed as lead transaction advisor to the IDC Zambia for the development of the projects.
Once this mandate is in place, project development will commence, with requests for prequalification expected to be issued to prospective developers within three months.
Scaling Solar service offer
The Scaling Solar programme is a “one stop shop” to help governments mobilise privately funded grid-connected solar projects at competitive tariffs that can be operational within two years of commencement. Scaling Solar brings together several World Bank Group services under a single engagement platform:
- Advice to assess the right size and location for solar PV power plants in a country’s grid.
- Simple and rapid tendering to ensure strong participation and competition from committed industry players.
- Standardised, balanced project documents to eliminate negotiation and ensure speed and bankability.
- Competitive financing and insurance attached to the tender and available to all bidders, delivering competitive bidding and ensuring rapid financial close post-tender.
- Risk management and credit enhancement products to lower financing costs and deliver power at lower tariffs.