ZESCO faces potential $23.1bn financing gap under power sector reforms —Report

Zambia will require US$31 billion by 2050 to implement its Integrated Resource Plan (IRP), while ZESCO could face a financing gap of up to US$23.1 billion between 2033 and 2050 under the Open Access electricity market model, a Ministry of Energy report has revealed.

The figures are contained in the Ministry’s presentation on the IRP Financing Strategy, delivered during a stakeholder meeting organised by the Centre for Trade and Policy Development (CTPD) at the Radisson Blu Hotel.

According to the report, Zambia will require US$11.6 billion by 2030 to implement the plan, with generation capacity projected to increase from 3,877 megawatts (MW) to 10,013MW by 2030 and 23,193MW by 2050.

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The expansion is expected to rely increasingly on variable renewable energy sources.

The report said variable renewable energy currently accounts for 7.9 percent of installed generation capacity, but its share is projected to rise to 33 percent by 2030 and 56 percent by 2050.

It noted that the energy sector had historically relied heavily on concessional financing from bilateral and multilateral development banks, which provided nearly half of sector financing at an average of US$231 million annually.

However, the report said current financing levels were insufficient to implement the IRP, which requires an estimated US$1.07 billion annually.

Zambia’s installed generation capacity stands at 3,877MW, with large hydropower accounting for 79.6 percent, leaving the electricity system vulnerable to climate-related droughts that have disrupted power generation.

To assess the financial implications of the planned expansion, the Ministry compared the Single Buyer Model with the Open Access electricity market model through to 2050.

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