Unveiling Zambia's Hidden Energy Gem: Seizing Alternative Energy Opportunities amidst Power Shortage

Alex Chishya , Lusaka, 12th March, 2024 – In a striking announcement last month, ZESCO Limited unveiled plans for a significant scale-back in electricity production at the Kariba North Bank Power Station for 2024. Victor Mapani, Zesco's Managing Director, revealed a projection that sees generation plummeting to 214 Mega Watts, a stark contrast from the robust 386 Mega Watts generated in the previous year. This dramatic change signals a crucial juncture for stakeholders, spotlighting the energy sector's volatility and its broader economic implication. Following this, Zambia's energy sector, poised at the crossroads of challenge and opportunity, beckons a new era where diversification and strategic investment pave the way to resilience and prosperity. Amidst the fluctuating currents of power availability, a report commissioned by the Policy Monitoring and Research Centre (PMRC) dubbed “Propelling Zambia’s Energy Mix – Enhancing Efficiency in the Liquified Petroleum Gas (LPG) Subsector" unveils a compelling rationale for a holistic approach to energy sourcing, emphasising the crucial roles of solar energy and Liquefied LPG in navigating the nation through its present constraints.

The study’s rationale underscores a pressing need to broaden Zambia's energy framework, advocating for an integrated strategy that capitalises on the country's solar potential and LPG resources. This diversification is not merely a buffer against power shortages but a strategic manoeuvre to energise various sectors, invigorating the economy and bolstering energy security.

For the manufacturing sector, the path to sustainable energy may not be illuminated by solar power alone, given its current limitations in meeting high-demand industrial energy needs directly. However, the emerging, state-of-the-art energy storage technologies stand as a beacon of innovation, enabling manufacturers to capture and store solar energy. Investing in these systems enables industries to counteract the effects of power fluctuations, ensuring uninterrupted operations and optimising cost-effectiveness. Moreover, Zambia's abundant mineral wealth, particularly in manganese, presents a golden opportunity to venture into domestic production of batteries and storage solutions, fostering an industry that can cater to local needs and regional markets.

Simultaneously, LPG emerges as a key player in the diversification of Zambia’s energy portfolio. Against the setting of electrical shortages, LPG offers a reliable, cleaner alternative for heating and power across residential, commercial, and industrial spheres. Its integration can alleviate pressure on the national grid while propelling sectors towards more sustainable energy practices.

In foresight of such shortages, the government had, months prior, introduced fiscal incentives through zero tax rating on solar batteries, solar water heaters, solar panels and solar streetlights, a move designed to propel the adoption of solar technology. However, these have languished in the shadows, their potential to catalyse change largely unacknowledged. However, in the face of increasing power shortages, their importance cannot be emphasized enough. They offer a lifeline i.e. a means to not only mitigate the current energy crisis but to redefine Zambia's energy narrative.

The government's astute fiscal incentives lay out a solar red carpet for SMEs, waiving taxes on pivotal solar commodities. It’s a visionary move that casts the commodities not just as mere products, but as the vanguards of a renewable era. This policy doesn’t just illuminate the way forward; it blazes a trail of golden opportunities, imbuing solar energy with an economic allure that’s as bright as it is boundless.

Investors and SMEs stand to gain immensely from this transformative energy potential. Firstly, an investor engaged in the distribution and possible manufacture of solar energy solutions faces the possibility of increased profit margins owing to reduced associated tax costs while the demand for these solutions continues to soar owing to the power shortage, allowing them to quote favourable prices. Additionally, the adoption of renewable energy solutions presents an opportunity for them to not only pioneer but also set the standard for the inclusion of Environmental, Social and Governance (ESG) reporting practices in their businesses, a practice that is slowly becoming a requirement for financing as seen in the Council of the European Union (EU) – Press release 86/24, 5/02/2024, Environmental, social and governance (ESG) ratings: Council and Parliament reach agreement. Clearly, this has the potential to elevate the investor’s corporate image internationally and also positions them favourably should they require financing in the future. Furthermore, the burgeoning fields of solar and energy storage, augmented by Zambia's mineral assets, present lucrative avenues for engagement and development, promising robust returns in a market poised for growth.

For SMEs, the shift to off-grid solutions is not just a strategic response to immediate challenges but a long-term investment in reliability and independence. Solar installations and LPG systems can unlock new operational efficiencies, reduce energy costs, and ensure business continuity, even as they contribute to broader national objectives of sustainability and energy diversity.

Through the adoption of these alternative energy sources, Zambia can not only navigate its current energy challenges but also lay the foundation for a vibrant, resilient future. The synergy between government incentives, investor engagement, and SME adaptability can transform the energy sector into a cornerstone of economic strength and environmental stewardship, signalling a new dawn for Zambia's prosperity.

Eng. Vic. Ben. Mapani |