SSA’s largest grid solar project gets funding

May 15, 2025

From the newsletter

Zambia's energy transition has taken a major leap forward with the financial close of the 100 MW Chisamba Solar PV Project. Stanbic Bank Zambia supplied the $71.5 million in commercial debt for this development. It is now the largest grid-connected solar project in Zambia and the biggest in sub-Saharan Africa outside South Africa.

  • Zambia's energy woes are reducing with rising water levels in its hydro dams. However, the hardships the country faced during the 2024 drought are driving a shift towards diversifying energy sources, with a primary focus on solar power.

  • The country is also exploring external electricity sources from neighbouring countries. Construction of the power line connecting to Tanzania began last month, and there are further plans to establish connections with the DR Congo and Mozambique.

More details

  • The Kariba North Bank Extension Power Corporation (KNBEPC), a company fully owned by ZESCO, will develop the project. The electricity generated will be bought by GreenCo Power Services (GreenCo), a prominent renewable energy trader in SADC and Zambia, through a 13-year Power Purchase Agreement (PPA). Additionally, GreenCo will supply power to First Quantum Minerals (FQM), Zambia’s largest mining investor, under a separate Power Supply Agreement (PSA).

  • Financing is a common obstacle for many projects. However, this development model, where the private sector takes the lead, can attract significant funding and reduce the risks associated with project implementation. The generated electricity will be transmitted through ZESCO's grid, allowing ZESCO to earn revenue from Use-of-System Agreement charges.

  • The Zambian government is actively working to simplify the investment process for the private sector. Last month, the time required for project approvals was reduced from six months to approximately 48 hours. This swift change aims to reassure investors who often face difficulties navigating government bureaucracy to obtain necessary approvals, licences, and permits, sometimes leading to project abandonment. This new efficiency seeks to eliminate such hurdles.

  • This month, the Energy Regulation Board (ERB) in Zambia granted three construction permits for the electricity and renewable energy sector. These permits cover a range of activities, from manufacturing renewable energy equipment to major infrastructure projects like the Zambia-DR Congo interconnector and two solar power plants with a combined capacity of 108 MW.

  • While hydropower currently provides over 80% of Zambia’s electricity, several solar energy projects are in progress. These include a 67 MWp plant being developed by Solarcentury Africa and the Industrial Development Corporation (IDC). Furthermore, construction began this week on another 50 MW solar project in the Choma district, which aims to reach a total capacity of 100 MW in its second phase and will include 20 MWh of battery storage.

  • Renewable energy continues to attract investors, and banks are increasingly participating in this sector. Stanbic Bank Zambia, part of the Standard Bank Group, which has a strong track record of financing projects across Africa (including approximately 9,000 MW in South Africa alone), is one such institution. Recent projects they've supported include the 13.5 MW Lower Maguduza Hydropower Project in Eswatini and the 140 MW Ishwati Wind Farm in South Africa.

Our take

  • Banks for long shied away from investing in renewables, fearing the maturity of the technology. That is now in the past. Many banks now have specialised funds for renewables. South African banks lead in this. The strong potential for revenue generation from renewable energy is expected to attract even more banks to invest in this growing sector.

  • With the entry of many financing institutions, the competition for clients will heat up. Energy developers, companies, and investors can expect better lending terms. This will be a relief to debt-heavy African governments.

  • Zambia's goal of reaching 1,000 MW by year-end is not a distant dream. Indications show it can possibly attain this. And if it does, it will have set a perfect example of how to scale up power generation.