The 6.02¢/kWh tariff makes the projects the lowest-cost solar power in sub-Saharan Africa to date
Lusaka – Zambia’s Industrial Development Corporation (IDC) opened bids on May 27 from seven leading renewable energy developers seeking to build large-scale solar power plants in the southern African country where power shortages are acute. The bid tariffs have ranged from 6.02 US cents / kWh to 10.6¢ / kWh at the low end, which would make the projects the lowest-cost solar power in sub-Saharan Africa to date.
The proposals, initially submitted on May 6, relate to the development of two utility-scale solar power projects of up to 50 MW each. These would be the first large-scale solar IPPs in the country and the inaugural projects for the World Bank Group’s Scaling Solar program. IFC, a member of the World Bank Group, acted as lead transaction advisor to the Government of Zambia and since October 2015 have helped run the tender process for the two projects.
The tender initially attracted 48 developers, of which 11 were prequalified for the subsequent bidding process. Seven bidders submitted final proposals. These were:
- Access / Eren Zambia 1
- EDF Energies Nouvelles
- Enel Green Power S.p.A.
- Mulilo Zambia PV1 Consortium
- NEOEN S.A.S. / First Solar Inc.
- Shanghai Electric Power / AVIC
Winners for the two projects will be selected on the basis of the lowest proposed tariff. Provisional results indicate that NEOEN S.A.S. / First Solar Inc. and Enel Green Power S.p.A. will win the two projects at tariffs of 6.02¢ / kWh and 7.84¢ / kWh respectively — these proposed tariffs will remain fixed for 25 years. However, this remains subject to completion of necessary procurement formalities over the coming days, and an official announcement will be made at that time.
IDC noted that the two provisional winning tariffs are both well below those typically offered under unsolicited proposals from solar developers in Zambia or elsewhere in Africa – a testament to the value of Scaling Solar’s transparent, competitive tender process. Local Zambian participation in the two projects will be ensured through IDC taking a 20 percent shareholding in each of the two project companies. IDC’s interests are expected to be offered to Zambian investors as a preferential offer in due course.
Round 2 of the Scaling Solar program in Zambia, with a target capacity of a further 200 MW, has recently been launched by Zambia’s President, His Excellency Mr. Edgar Chagwa Lungu. Work has already commenced on a high-level study of the national grid to determine the optimal location and size of these and other future solar PV projects.
“IDC is delighted with the high level of competition and the quality of bidders that Scaling Solar has delivered,” said IDC Chief Executive Andrew Chipwende. “To get from His Excellency the President’s initial procurement directive to the opening of financial proposals in ten months has only been possible through the adoption of the Scaling Solar model, which brought together all the necessary public sector stakeholders, led by the Ministry of Finance, as well as the various members of the World Bank Group.”
“The experience in Zambia has proven the effectiveness of Scaling Solar to help countries add solar power to their energy mix quickly and affordably,” said Dan Croft, Senior Investment Officer for IFC’s PPP Transaction Advisory Services team. “We look forward to delivering similar results in Senegal, Madagascar and other countries.”
About the Industrial Development Corporation
IDC is an investments holding company wholly owned by the Zambian government, and was incorporated in early 2014. IDC’s mandate is to play a catalytic role in deepening and supporting Zambia’s industrialization capacity to promote job creation and domestic wealth formation across key economic sectors. The IDC plays its role through evaluation, pricing and lowering the investment risk profile by serving as co-investor alongside private sector investors.
About The World Bank Group
The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. For more information, please visit www.worldbank.org, www.miga.org, and ifc.org.
About Scaling Solar
Scaling Solar is a World Bank Group solution that makes it easier for governments to quickly procure and develop large-scale solar projects with private financing. It includes a ‘one-stop shop’ package of technical assistance, templated documents, pre-approved financing, insurance products, and guarantees. Scaling Solar is designed to allow governments to get fast, affordable, utility-scale power up and running within two years of engagement. It has financing support of USAID’s Power Africa, the Ministry of Foreign Affairs of the Netherlands, the Ministry of Foreign Affairs of Denmark, and the Infrastructure Development Collaboration Partnership Fund (DevCo). For more information, visit www.scalingsolar.org.
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Phone: +27 83 448 9873