Capacity Building for Renewable Energy and Energy Efficiency – Feasibility Studies and Demonstration Projects, Zambia

Since February 2018 NTU International A/S is leading the implementation the project “Capacity Building for Renewable Energy and Energy Efficiency – Feasibility Studies and Demonstration Projects”, funded by the European Union (EU). The first phase of the project is completed, while the implementation of the second phase is ongoing.

The project “Capacity Building for Renewable Energy and Energy Efficiency” provides Technical Assistance (TA) to the Zambian Rural Electrification Authority (REA) for the development of renewable energy and energy efficiency demonstration projects in rural Zambia.

The specific objective of this TA is to support the deployment of renewable energy and energy efficiency actions and to provide capacity building to sector stakeholders in order to enable them to develop sustainable energy projects in the future.

The Purpose of the project includes:

• Helping to build resilient infrastructure, promoting inclusive and sustainable industrialization, and addressing energy poverty in rural areas
• Helping to take urgent action to combat climate change and its impacts
• Ensuring technical know-how transfer in the development of project feasibility studies for some prospective off-grid sites
• Demonstrating the feasibility of renewable energy projects in practice

Context

This project is a part of an ambitious programme “Support to the Zambia Energy Sector: Increased Access to Electricity and Renewable Energy production” with an overall budget ca 65 million EUR and the objective to increase access to clean, reliable, and affordable energy and promote renewable energy production and energy efficiency in Zambia. This is to be achieved through the following lines of action (activities) running in parallel:

1. Support to public institutions to develop and/or revise the legal and regulatory framework for renewable energy and energy efficiency in Zambia.
2. Building capacity of both public and private organizations involved in the renewable energy and energy efficiency sector in Zambia.
3. Support for demonstration projects for renewable energy and energy efficiency in Zambia.

The support provided by NTU International focuses on the third line of action.

The strategy and structure

NTU is working to ensure capacity building and technical know-how transfer, through on-the-job and formal training. In this project, the focus is on the mini-grids, since one of the goals is to elaborate guidelines for mini-grids operations in the future. NTU’s team of experts is working on the detailed design of future projects related to mini-grids. This approach is helping to establish a system of continuous development for solar energy based on solar photovoltaic technology in rural areas in Zambia. This approach is expected to provide electricity for at least 10 000 people in isolated communities of Zambia.

The project is split into two phases:

• Phase 1 consisted of the following activities:
  • Activity 1.1: Preparatory Activities
  • Activity 1.2/3: Elaboration of (pre)-feasibility studies for mini-hydro Rural Electrification Authority (REA) sites
  • Activity 1.4: Technical assistance for the design of non-hydro mini-grid projects
  • Activity 1.5: Preparation and award of a call for proposals for demonstration projects
  • Cross-cutting Capacity Strengthening activities

The TA under Phase 1 has resulted in several key achievements:

• Elaboration of Hydropower database and identification of prospective sites for further studies
• Assessment of prospective RE sites for inclusion in the CfP: Long and shortlist of projects
• Logistic Survey and Preliminary Project Design Report for sites under Lot 1
• Preparation and award of the CfP for demonstration projects in three lots: Six Grant Contracts signed, one for Lot 1, four for Lot 2, and one for Lot 3. About 257 demonstration sites are planned for lots 1 and 2
• Draft model PPP contract documents for Lot 1
• Draft model EPC for LCC for Lot 3, and
• Formal training sessions were delivered on subject matters such as CfP processes (2), PPP (2), EPC (1), and hydropower planning and selection of hydro-meteorological equipment (7), with attendance of 138 participants in total for 12 training sessions

Following the successful preparation of renewable energy and energy efficiency projects and organization of the CfP, NAO signed six Grant Contracts with the Beneficiaries on 28 November 2020. As awarded, the DPs under lots 1 and 2 consist of 257 micro and mini-grids across Zambia. For Lot 3, one Grant Contract was signed for the replacement of about 3,900 streetlights.

• Phase 2 consists of the following activities:
  • Monitoring the implementation of demonstration projects
  • Elaboration or update of guidelines for mini-grids operation, Enhanced Institutional Support, Knowledge Transfer, and Training for REA
  • Preparation of documentation needed for the development of on- and off-grid Renewable Energy schemes

The last reporting period that ended on 28 February 2022 has seen great progress in having more private-sector renewable demonstration projects, however, overall, there have been various issues in the implementation process. Despite the obstacles, NTU has continued to work with its capacity and passion to support REA with the aim that the people of Zambia do not lose out on what it is supposed to gain from this project, that is to create a sustainable renewable energy demonstration projects and an enabling environment that will encourage private sector investments in individual, PPP, and EPC models, that will light homes and help small business to flourish in rural Zambia.

Collaboration

The Zambian government sees renewable energy as an important part of the country’s future energy mix. The National Indicative Programme (NIP) of the 11th EDF (of which this project is part) supports the Zambian energy sector and promotes renewable energy production and energy efficiency across Zambia through the ElectriFI programme. The Electrification Financing Initiative (ElectriFI) is a financing scheme initiated by the European Commission and Power Africa. This programme provides seed, mid-and long-term capital for energy access projects in developing countries, such as Zambia. The mission of ElectriFI is to grow viable businesses and projects that create new connections to affordable, reliable, and sustainable energy. To achieve this mission, ElectriFI provides funding for developers and investors across a range of business models- not only for projects with one off-taker benefiting from contractually-based revenue streams (IPPs) but also for businesses that are exposed to full market forces of supply and demand.

Solar power has enormous potential as an energy source in emerging markets, such as Zambia. That is why Zambia’s Industrial Development Corporation (IDC) signed an agreement with IFC to explore the development of two large-scale solar projects through Scaling Solar. The competitive auction organized through the program attracted 48 solar power developers, seven of whom submitted final proposals, and the bids yielded the lowest solar power tariffs in Africa during this time.

SIDA (Beyond the grid fund) and USAID (Power Africa) are also targeting off-grid rural electrification, mostly stand-alone systems. The Global Energy Transfer Feed-in Tariff (“GET FiT”) Program is an initiative launched by KfW, whose purpose is to fast-track a portfolio of a number of RE generation projects (1 MW-20 MW) promoted by private developers.

There are also actions to provide support and develop catalyst private investment into small and medium scale energy projects in Africa, where the main supporter is the European Development Finance Institutions (EU EDFI) Private Sector Development Facility. The same support and complementary programmes or initiatives include the European Union Energy Initiative - Partnership Dialogue Facility (EUEI PDF) and the Africa-EU Renewable Energy Cooperation Programme (RECP). Furthermore, a Joint Declaration of Intent (DoI) on enhanced cooperation in the energy sector, reaffirms a shared will from all signatories and introduces the cost-reflective tariffs- as this is a key enabler to private investments and subsequent development of the energy sector.

Since February 2018 NTU International A/S is leading the implementation the project “Capacity Building for Renewable Energy and Energy Efficiency – Feasibility Studies and Demonstration Projects”, funded by the European Union (EU). The first phase of the project is completed, while the implementation of the second phase is ongoing.

The project “Capacity Building for Renewable Energy and Energy Efficiency” provides Technical Assistance (TA) to the Zambian Rural Electrification Authority (REA) for the development of renewable energy and energy efficiency demonstration projects in rural Zambia.

The specific objective of this TA is to support the deployment of renewable energy and energy efficiency actions and to provide capacity building to sector stakeholders in order to enable them to develop sustainable energy projects in the future.

The Purpose of the project includes:

• Helping to build resilient infrastructure, promoting inclusive and sustainable industrialization, and addressing energy poverty in rural areas
• Helping to take urgent action to combat climate change and its impacts
• Ensuring technical know-how transfer in the development of project feasibility studies for some prospective off-grid sites
• Demonstrating the feasibility of renewable energy projects in practice

Context

This project is a part of an ambitious programme “Support to the Zambia Energy Sector: Increased Access to Electricity and Renewable Energy production” with an overall budget ca 65 million EUR and the objective to increase access to clean, reliable, and affordable energy and promote renewable energy production and energy efficiency in Zambia. This is to be achieved through the following lines of action (activities) running in parallel:

1. Support to public institutions to develop and/or revise the legal and regulatory framework for renewable energy and energy efficiency in Zambia.
2. Building capacity of both public and private organizations involved in the renewable energy and energy efficiency sector in Zambia.
3. Support for demonstration projects for renewable energy and energy efficiency in Zambia.

The support provided by NTU International focuses on the third line of action.

The strategy and structure

NTU is working to ensure capacity building and technical know-how transfer, through on-the-job and formal training. In this project, the focus is on the mini-grids, since one of the goals is to elaborate guidelines for mini-grids operations in the future. NTU’s team of experts is working on the detailed design of future projects related to mini-grids. This approach is helping to establish a system of continuous development for solar energy based on solar photovoltaic technology in rural areas in Zambia. This approach is expected to provide electricity for at least 10 000 people in isolated communities of Zambia.

The project is split into two phases:

• Phase 1 consisted of the following activities:
  • Activity 1.1: Preparatory Activities
  • Activity 1.2/3: Elaboration of (pre)-feasibility studies for mini-hydro Rural Electrification Authority (REA) sites
  • Activity 1.4: Technical assistance for the design of non-hydro mini-grid projects
  • Activity 1.5: Preparation and award of a call for proposals for demonstration projects
  • Cross-cutting Capacity Strengthening activities

The TA under Phase 1 has resulted in several key achievements:

• Elaboration of Hydropower database and identification of prospective sites for further studies
• Assessment of prospective RE sites for inclusion in the CfP: Long and shortlist of projects
• Logistic Survey and Preliminary Project Design Report for sites under Lot 1
• Preparation and award of the CfP for demonstration projects in three lots: Six Grant Contracts signed, one for Lot 1, four for Lot 2, and one for Lot 3. About 257 demonstration sites are planned for lots 1 and 2
• Draft model PPP contract documents for Lot 1
• Draft model EPC for LCC for Lot 3, and
• Formal training sessions were delivered on subject matters such as CfP processes (2), PPP (2), EPC (1), and hydropower planning and selection of hydro-meteorological equipment (7), with attendance of 138 participants in total for 12 training sessions

Following the successful preparation of renewable energy and energy efficiency projects and organization of the CfP, NAO signed six Grant Contracts with the Beneficiaries on 28 November 2020. As awarded, the DPs under lots 1 and 2 consist of 257 micro and mini-grids across Zambia. For Lot 3, one Grant Contract was signed for the replacement of about 3,900 streetlights.

• Phase 2 consists of the following activities:
  • Monitoring the implementation of demonstration projects
  • Elaboration or update of guidelines for mini-grids operation, Enhanced Institutional Support, Knowledge Transfer, and Training for REA
  • Preparation of documentation needed for the development of on- and off-grid Renewable Energy schemes

The last reporting period that ended on 28 February 2022 has seen great progress in having more private-sector renewable demonstration projects, however, overall, there have been various issues in the implementation process. Despite the obstacles, NTU has continued to work with its capacity and passion to support REA with the aim that the people of Zambia do not lose out on what it is supposed to gain from this project, that is to create a sustainable renewable energy demonstration projects and an enabling environment that will encourage private sector investments in individual, PPP, and EPC models, that will light homes and help small business to flourish in rural Zambia.

Collaboration

The Zambian government sees renewable energy as an important part of the country’s future energy mix. The National Indicative Programme (NIP) of the 11th EDF (of which this project is part) supports the Zambian energy sector and promotes renewable energy production and energy efficiency across Zambia through the ElectriFI programme. The Electrification Financing Initiative (ElectriFI) is a financing scheme initiated by the European Commission and Power Africa. This programme provides seed, mid-and long-term capital for energy access projects in developing countries, such as Zambia. The mission of ElectriFI is to grow viable businesses and projects that create new connections to affordable, reliable, and sustainable energy. To achieve this mission, ElectriFI provides funding for developers and investors across a range of business models- not only for projects with one off-taker benefiting from contractually-based revenue streams (IPPs) but also for businesses that are exposed to full market forces of supply and demand.

Solar power has enormous potential as an energy source in emerging markets, such as Zambia. That is why Zambia’s Industrial Development Corporation (IDC) signed an agreement with IFC to explore the development of two large-scale solar projects through Scaling Solar. The competitive auction organized through the program attracted 48 solar power developers, seven of whom submitted final proposals, and the bids yielded the lowest solar power tariffs in Africa during this time.

SIDA (Beyond the grid fund) and USAID (Power Africa) are also targeting off-grid rural electrification, mostly stand-alone systems. The Global Energy Transfer Feed-in Tariff (“GET FiT”) Program is an initiative launched by KfW, whose purpose is to fast-track a portfolio of a number of RE generation projects (1 MW-20 MW) promoted by private developers.

There are also actions to provide support and develop catalyst private investment into small and medium scale energy projects in Africa, where the main supporter is the European Development Finance Institutions (EU EDFI) Private Sector Development Facility. The same support and complementary programmes or initiatives include the European Union Energy Initiative - Partnership Dialogue Facility (EUEI PDF) and the Africa-EU Renewable Energy Cooperation Programme (RECP). Furthermore, a Joint Declaration of Intent (DoI) on enhanced cooperation in the energy sector, reaffirms a shared will from all signatories and introduces the cost-reflective tariffs- as this is a key enabler to private investments and subsequent development of the energy sector.