Renewable Energy based Electricity generation for isolated mini-grids in Zambia: About the Project

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PROJECT INFORMATION

Zambia is endowed with abundant energy resources (except for petroleum products which are imported). Its hydropower potential is assessed at 6,000 MW and the biomass cover (covering 81% of total land area), though under increasing pressure, is still reasonably rich. Zambia has rather large coal reserves (estimated at 80 million tons) and operates its own pipeline-fed oil refinery (at Ndola, capacity 1.1 million tons per year). Of the total installed electric generating capacity of 1,778 MW, hydropower accounts for 1,670 MW (94%) in Zambia. In spite of surplus hydropower availability, the electricity grid penetration is still very low about 20% of total population mostly in urban areas has access to electricity with a national grid that caters to only 2% of the households in rural areas.
The Zambian Government aims to provide electricity to all rural households in Zambia, in order to improve their standard of living and provide opportunity to generate more income. Most of these rural households are in far flung areas, and hence cannot be reached economically through grid extension. Renewable energy based isolated mini grids provide a viable option to provide the electricity and energy services to remotely located rural households on sustainable basis. Linking decentralized mini grids based on renewable energy with income generation activities would accelerate rural industrial development, which in turn would ensure returns on the investment and sustainability of the mini grids.
Overall Project Objectives: Mini grids based on renewable sources of energy will contribute to the Zambian Government's objective of providing electricity and energy services to rural areas, and improving their standard of living through income generation activities. The project will:
(a) establish isolated mini grids to provide electricity and energy services to rural households and communities that cannot be reached economically by the grid; and (b) link renewable electricity mini grids with income generation activities to accelerate rural industrial development.

The project will identify, evaluate and prioritize the barriers preventing increased uses of renewable energy sources for the generation of electricity for isolated mini-grids, and to design activities for their reduction/removal.

The project is based on the following strategic principles (developed during the UNID's mission to Zambia in April 2001 and agreed with the Department of Energy and Energy Regulation Board, Government of Zambia):

• Pilot installations (mini grids) based on renewable energy will be established in remote rural areas where they are most needed, and will be designed to test, monitor and evaluate assessment methodologies, maintenance, financing, ownership, operations and monitoring.

• Mini grids will meet local energy needs on a commercial basis, using public utility as well as businesses with all ownership forms.

• Communities, individual consumers, public utility and investors will actively contribute to and participate in the mini grids program.

• The Government and cooperating agencies will act as a market enabler, putting in place the laws, decrees, regulations, and building capacity for replication of mini grids based on renewable electricity.

• The access of rural mini grids to soft credit and other financial incentives will be increased to improve financial viability of public utility, businesses and affordability to consumers.

• Financial incentives will be provided, in recognition of social and environmental benefits, but will used carefully to build capacity and support sustainability.