MAKING WAVES

Zambia 2015 | MINING & ENERGY | FOCUS: HYDROELECTRIC POWER

With each year, demand for electricity is rising in Zambia. However, the government alone will not be able to meet demand and the answer lies in increasing private sector investment.

Zambia has 40% of the total water resources in the SADC region. The existing hydropower capacity at 2,203MW is too low to secure the economic future of Zambia's fast-growing economy and—with estimated potential capacity of over 6,000MW—there is plenty of room for expansion. Power generation is dominated by the state-owned Zesco, which controls the major hydropower assets with the exception of the 56.5MW stations at Mulungushi and Lunsemfwa. Zesco also operates the grid, and is a founder member of the Southern African Power Pool (SAPP). Also, the president has just commissioned $52 million for Lunzua Hydro-Power station.

In 2011, the World Bank released a study about electricity production from hydroelectric sources in Zambia. The research showed that the country's electricity supply mix was overwhelmingly hydrobased, being that measure at 99.65%. A more recent study conducted by International Renewable Energy Agency (IRENA) and published in 2013, displayed an ever higher rate (99.9%).

Such an unbalanced energy mix, combined with poor rainfall in last year rainy season is causing power shortages in Zambia and many sectors of the economy have been negatively affected.
A particularly dry rainy season has left the dams with dwindling water levels which had the inevitably led to power deficits. In order to provide homes and companies with electricity, the country will need to import between 150 and 200MW.

Local analysts and organizations are inviting the government to differentiate the energy mix and to implement investment-friendly reforms to attract new capitals and technologies that would use different and possibly green energy sources.

However, the government shows no signs of changing. In 2012, it had received funds from the World Bank to finance its National Water Resources Development Project (WRDP) whose objective is to support the implementation of an integrated framework for water resources management.

At the beginning of July 2015, The Hon Christopher Yaluma, the Minister of Mines, Energy and Water Development signed a MoU with the Democratic Republic of Congo (DRC) for the construction of hydropower plants on the Luapula River, whose construction will commence in 2017 to be completed by 2020.

Moreover, Zambia and Zimbawe are jointly conducting the engineering feasibility studies and calculating the social and environmental impacts of another hydro-electric power plant, the Batoka project that will generate 2,400MW.

Through these projects, the government is seeking to boost power generation and ease electricity shortages but many are concerned that relying on one energy source would make the country vulnerable to droughts or other unfavorable natural events.

Electricity demand in Zambia is increasing and is projected to grow every year at a 4% rate over the next decade. If these predictions are confirmed, Zambia will exhaust its electricity potential in the year 2030, when power demand reaches an estimated figure of 6,000 MW. Investments in other energy sources are vital to enhance security of power supply and stimulate economic growth. While the government hesitates to undertake new paths, excellent opportunities exist for foreign investors to exploit Zambia's huge energy potential.