Zambia Power Key View

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Zambia Power Key View

• 11 May 2022
• Zambia
• Power

Key View: Solar power will attract significant investment in Zambia over our forecast period to 2031, with strong growth in its project pipeline spurred on by liberation of the renewables sub-sector and expanding regional electricity demand. Its sizable hydropower sector will generate an excess of electricity after the recovery of water levels in Lake Kariba, allowing the country to export electricity under normal rainfall conditions. However, the lack of power sector diversity will leave Zambia vulnerable to blackouts during drought, which will require significant electricity imports to minimise blackouts.

Headline Power Forecasts (Zambia 2021-2026)

Indicator	2021e	2022f	2023f	2024f	2025f	2026f
Generation, Total, TWh	17.2	17.6	19.2	20.5	21.1	21.5
Consumption, Net Consumption, TWh	14.3	15.1	16.3	17.6	18.3	18.8
Capacity, Net, MW	3,831.3	3,875.3	3,925.9	3,982.0	4,045.6	4,113.5
e/f = Fitch Solutions estimate/forecast. Source: EIA, IRENA, Fitch Solutions

Latest Updates And Structural Trends

• The Exim Bank of China and Industrial and Commercial Bank of China (ICBC) have reportedly frozen financing distributions to the 700MW Kafue Gorge Lower Power Plant project after the Zambian power utility Zesco reportedly failed to meet its contractual obligations. This is expected to delay the project further as contractor Sinohydro has also reportedly made little progress over recent months approaching the project's expected completion date. While we have not revised our forecast to reflect completion after 2022, we continue to monitor the project's progress and will do so if evidence supporting such a delay arises.
• We have not made any notable changes to our forecasts for Zambia's thermal power growth this quarter. The absence of evidence contrary to our bearish outlook on the sub-sector, the lack of thermal power plants under development and the government's rhetoric strongly supportive of solar power and hydroelectricity all feed into our downbeat projections on thermal power.
• Chariot Limited, Total Eren and First Quantum Minerals (FQM) have formed a partnership to develop 430MW of combined wind and solar power to provide electricity to FQM's Zambian mining operations. The project will help FQM reach its goal to reduce its carbon emissions by 30% by 2025. Chariot Limited and Total Eren signed an agreement in 2019 to jointly develop wind and solar power projects specifically for mining firms in Africa. The plant will begin construction in 2023 at an estimated cost of USD500mn.
• Zesco has announced that it is on track to complete a USD260mn transmission and distribution network expansion project in Lusaka in 2023. The project will give 63,000 households in high-density low-income residential areas access to electricity for the first time.

This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.