Zambia Power Sector Assessment

The current supply and demand balance is precarious, with a projected shortfall of 1,200 megawatts by 2022. This deficit is attributed to inadequate generation capacity, strained grid infrastructure, and insufficient revenue collection by ZESCO, the state-owned electricity supply corporation. The demand for electricity in Zambia is driven by the country's economic growth, with the industrial sector accounting for the largest share of consumption. The mining sector, which is a significant contributor to the country's GDP, is a major consumer of electricity. However, the sector's growth has been hindered by power outages and high electricity costs. The government has set ambitious targets to increase electricity access to 70% of the population by 2030, but achieving this goal will require significant investments in the power sector. ZESCO's commercial viability is threatened by a range of challenges, including capacity constraints, strained grid infrastructure, and inadequate revenue collection. The company's ability to finance future growth is also deteriorating, making it difficult to invest in new generation capacity and grid expansion. The absence of cost-reflective tariffs has exacerbated these challenges, as ZESCO is unable to recover its costs from consumers. The delivery of electrification services in Zambia is also hindered by a range of challenges. The Rural Electrification Agency (REA) has made significant progress in connecting rural communities to the grid, but the pace of progress is slow. Private sector companies have also invested in mini-grids and solar home systems, but these initiatives are often hampered by regulatory and financial constraints. The government has established a number of initiatives to support the delivery of electrification services, including the Rural Electrification Masterplan, but more needs to be done to address the scale and complexity of the challenge. The Zambian power sector requires significant investments to address its challenges and meet the country's growing energy demands. The government, private sector, and development partners must work together to develop a comprehensive strategy to address the sector's challenges and achieve the country's ambitious electrification targets. This will require a range of interventions, including investments in new generation capacity, grid expansion, and electrification services, as well as reforms to the regulatory framework and the financial model of ZESCO.