Last edited: April 2019
When it comes to finding external financing for initiating energy projects, a possible course of action is to look for subsidies. The Zambian government sees renewable energy as critical for the country. A document on the vision 2030 of the country acknowledges the need need to diversify the electricity mix. A good start to look for subsidies would be the government, but also NGOs provide energy subsidies in Zambia. There are various types of both direct and indirect subsidies available for solar power.
The aim of a subsidy, in this case for the installation of a solar power system, is to help businesses and communities with limited funds to gain access to such systems nonetheless. This helps the targeted market to grow. In the case of (solar) energy subsidies, the aim is to increase the amount of systems installed and hence the energy output. Subsidies can either raise the price received by energy producers, or lower the price paid by energy consumers. There are many different types of energy subsidies. Some have a direct effect on the price paid for a system, like grants and tax exemptions, while others act indirectly. The latter include regulations that skew the market in favor of a particular energy sources or a generating technology, or support for research and development.
Rural Electrification Fund (REF)
The first option for subsidies is with the help of the Rural Electrification Fund, funded by the government and overseen and managed by the Rural Electrification Authority (REA). The Authority manages the implementation of the rural electrification programme in Zambia.
Duty and VAT exemptions
Besides subsidies, there are also indirect ways to save money in a solar project. The Zambian government made certain aspects of solar products duty and VAT exempt. Energy efficient lighting lamps, discharge lamps, solar batteries and inverters for solar power are duty free (the effective rate). Zero VAT ratings exist for ‘Energy Saving Appliances, Machinery and Equipment’, which includes solar panels and batteries.
Other support systems
Renewable Energy Feed-in Tariff (REFiT)
This Feed in Tariff strategy started in 2017 and is specifically implemented to support renewable energy sources. It will provide payments to eligible renewable power projects, with an an aim of installing 200MW in the first phase. The corresponding power purchase agreement (PPA) of this FiT guarantees tariffs for the next 20 years.
Beyond the Grid for Zambia
Beyond the Grid Fund for Zambia is an ambitious new undertaking to bring basic clean energy access to one million Zambians and accelerate private-sector growth in energy generation and distribution in the country. Their aim is to give electricity to 1 million residents in Zambia by giving grants to companies. The size of the fund is 20 million euros (22.5 million dollars)
Sustainable Energy for All (SE4ALL)
Subsidies do not have to come from within Zambia. SE4ALL is a worldwide sustainable energy initiative from the United Nations and consists of three objectives. Firstly the ensurement of universal access to modern energy services. Secondly, trying to double the rate of energy efficiency and thirdly doubling the share of renewable energy in the global energy mix. Since December 2015, Zambia started with the special development of a national SEforALL Action Agenda and Investment Prospectus with the technical assistance of the SEforALL Africa Hub, which is expected to be finished in 2019. Since December 2015, the country has embarked in the process of developing its national SEforALL Action Agenda and Investment Prospectus with the technical assistance of the SEforALL Africa Hub.
More on NGOs active with solar in Zambia can be found here.