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GEF support for Zambia

The Global Environment Facility (GEF) approved a grant of $2.95 million to help remove the many barriers to renewable-energy systems in rural Zambia, including minihydro.
These barriers include the lack of information and capacity, as well as insufficient finance to take care of high initial costs.

The project, which will be supervised by the U.N. Environment Programme (UNEP), will have a total value of $7.8 million with co-financing. The U.N. Industrial Development Organization (UNIDO) will execute the project in close cooperation with the Ministry of Energy and Water Development and the Development Bank of Zambia. This venture is expected to demonstrate sustainable ways for meeting the country’s goal of increasing from 2 percent to 15 percent over the next five years the number of rural communities enjoying electricity supply. Also, directly or indirectly, it will reduce carbon dioxide emissions by some 2.2 million tons over the lifetime of the intervention.

“This is an exciting project, one that shows how you can help provide electricity, using renewable-energy technology, to a rural community while having a positive effect on national electrification policies and making an impact on the environment, both within Zambia and at the global level,” said GEF Chairman and Chief Executive Officer Len Good. “This project takes on added significance in view of the GEF’s commitment to contribute to the goals of the New Partnership for African Development.”

The key to achieving the project goals will be the demonstration effect of three types of pilot mini-grids. The three types will use biomass gasification, solar energy, and mini-hydro power stations, respectively. They are intended to demonstrate the technical and financial viability of renewable energy in rural electrification to potential investors, financing institutions, ZESCO (the country’s public utility company), equipment suppliers, energy service providers, and government planning and regulatory officers. Until now, electricity expansion plans have been focused on diesel-power generation—which is less environmentally friendly—but has lower start-up costs. As the main national grid reaches the remote areas in which the demonstration projects are installed, they can easily be integrated into the grid. The project will help develop institutions, policies, and regulations designed to provide a level playing field on which renewable-energy technologies might be able to compete with more conventional diesel-based power-generation projects.

Of the three technologies being addressed by the project, the mini-hydro has the greatest likelihood of being widely replicated. However, after witnessing biomass electrification at work in India, officials of the national public utility have expressed willingness to use this technology in place of diesel generation in up to ten locations already identified and possibly many more to follow. A ten-fold increase in the adoption of biomass gasification technologies is foreseen over the long term. Also, there is considerable hope of a successful experiment with solar photovoltaic (PV) lighting in fishing communities not only to electrify houses but also to replace kerosene in lanterns on fishing boats.

A specially established revolving fund is expected to help foster adoption of renewable energy and to ensure long-term sustainability of the project interventions. The fund, to be located within the Development Bank of Zambia, will bear the financial risk associated with this kind of innovative undertaking, which commercial banks are not usually willing to take. The revolving nature of the fund will increase the possibilities that investment in renewable energy resources will continue long after the six-year duration of the project. The proposed fund helps set the stage for private-sector engagement, one of the defining characteristics of this venture.

Another characteristic of the project is that extensive consultations have been carried out with all relevant stakeholders, including ZESCO and a number of potential private investors. The fishermen consulted expressed a willingness to try the solar technology suggested for the fishing village and to pay to have the lighting fixtures on their boats recharged by the solar PV mini-grid.

Capacity building and policy development are other important features of the project. Training will be arranged for technology experts, planners, policymakers, university personnel, business leaders and other key stakeholders. Banks and other financial institutions will be equipped with the expertise to evaluate rural electrification endeavors based on renewable energy resources.

The key indicator of success for this project would be the spread of renewable-energy technologies in the Zambian countryside. Also, given Zambia’s full integration into the Southern African Development Community, the Common Market for Eastern and Southern Africa, and the New Partnership for African Development, possibilities for the replication of any successful models in the region and even beyond seem promising.

Additional information: web site GEF
News date: 17/06/2004

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