Green Climate Fund and AfDB to Provide $154 Million for Renewable Financing in Zambia

Framework will finance 100 MW of renewable projects, mainly solar


The Green Climate Fund (GCF) and the African Development Fund (AfDB) have joined hands to support a $154 million renewable financing framework in the southern African nation of Zambia.

Historically, Zambia has been reliant on hydropower for 90% of its energy needs. But the country is now facing severe challenges in keeping up with the ever-rising energy demands of the country. The situation has become worse as the country has been hit by droughts which limit hydroelectric power generation.

To address these issues, the framework will deploy alternative energy sources by financing 100 MW of renewable energy projects, which would primarily be small solar projects. The framework will also provide the required technical help for the development of sustainable electrification policies and help domestic financial institutions to finance such projects.

The total financial requirement of the framework is nearly $154 million, out of which GCF will provide $50 million in debt financing and $2.5 million as a grant to support the technical aspect of the project. The framework will also be co-financed by AfDB, which will provide $51.5 million and the remaining $50 million will come from banks and private sector investors.

Speaking about this latest development, Wale Shonibare, vice president, climate change and green growth at the African Development Bank, said, “The bank’s partnership with the GCF is now delivering value, aiding the bank’s efforts to power Africa sustainably by leveraging the continent’s vast renewable energy resources. With the FAA in place, we will move faster on our shared institutional goals by investing in renewable energy projects in Zambia and offering the much-needed technical assistance to the crowd in further investments in the sector.”

Recently, Univergy Solar, a renewable energy company based in Japan, announced that it will invest more than $200 million in two solar projects in Zambia. These new projects are expected to add nearly 200 MW capacity to the country’s national grid by the next year. The country’s severe drought has led to an energy deficit of 750 MW.

Earlier this year, the Global Energy Transfer Feed-in tariffs (GET FiT) had awarded 120 MW of solar PV projects under round one of GET FiT Zambia solar tender. Six projects of 20 MW were awarded, totaling 120 MW.  The GET FiT tender had an initial plan to award 100 MW, but due to favorable results, the country decided to allocate an additional 20 MW.