What Is The Energy Problem In Zambia?

Zambia faces a severe energy crisis characterized by electricity shortages, reliance on hydropower, and limited access to electricity for many households. Only 31% of Zambians have access to electricity, with the electrification rate as low as 5% in rural areas (1). The high cost of electricity and unreliable supply has hampered economic development and posed challenges for livelihoods and businesses. Zambia has historically relied on hydropower from three main plants for around 80% of its electricity. However, due to underinvestment in new energy infrastructure and a drought in the past decade, hydropower output has declined leading to massive power cuts across the country.

(1) https://www.sciencedirect.com/science/article/abs/pii/S0973082618300930

Reliance on Hydropower

Most of Zambia’s electricity comes from hydropower dams on the Zambezi River. As of 2022, hydropower accounted for approximately 85% of Zambia’s total installed electricity generation capacity of 2,800 MW (Source). Major hydropower stations include the Kariba Dam shared with Zimbabwe, Kafue Gorge, and Victoria Falls. While hydropower provides a renewable source of energy, over-reliance on hydropower has made Zambia’s electricity supply vulnerable to droughts and climate change.

In recent years, Zambia has suffered from severe droughts leading to reduced water flow on the Zambezi River, which has negatively impacted electricity generation at the hydropower dams. During periods of drought, Zambia has struggled to meet electricity demand and has resorted to load shedding, causing frequent blackouts across the country. The 2015-16 El Niño droughts resulted in water levels at Lake Kariba falling to record lows, causing a sharp drop in electricity production (Source). With climate change projections of increased droughts, Zambia’s overdependence on hydropower threatens to exacerbate its electricity supply problems.

Underinvestment in Energy Infrastructure

Zambia has suffered from insufficient investment in new power plants and transmission lines, resulting in an electricity deficit versus demand. According to a report by USAID, investment in the country’s power infrastructure has not kept pace with economic and population growth over the past 15 years, leading to electricity shortfalls (1).

Zambia relies heavily on hydropower from three major plants – Kariba North Bank, Kafue Gorge and Victoria Falls. But no new large power stations have been built since the early 1980s. The country requires major investments in generation capacity, but also in extending the transmission and distribution grid to underserved rural areas (2).

The underinvestment in energy infrastructure leads to an estimated power deficit of around 852 megawatts. With demand projected to triple by 2030, the World Bank estimates Zambia needs to invest US$8 billion in generation and grid expansion over the next 20 years to close the electricity access gap (3).

Sources:

(1) https://www.usaid.gov/zambia/energy

(2) https://www.linkedin.com/pulse/debt-restructuring-its-potential-impact-zambias-sector-paul-mulenga

(3) https://www.sciencedirect.com/science/article/pii/S0305750X20304861

Impact of Electricity Shortages

Frequent power outages and electricity shortages in Zambia severely impact economic productivity and the daily lives of citizens. According to research, power cuts reduce household income by 30-40% and force people to resort to less efficient and unhealthy forms of lighting like kerosene lamps. The unreliability of electricity supply hurts industrial output and the operations of schools, hospitals and other essential services.

For businesses, the high frequency of blackouts makes it difficult to operate reliably and plan production. A survey by the Zambia Association of Manufacturers found that power outages cost companies an average of $14,000 per day. Key industries like mining and manufacturing face severe disruptions without a consistent electricity supply. Ultimately, the economic costs of power shortfalls slow Zambia’s growth and development.

High Cost of Electricity

In recent years, electricity tariffs in Zambia have increased dramatically as the government has moved away from subsidizing electricity prices. According to a 2019 study, the government increased the top marginal tariff by 115% in 2017, leading to unprecedented hikes in electricity costs (Maboshe, 2019).

These price increases have made electricity largely unaffordable for many households and businesses in Zambia. An econometric analysis in 2012 found that the removal of electricity subsidies significantly reduced household welfare, especially for low-income families (Chama, 2012). With over half of Zambians already living below the poverty line, high electricity tariffs present a major challenge to development and economic growth.

Sources:

(Maboshe, M. (2019). The welfare effects of unprecedented electricity price hikes in Zambia. Energy Policy, 129, 846-856. https://www.sciencedirect.com/science/article/abs/pii/S0301421518306967)

(Chama, C. Y. (2012). An Econometric Analysis of Zambian Electricity Demand. https://core.ac.uk/download/pdf/30838361.pdf)

Limited Access to Electricity

Access to electricity in Zambia is extremely limited, with only 31% of the total population having access to power according to the World Bank [1]. The access rate is much higher in urban areas, where around 66% of people have electricity. However, the rural areas remain largely unelectrified, with only around 15% of the rural population connected to the grid [2]. Overall, around 85% of people living in rural parts of Zambia lack access to electricity.

This urban-rural divide highlights the major electricity access challenges facing Zambia, where the majority of the population lives in rural areas with very limited grid connectivity. Extending access to these unelectrified regions will be key for increasing electricity access across Zambia.

Deforestation for Charcoal

Widespread felling of trees to produce charcoal for cooking has contributed significantly to deforestation and environmental degradation in Zambia. According to a CIFOR report, charcoal production is a major driver of deforestation, with nearly 25% of forest loss attributed to unsustainable charcoal practices. Urbanization and electricity shortages have increased charcoal demand, with annual consumption in Lusaka estimated at nearly 500,000 tons as of 2022 (Sedano et al.).

Rampant tree cutting for charcoal has far-reaching environmental consequences like soil erosion, loss of wildlife habitat, and increased carbon emissions. Furthermore, reliance on charcoal accelerates the cycle of deforestation and forest degradation. As forests disappear, charcoal producers move farther out, felling more trees and threatening the livelihoods of rural communities that depend on forests.

Sustainable solutions are needed to curb deforestation from charcoal production. Supporting local charcoal producers in sustainable forest management, promoting fuel-efficient cookstoves, and scaling up alternative fuels like briquettes made from agricultural waste could help address the charcoal dependence driving Zambia’s deforestation crisis.

Solutions

There are several potential solutions to diversify Zambia’s energy mix and improve electricity access:

Diversifying the energy mix with solar, wind, and natural gas can reduce reliance on hydropower. Zambia has significant solar potential and could attract private investors to develop large solar farms, as seen in neighboring countries like Namibia. Expanding natural gas imports from neighboring countries could also provide more reliable baseload power when water levels are low at hydropower dams.

Attracting more private investment into new power generation and distribution is key. The government is working to reform the energy sector and electricity market structure to facilitate this. Private companies could help fund new solar, wind, gas, or even geothermal projects.

Expanding and upgrading transmission infrastructure could also help. New transmission lines are needed to connect new power plants across the country. Upgrades could reduce technical losses in the grid. Regional interconnections could allow power imports from neighboring countries.

Overall, a mix of solutions focused on diversifying supply, mobilizing private capital, and expanding infrastructure could significantly improve Zambia’s electricity access and reliability issues.

Government Initiatives

The Zambian government has implemented several reforms and initiatives to improve the country’s energy situation. A major focus has been attracting independent power producers (IPPs) to add capacity and diversity to electricity generation.

In 2019, the government passed the Electricity Act to restructure the sector and establish an independent industry regulator, the Energy Regulation Board (ERB). The ERB’s role is to create favorable conditions for IPPs by improving transparency in approving power projects and setting cost-reflective tariffs [1].

The government has also prioritized rural electrification programs to increase energy access. The Rural Electrification Authority (REA) was established in 2003 to extend the grid and develop mini-grid and off-grid solutions using solar, wind and micro-hydro power. From 2010 to 2020, the REA increased rural electricity access from 3% to over 27% [2].

To transition households away from unsustainable charcoal use, the government removed subsidies on kerosene and is promoting alternate fuels like liquefied petroleum gas (LPG). The national LPG rollout program aims to distribute 500,000 cylinders to households by 2025 [1].

Outlook

While Zambia still faces significant challenges in reforming and expanding its energy sector, there are promising signs of progress.

Meeting the government’s goal of universal electricity access by 2030 will require major investments in generation, transmission, and distribution infrastructure across the country. However, recent policy reforms have helped attract greater private sector involvement and financing for new projects. The government has also made rural electrification a priority through initiatives like the Rural Electrification Authority (REA) Fund.

Continued reforms and competitive tendering for new generation projects will be key to driving down electricity prices over time. Integrating variable renewable energy sources like solar and wind at scale can further diversify Zambia’s generation mix beyond hydropower. Regional power trading through the Southern African Power Pool (SAPP) also offers opportunities.

While deforestation for charcoal remains a concern, clean cooking programs are expanding access to cleaner fuels like liquefied petroleum gas (LPG) and ethanol for households. Stakeholder engagement and education around sustainable forestry practices can further alleviate pressures on Zambia’s forests.

With the right policies, investments, and political will, Zambia can unlock its significant energy potential. The government’s push for an open and competitive energy sector lays the groundwork for expanded access, reliability, sustainability and affordability.