10.06.2016.

WhyZambias6centsismoresignificantthanDubais3cents

PublishedonEnergyforAll(http://blogs.worldbank.org/energy)
Home>WhyZambias6centsismoresignificantthanDubais3cents

WhyZambias6centsismoresignificantthanDubais3cents

SubmittedbyGevorgSargsyanOnTue,06/07/2016

LastweekZambiasetanewpricerecordforutilityscalesolargeneratedenergyinAfrica [1] withthesupportofthe

WorldBankGroups(WBG)ScalingSolarinitiative[2] .Theauction[3] for100MW(2x50MW)resultedinapriceaslow
as6cents/kWh.

Thisisgoodnewsforthecountry,whichmuchliketherestofSubSaharanAfricafacesacuteelectricityshortages.
Nearly700millionpeopleinSubSaharanAfricadonthaveaccesstoelectricity. [4]

ZambiassolarauctionresultfollowedaseriesofheadlinemakingauctionsinIndia,Mexico,Peru,andDubai.In
Dubaiscase,thepricewasaslowas3cents/kWhthelowestpriceeverofferedforsolarpower.Solarauctionsare
effectivelyacompetitivebiddingprocesstobuildpowerplantsandsupplyaspecificquantityofelectricityatapre
agreedpriceoveraspecifiedperiodoftime.

ThereareafewreasonswhyZambiasoutcomeismoresignificantthanDubais.

First,Zambias6cents/kWhpriceisfixedandwontincreasefor25years.Thismakestheaveragepriceinrealterms
anevenmoreastonishing4.7cents/kWh.

Second,therearentanyimplicitorexplicitsubsidiesinvolvedinthedeal,neitherZambiahasasophisticatedand
liquidfinancialmarket.TheWBGsimplyhelpedstructuretheauctionbasedonthebestglobalpracticestakinginto
accountlocalspecificationsandprovidingaguaranteetobackstoptheobligationsofthenationalutilitytopayforthe
electricitybeingsupplied.

Third,Zambiahasabout2400MWofmostlyhydrobasedgeneration,comparedtomuchlargersystemsinother
countrieswithsuccessfulauctions.Italsohasadistressedmacroeconomicsituationcoupledwithweakinstitutional
capacityintheenergysector.TheBanksguaranteeiscriticaltoaddresstherisksassociatedwiththesefactors.

Mostimportantly,theseresultsaredramaticallyshiftingperceptionsthatlowcostsforrenewableenergyare
unattainableinpoorcountrieswithweakinstitutions,underdevelopedlawsandregulations,andhighcostsfor
conductingbusiness.AccordingtotheDoingBusinessreport[5] ,Zambiaisranked97,comparedtotheUnitedArab
Emirates(UAE),whichisranked31.

Whileallthelegalandfinancialagreementsstillneedtobesigned,thisauctionhaslaunchedaneweraforclean
energyinAfricaandtherestoftheworld [6] .Aslongascountriesputinplaceawellstructured,transparentbidding
process,mitigatingcountryrisksusingguaranteesandotherfinancialinsuranceinstruments,wecanexpecttosee

http://blogs.worldbank.org/energy/print/whyzambias6centsmoresignificantdubais3cents 1/2
10.06.2016. WhyZambias6centsismoresignificantthanDubais3cents
evenlowerpricesinthemonthsandyearstocome.

ScalingSolarisaWorldBankGroupsolutionthatmakesiteasierforgovernmentstoquicklyprocureanddevelop
largescalesolarprojectswithprivatefinancing.Itincludesaonestopshoppackageoftechnicalassistance,
templateddocuments,preapprovedfinancing,insuranceproducts,andguarantees.ScalingSolarisdesignedtoallow
governmentstogetfast,affordable,utilityscalepowerupandrunningwithintwoyearsofengagement.Ithas
financingsupportofUSAIDsPowerAfrica,theMinistryofForeignAffairsoftheNetherlands,theMinistryofForeign
AffairsofDenmark,andtheInfrastructureDevelopmentCollaborationPartnershipFund(DevCo).
Tags:
#endenergypoverty[7]
ScalingSolar[8]
solarenergy[9]
renewableenergy[10]
Energy[11]
Africa[12]
Zambia[13]

SourceURL(retrievedon06/10/201608:35):http://blogs.worldbank.org/energy/whyzambias6centsmoresignificantdubais3cents

Links:
[1]https://twitter.com/intent/tweet?text=Zambia%C2%A0set+a+new+price+record+for+utilityscale+solar
generated+energy+in+Africa&url=http://blogs.worldbank.org/energy/whyzambias6centsmoresignificantdubais3cents/?
cid=EXT_WBBlogTweetableShare_D_EXT&via=WBG_Energy
[2]http://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industries/infrastructure/power/scaling+solar
[3]http://us13.campaignarchive2.com/?u=bd217cdb4581a3aca721422dd&ampid=707d16d70f&ampe=2de4ab5e8c
[4]https://twitter.com/intent/tweet?text=Nearly+700+million+people+in+Sub
Saharan+Africa+don%E2%80%99t+have+access+to+electricity.&url=http://blogs.worldbank.org/energy/whyzambias6centsmoresignificant
dubais3cents/?cid=EXT_WBBlogTweetableShare_D_EXT&via=WBG_Energy
[5]http://www.doingbusiness.org/reports/globalreports/doingbusiness2016
[6]https://twitter.com/intent/tweet?
text=this+auction+has+launched+a+new+era+for+clean+energy+in+Africa+and+the+rest+of+the+world&url=http://blogs.worldbank.org/energy/why
zambias6centsmoresignificantdubais3cents/?cid=EXT_WBBlogTweetableShare_D_EXT&via=WBG_Energy
[7]http://blogs.worldbank.org/energy/category/tags/endenergypoverty
[8]http://blogs.worldbank.org/energy/category/tags/scalingsolar
[9]http://blogs.worldbank.org/energy/category/tags/solarenergy
[10]http://blogs.worldbank.org/energy/category/tags/renewableenergy
[11]http://blogs.worldbank.org/energy/category/topics/energy
[12]http://blogs.worldbank.org/energy/category/regions/africa
[13]http://blogs.worldbank.org/energy/category/countries/zambia

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