Zambia is grappling with a severe energy crisis, driven primarily by a significant drop in water levels at its hydropower plants. This has led to a dramatic reduction in electricity generation, forcing the government to seek alternative solutions. To address the more than 1,300 MW energy deficit, Zambia has secured additional electricity imports from South Africa and Zimbabwe. Additionally, the government is launching a net metering program and planning to install generators at crucial locations like hospitals, schools, business areas, and markets.
The ongoing drought has severely impacted water levels in the Kafue River and Zambezi basins. This has resulted in the hydropower plants operating at less than half their capacity compared to the previous year. Consequently, the country has implemented a minimum of 12 hours of load shedding daily to manage the shortfall.
Recently, the government confirmed negotiations to import more electricity from South Africa and Zimbabwe. Minister of Energy Makozo Chikote announced that the national utility, Zesco Limited, would procure 218 MW of power from South Africa’s Eskom and the Zimbabwe Power Company. This additional capacity is expected to be integrated into the grid in August. It will add to the 409 MW already being imported from neighboring countries. Chikote also mentioned that Zesco is in the advanced stages of procuring diesel generators. As of July 31, Zambia’s peak electricity demand stood at 2,400 MW, while available power generation was only 1,040 MW, resulting in a deficit of 1,360 MW.
In response to this crisis, Zesco launched a Net Metering Program on August 1, 2024. This initiative aligns with the Electricity (Net Metering) Regulations, 2024, and aims to promote renewable energy adoption among customers. The program allows customers to generate their own electricity and feed any excess power back into the grid. Net metering enables prosumers—consumers who also produce electricity—to offset their electricity bills by generating power from renewable sources such as solar.
Zesco explained, “Net metering is a system that allows prosumers to generate their own power from renewable energy sources. Any excess electricity generated can be fed back into the Zesco grid, effectively allowing prosumers to offset their electricity bills. This system not only promotes the use of renewable energy but also enhances energy security and sustainability in Zambia.”
To further bridge the energy deficit, Chikote announced that the Cabinet has approved additional measures to encourage investment in alternative energy sources. These measures include:
1. Zero rating of Value Added Tax (VAT) on the importation of selected equipment and machinery used in the development and establishment of electricity generation, transmission, and distribution projects from July 1, 2024, to December 31, 2033.
2. Suspension of customs duty and zero rating of VAT on the supply of generators and components and auxiliary items for solar power equipment from July 1, 2024, to December 31, 2027.
3. Exemption of VAT on the importation of equipment and machinery for manufacturing fertilizer.
4. Suspension of customs duty on the importation of irrigation equipment accessories from July 1, 2024, to December 31, 2027.
5. The government has also urged citizens to install solar panels on private buildings where possible to create a “solar explosion of new clean energy.”
Other measures include recalling electricity exports, optimizing the timing of power imports, approving new Power Purchase Agreements within 48 hours, and accelerating private investment in new energy projects.
Water levels at Lake Kariba, managed by the Zambezi River Authority, have been steadily decreasing. The authority reported that the lake level was at 476.99 meters (10.28% usable storage) on August 6, 2024, compared to 479.61 meters (28.98% usable storage) on the same date last year. The Kariba Lake is designed to operate between levels 475.50 meters and 488.50 meters for hydropower generation. The decrease in water levels is due to higher outflows than inflows.
Earlier this year, Zesco introduced a power management plan to reduce power generation by 700 MW due to reduced water levels. The unstable electricity supply has prompted the mining sector to seek alternative energy sources to maintain operations.
