'Clean energy for all The implementa4on of Scaling Solar in Zambia - PowerPoint PPT Presentation

'Clean energy for all’ The implementa4on of Scaling Solar in Zambia Dr. Susann Stritzke Research Associate Renewable Energy WASD Conference, London, 04/12/2017 1

WHO WE ARE Established in 2008 through the generosity by Sir Mar4n Smith and his family, aGached to the School of Geography at the University of Oxford We believe that to address climate change and environmental sustainability , it is essenNal to bring business into the conversaNon We seek to apply impacAul research to develop innova4ve solu4ons for the challenges facing humanity and the modern firm Project: ‚Making light Work’ - funded by the BriNsh Academy to evaluate success factors for the implementaNon of Scaling Solar – a programme developed by the World Bank 2

ENERGY SITUATION IN ZAMBIA Zambia 2 GW Electricity Profile Installed capacity (+/-) 83% Hydro- 31% 99% State-owned power Access generaNon, to electricity transmission & distribuNon (Zesco) Government of Zambia (GRZ): Universal electricity access for all Zambians by 2030 3

ENERGY SITUATION IN ZAMBIA Low electrifica4on rate Hydro dependency - Climate change Power deficit (est. 2016: 600-1000 MW) Private investment in the power sector (IPPs) is yet very limited High financing costs 4

SCALING SOLAR Programme designed by World Bank/IFC to facilitate privately-funded on-grid photovoltaic (PV) energy projects Offers a range of World Bank resources & services in a “one-stop shop” package to governments (advisory services, standardized contracts, stapled offer of financing, guarantees and insurance...) Goal: Nme- and cost-efficient implementaNon of uNlity scale solar pv projects Procurement process: selecNon of developers through reverse energy aucNon First rolled-out in Zambia; further implementaNon in Ethiopia, Senegal and other countries in SSA planned 5

SCALING SOLAR IN ZAMBIA • First solar PPP in Zambia • Launched 2015 - iniNated afer a direcNve by the Zambian President Edgar Lungu to the Zambian Industrial Development CorporaNon (IDC) to procure 600MW of solar power in order to overcome the naNonal energy crisis • Projects have been prepared and aucNoned by Industrial Development Corpora4on Zambia (IDC, 100% SOE) in cooperaNon with IFC • Round I: 2 solar PV projects tendered (52 MW/34 MW) • Tariffs achieved considered to be benchmark in the region (6 US$ct, Neon/First Solar & 7,8 US$ct per kWh, ENEL Green Power) • Bidders were not involved in project development 6

SCALING SOLAR IN ZAMBIA The World Bank. (2017). Project appraisal document on a proposed IDA guarantee (...) and on a proposed IFC financing (...) to Bangweulu Power Company ltd. for the West Lunga Scaling Solar energy project. Retrieved from <hGp://documents.worldbank.org/curated/en/974771487473237766/pdf/ PAD-01302017.pdf> 7

CURRENT PROJECT STATUS 🤸 ✓ ✓ ✓ ⌛ � Projects are currently approx. 10 months delayed 8

CRITICAL SUCCESS FACTORS Research: Main CSFs for the planning & implementa4on phase of PPPs* Experienced Adequate risk Public & & solid ? Poli4cal Transparent alloca4on & community support procurement private sector sharing support par4cipants Scaling Solar: comprehensive technical, financial Scaling Solar: risk & legal criteria for management & Scaling Solar: high bidders set by RFQ credit degree of Scaling Solar: process Scaling Solar: enhancement presiden4al transparency, stakeholder package direc4ve & selec4on of Bidders must consulta4ons - no structure of IDC bidders based on demonstrate immediate Poli4cal risk (SOE); high an auc4on substan4al opposi4on insurance poli4cal urgency scheme, all bids experience in provided & par4al announced ✓ ✓ ✓ developing, ✓ ✓ risk guarantees construc4ng & opera4ng PV power plants *Osei-Kyei, R., and Chan, A. P. C. (2015), "Review of studies on the criNcal success factors for public-private partnership (PPP) projects from 9 1990 to 2013", Interna'onal Journal of Project Management , Vol. 33 No. 6, pp. 1335–46

FINDINGS ZAMBIA Public stakeholder alignment and ins4tu4onal capacity Current delay mainly a quesNon of governmental stakeholder alignment among those bodies, which facilitate the implementaNon of the programme in Zambia: • Persistence of unresolved issues & lack of previous coordinaNon processes among public stakeholders • Rooted in the complexity of such a PPP & the number of stakeholders involved (stakeholder alignment) • LimitaNons in terms of insNtuNonal capacity among the public stakeholders in implemenNng the first large-scale solar pv project in Zambia - lack of understanding of the specific requirements that such a development imposes, for example with respect to the project site, or specific regulatory issues (grid-code). 10

LEARNING LESSONS Public Sector Private Sector Speed vs. Prepara4on: Public stakeholder alignment and ‘Clean Energy for All’ insNtuNonal capacity building at pre-implementaNon stage Conserva4veness vs. Risk appe4te: Consider data accuracy as a ‘Neutral’ coordina4on : potenNal risk-factor and include Big vs. Small: interrelaNonships between ‘error’ margins in the bidding ReconsideraNon of uNlity scale procurer & SPV shareholders > strategy; calculate Nme delay energy projects as soluNon to potenNal conflict of interest > achieve SDGs - Focus on the independent unit coordinaNng the strategic implementaNon of process (PPP Unit) decentralized small and medium scale RE projects and the regulatory framework that enables successful project development in the on-grid (e.g. net-metering) and off-grid sector 11

Thank You! susann.stritzke@smithschool.ox.ac.uk 12

LITERATURE Osei-Kyei, R., and Chan, A. P. C. (2015), "Review of studies on the criNcal success factors for public- private partnership (PPP) projects from 1990 to 2013", Interna'onal Journal of Project Management , Vol. 33 No. 6, pp. 1335–46. Rockart, J. F. (1982), "The changing role of the informaNon systems execuNve: A criNcal success factors perspecNve", Sloan School of Management , pp. 3–13 13

5. CONCLUSION 14

LEARNING LESSONS • Speed vs. Prepara4on: Public stakeholder alignment and insNtuNonal capacity building at pre- implementaNon stage ‘Neutral’ coordina4on : interrelaNonships between procurer & SPV shareholders> potenNal Government / conflict of interest might affect levels of trust among stakeholders > independent unit Public Actors coordinaNng the process (PPP Unit) • Conserva4veness vs. Risk appe4te: Consider data accuracy as a potenNal risk-factor and include ‘error’ margins in the bidding strategy; calculate Nme delay Private Actors/ Developers • Big vs. Small: ReconsideraNon of uNlity scale energy projects; Focus on the strategic implementaNon of decentralized small and medium scale RE projects and the regulatory framework that enables successful project development in the on-grid (e.g. net-metering) and ImplementaNon off-grid sector of the SDGs 15

1. MAPPING THE ENERGY CHALLENGES IN SUB-SAHARAN AFRICA Energy access: urban vs. rural areas Zimbabwe Zambia South Africa Niger Malawi Kenya Ghana Botswana Sub-Saharan Africa 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Rural Urban NaNonal electrificaNon rate electrificaNon rate electrificaNon rate % 16 hGp://www.worldenergyoutlook.org

1. MAPPING THE ENERGY CHALLENGES IN SUB-SAHARAN AFRICA Electric power consump4on (kWh per capita) 2014 United States European Union South Africa East Asia & Pacific Botswana Namibia Zambia Zimbabwe Sub-Saharan Africa Mozambique Ghana Congo, Rep. Nigeria Ethiopia Niger 0 2000 4000 6000 8000 10000 12000 14000 kWh hGp://data.worldbank.org 17

THE ELECTRICAL GRID 18

ENERGY DEMAND VS. SUPPLY IN ZAMBIA 19

3. CRITICAL SUCCESS FACTORS Cri4cal Success Factors (CSFs) for Public Private Partnerships CSFs = ‘ key areas of ac4vity necessary to be focused to ensure compe44ve performance towards an organisa4on’s strategic goals ' (Rockart, 1982) Empirical research iden4fied different CSFs for different stages of PPP projects Study iden4fied 5 main CSFs for the planning & implementa4on phase of PPPs (Osei-Kyei & Chan, 2015) 20