Financing Secured For 47.5 MW Zambia PV Project

Neoen & First Solar Get Go Ahead For Construction Of Zambia’s First Project Under World Bank Group’s Scaling Solar Program
06:40 PM (Beijing Time) - 21. December 2017

Key Takeaways

  • Zambia’s 47.5 MW solar power plant being developed by Neoen and First Solar has secured requisite finance to start construction
  • Financing agreements signed between Neoen, First Solar, IDC sponsored Bangweulu Power Corporation Limited, IFC and OPIC
  • Project construction is expected to be complete within 9.5 months
  • It will provide clean power to the grid for tariff of $0.0601 per kWh – that’s the tariff for which Neoen and First Solar won the rights to develop this project during first tender round of the Scaling Solar Program

Zambia is all set to start construction of its first large scale solar power plant – all financing is now in place for the 47.5 MW installation. Financing agreements were signed between Bangweulu Power Corporation Limited, World Bank’s International Finance Corporation (IFC) and Overseas Private Investment Corporation (OPIC). Bangweulu Power is sponsored by French renewable energy developer Neoen and American module maker First Solar along with Zambia Industrial Development Corporation (IDC).

The financing package includes senior loans of up to $13.3 million from the IFC and IFC-Canada Climate Change Program, each. It also includes up to $13.3 million from OPIC, along with an interest rate swap from IFC and a partial risk guarantee from World Bank’s International Development Agency.

The project is the first to be developed, tendered, awarded and financed under the Scaling Solar program of the World Bank Group. Neoen and First Solar won the rights to develop this project in the inaugural Scaling Solar tender in Zambia, at a tariff of $0.0601 per kWh. Back then, the capacity mentioned was 54 MW. Neoen and First Solar signed the power purchase agreement (PPA) with Zambian national utility ZESCO in March 2017 (see Neoen Signs PPA For Zambia Project).

Out of the total capacity awarded in the first round tender, Enel of Italy is constructing 28.2 MW. It is expected to reach financial close on the plant in the coming months.

Neoen and First Solar have now issued a so-called ‘notice to proceed’ for the construction of this facility. It will take 9.5 months to set up the project.

Zambia is primarily dependent on hydropower facilities for its power requirements, but plagued with droughts, the country has had to resort to load shedding up to 10 hours a day.

“Scaling Solar is a game changer for Zambia and other countries facing electricity shortages,” said Philippe Le Houérou, IFC’s CEO. “The successful close of Scaling Solar is proof that we can find innovative ways to reduce risks that encourage private sector investment and deliver affordable renewable energy for countries in Africa and around the world.”

Scaling Solar is developing more than 1.2 GW of solar power capacity in Zambia, Ethiopia, Madagascar and Senegal. In June 2017, the IDC short-listed 12 bidders as pre-qualifiers for the second round of Scaling Solar program. They will compete for 300 MW utility scale solar power capacity (see Zambia Pre-Qualifies 12 Bidders).

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani