Zambia is addressing its energy crisis with a $96.7 million green bond from CEC Renewables to fund a new 136 MW solar power plant. Supported by the Emerging Africa & Asia Infrastructure Fund, this issuance builds on a $200 million medium-term note program that has already bolstered investor confidence in sustainable energy projects.
Green Bond to Drive Solar Expansion
Zambia is taking a significant step toward tackling its energy crisis with a groundbreaking investment in solar energy. Through its subsidiary CEC Renewables, the Copperbelt Energy Corporation (CEC) has secured $96.7 million through a green bond issuance to finance a new 136 MW solar power plant. This project is designed to diversify the country’s energy sources, reduce its dependency on hydropower, and mitigate the effects of climate change.
The Emerging Africa & Asia Infrastructure Fund (EAAIF), managed by Ninety One, has committed $18.9 million to this initiative. The green bond is part of a larger $200 million medium-term note program structured by EAAIF and Cygnum Capital in 2023. This program laid the foundation for Zambia’s first green bond issuance of $53.5 million, which opened the door for local and regional private investors.
Cygnum Capital served as lead arrangers for the program’s second tranche, valued at $96.7 million, with Stanbic Bank Zambia as lead manager and underwriter. Additional investors include ZCCM-IH, the ALCB Fund, and the Dutch Entrepreneurial Development Bank (FMO). This investment will boost CEC Renewables’ total solar generation capacity to 230 MW.
The solar power generated will be supplied to ZESCO, Zambia’s national energy utility, and various local businesses. The initiative is expected to create over 800 jobs and benefit 146,000 end-users through a more reliable electricity supply.
Mitigating Zambia’s Energy Crisis
Zambia’s heavy reliance on hydropower, which accounts for over 80% of its electricity, has left the nation vulnerable to climate change. Frequent droughts deplete water levels in key reservoirs like the Kariba Dam, causing severe power shortages and daily outages that can last up to 12 hours. These disruptions have taken a heavy toll on industries, businesses, and households alike.
The energy crisis has also slowed economic growth, particularly in the mining sector — the backbone of Zambia’s economy. Small and medium-sized enterprises (SMEs) have faced significant operational challenges, leading to increased unemployment and economic instability. The 136 MW Itimpi solar PV plant, funded through the green bond, will provide a much-needed alternative power source to alleviate these issues. The project will also save an estimated 126,000 tons of carbon dioxide equivalent (tCO2e) annually.
This investment highlights Zambia’s commitment to transitioning to a sustainable energy future. By diversifying its energy mix, the country is improving its resilience to climate change while reducing its over-reliance on hydropower.
Thanzi Ramukosi, an investment specialist at Ninety One, highlighted the initiative’s importance. “Our support for CEC Renewables through the green bond reflects our dedication to developing Africa’s capital markets and funding dynamic companies driving growth and innovation. The renewable energy generated will improve the lives of communities and businesses facing the energy crisis,” he said.
Capital Markets Driving Infrastructure Development
The success of this green bond underscores the critical role of capital markets in driving infrastructure development. The collaboration between EAAIF and Cygnum Capital has established a robust framework for green finance in Zambia.
James Doree, managing director of Cygnum Capital, expressed gratitude for the partnership. “We’ve worked with EAAIF on several bond transactions. Their commitment to market development has been crucial to the success of tranche 1, paving the way for this larger, oversubscribed tranche 2,” he said.
Stanbic Bank Zambia also played a key role as lead manager and underwriter. Mwila Pascal, executive head of investment banking at Stanbic, called the issuance a strategic development for the nation. “This transaction is pivotal for CEC Renewables and Zambia’s capital markets. It strengthens the country’s energy transition by diversifying its energy mix,” he said.
The $96.7 million green bond represents a major step in Zambia’s pursuit of energy security. The collaboration between CEC Renewables, EAAIF, and other stakeholders demonstrates the transformative power of green finance in supporting sustainable development. By expanding its solar capacity to address power shortages, Zambia is enhancing its resilience to climate challenges, fostering economic growth, and contributing to global climate goals.
