UK Energy Sector Delegation Formalises $2 Billion Investment Package
After 15 months of agreements, talks and negotiations that began at COP26 in November 2021, Zambia’s President Hakainde Hichilema and a Nicholas Woolley-led UK energy commission have finalised a US $2 billion green energy joint ventures agreement.
Zambian and UK energy delegates outside State House following the agreement. (@HHichilema)
Back in 2021, Foreign Minister Stanley Kakubo and UK Minister for Africa signed a landmark partnership aimed at driving sustainable economic growth that conformed to the environmentally friendly principles of Glasgow’s COP26 climate summit.
Signed in London, the Green Growth Compact outlined expectations of billions of pounds of investments, doubled trade volume between the UK and Zambia, and £100 million ($135 million) of financial resources as part of Zambia’s then-blossoming Small and Medium Enterprises (SMEs) support initiative.
At that time, Vicky Ford’s comments on the deal included an expectation of final British investment induced by the Compact, announcing that “The Green Growth Compact is a landmark agreement that will benefit the UK and Zambia by boosting UK investment in Zambia by up to £1 billion, creating thousands of jobs and supporting green energy production”. The deal signed yesterday has doubled that figure, marking yet another milestone in negotiations to secure a better future for Zambia.
Hon. Stanley Kakubo and Vicky Ford celebrating the Green Growth Compact in London. (future Net Zero)
Nicholas Woolley’s role in Zambia’s green transition is not to be underestimated. The British High Commissioner to Zambia identified at the time of the Compact’s signing that its primary significance was the foundation it provided for “stronger trade and investment […] based on sustainability, mutual prosperity and creating opportunities for business and communities in both our countries”.
Fast forward 15 months, and Mr. Woolley continues to broker UK-Zambia energy agreements to the benefit of both nations, the latest of which is the $2 billion package. The template of the 2021 Compact continues to be used to great effect by UPND and Mr. Kakubo, with both the UK and Zambia’s other investment partner nations.
Mr. Woolley told ZNBC News in a January 11 interview that seven companies were conducting feasibility studies and applying for regulatory approvals. All seven had approved and outlined deals to bring solar and wind energy projects to Zambia to add 2,000 megawatts to the ZESCO grid, and had a 2-5 year completion timeline. The British power companies in question were Hive Green, Western Power, Buffalo Energy, Africa GreenCo, First Quantum Minerals Solar Energy, Vitalite Solar and SolarAid.
Since Hakainde Hichilema’s election in August 2021, First Quantum Minerals in particular has displayed enormous fiscal confidence in Zambia’s economic resurgence. The company operates two mines in Zambia, Sentinel and Kansanshi, the latter of which they invested $1.25 billion in May 2022. First Quantum Minerals has also played an important role in Zambia’s drive to increase nickel production, investing $100 million into its efforts to produce 30,000 annual tonnes of nickel concentrate.
The FQM refinery plant at Kansanshi. (First Quantum Minerals Ltd.)
First Quantum and its six compatriot firms have all passed their feasibility and regulatory assessments, it seems, since the announced figure matches that proposed in January. The finer details are expected to be announced in the coming weeks.
The deal’s announcement comes just over a month after ZESCO signed an agreement with UAE renewable energy firm Masdar for solar projects amounting to $2 billion. That project immediately triggered the installation of a 500 megawatt solar plant, with other planned projects forecasted to generate an additional 2,000 megawatts.
The combined deals will furnish Zambia with 4,000 megawatts of clean, renewable energy – all of which will be non-hydro. Hydroelectric power currently accounts for 85%, or 2400 megawatts, of Zambia’s 2,800 megawatt installed electricity generation capacity.
With decreasing water levels, unpredictable rain seasons and increasingly frequent floods, hydroelectric power is becoming a less reliable energy source, and record low water volumes in Zambia’s Kariba dam in 2022 were the primary cause of recent load-shedding blackouts.
The two deals will significantly totally eliminate Zambian dependency on hydroelectric power once complete, opening the door for renovation works on the 3 major hydroelectric dams that are 49, 50 and 64 years old. The Kariba Dam, Zambia’s largest, was chronically under-maintained over the course of former President Lungu’s administration, to the point where the world-famous New Yorker news magazine published a two-page spread that likened the risk of the dam’s collapse to “the dam industry’s Chernobyl”.
The Kariba Dam in 2016, around the time concern was raised about its condition. (Daily Maverick)
The completed solar farms will represent a 142% increase in Zambia’s generation capacity, guaranteeing constant power now and in the future as Zambia grows, and ensuring that rural and isolated communities will also have access to electricity. It is expected that these packages will also include the funding necessary to introduce the infrastructure needed for effective energy supply, which will have major secondary transport benefits for Zambian citizens living in areas near the solar farms.
Hakainde Hichilema has placed great stress on empowering SMEs to drive equitable Zambian growth, and has recognised the role smallholding farmers can play in Zambian agricultural production to boost the economy and fight African food insecurity.
During her visit to Zambia, U.S. Treasury Secretary Janet Yellen stressed the pivotal impact Zambian smallholding farmers can have on a food chain under constant stress thanks to Russia’s invasion of Ukraine, describing Africa as having “the potential not only to feed itself but also to help feed the world – if the right steps are taken”. With each new deal, investment agreement and public project announced, President Hichilema and his cabinet continue to take those very steps towards a future of Zambian prosperity.