Zambia is addressing its energy crisis through a $96.7 million green bond issuance by CEC Renewables to develop a 136 MW solar power plant. Supported by the Emerging Africa & Asia Infrastructure Fund, this green bond builds on a $200 million medium-term note program that has bolstered investor confidence in sustainable energy projects.
Green Bond to Drive Solar Expansion
Zambia is making strides to tackle its energy crisis with a groundbreaking investment in solar energy. The Copperbelt Energy Corporation (CEC) subsidiary, CEC Renewables, has secured $96.7 million through a green bond issuance to finance a 136 MW solar power plant. This project aims to diversify the country's energy sources, reduce 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 worth $53.5 million, thus opening doors to local and regional private investors.
The second tranche of the program — valued at $96.7 million — was facilitated by Cygnum Capital as lead arrangers, with Stanbic Bank Zambia acting as lead manager and underwriter. Additional investors include ZCCM-IH, ALCB Fund, and the Dutch Entrepreneurial Development Bank (FMO). This investment will boost CEC Renewables' 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 improved electricity supply.
Mitigating Zambia’s Energy Crisis
Zambia's reliance on hydropower — which accounts for over 80% of its electricity — has made the nation vulnerable to climate change. Frequent droughts have depleted water levels in reservoirs like the Kariba Dam, causing severe power shortages. Power outages often extend up to 12 hours a day. These disruptions have severely affected industries, businesses, and households.
The energy crisis has also slowed economic growth, particularly in mining — which is the backbone of Zambia’s economy. Small and medium-sized enterprises (SMEs) have faced 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 power source to alleviate these challenges. The project will save an estimated 126,000 tons of carbon dioxide equivalent (tCO2e).
This investment underscores Zambia's commitment to transitioning towards a sustainable energy future. By diversifying its energy mix, the country is improving its resilience to climate change and reducing its reliance on hydropower.
Thanzi Ramukosi, an investment specialist at Ninety One, emphasized the importance of the initiative. “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 also highlights the role of capital markets in driving infrastructure development. EAAIF and Cygnum Capital’s collaboration 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 Zambia. “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 issuance represents a significant step in Zambia’s pursuit of energy security by expanding solar energy capacity and addressing power shortages. This collaboration between CEC Renewables, EAAIF, and other stakeholders underscores the transformative role of green finance in supporting sustainable development. By diversifying its energy mix, Zambia is enhancing resilience to climate challenges, fostering economic growth, and contributing to global climate goals.