Zambia’s manufacturing sector stands at a critical crossroads, faced with escalating energy costs and chronic power shortages. The Energy Regulation Board’s (ERB) approval of ZESCO Limited’s multi-year electricity tariff and the ongoing drought-induced hydropower crisis have placed immense pressure on local manufacturers. However, suffice to say that the recent signing of Power Purchase Agreements (PPAs) for over 332MWp of solar capacity under the Micro-Generator Scheme, Presidential Solar Initiative, and Developer-Initiated Independent Power Producers (IPPs) presents a transformative opportunity. For Zambia’s manufacturing sector, this pivot to renewable energy is not just a necessity, it is a strategic pathway to enhanced efficiency, cost-effectiveness, and sustainable growth.
Despite the over reliance of Zambia’s energy mix on hydropower, which contributes nearly 83% of the nation’s electricity, the 29 PPAs signed on 18th February 2025 reflect an intentional shift towards the diversification of Zambia’s electricity generation mix. This adds to the national grid, a total of 270MWp from the Micro-Generator Scheme, 62MWp from the Presidential Solar Initiative and additional capacity from Developer-Initiated projects, all of which will significantly boost the contribution to the grid from non-hydro sources… Therefore, this is a significant step towards increasing the solar contribution to the national grid as the Micro-Generator Scheme integrates small-scale solar projects ranging from 100kW to 5MW with an expanse dotted across Zambia’s provinces, thereby expanding electricity access and reducing reliance on hydropower.
The signing of PPAs for 332MWp of solar capacity signals a significant shift in Zambia’s energy paradigm. By integrating renewable energy into its grid, Zambia not only reduces its reliance on hydropower but also offers manufacturers a more stable and cost-effective energy source. Solar energy, in particular, holds immense potential given Zambia’s abundant sunshine. These strategic interventions are a necessity to protect the manufacturing sector in the wake of a multitude of challenges the sector is grappling with, which include; a fluctuating exchange rates and high fuel prices.
In the grand scheme of things, the PPAs provide an opportunity for manufacturers to benefit from; more cost efficiency and energy security as solar power offers lower operational costs and increased energy security, reducing dependency on fluctuating hydroelectric power. This stability enables manufacturers to better manage production schedules and costs, improving competitiveness. Further, this provides building blocks for manufacturers to embed techniques into their processes that ensure alignment with Environmental, Social, and Governance (ESG) requirements, which in turn will attract environmentally conscious investors, suppliers and customers. By embracing solar and other renewables, manufacturers can enhance their brand reputation and marketability. Additionally, the PPAs and other forms of expansion in the renewable energy infrastructure promises significant economic benefits, cascading all across the job market including; jobs in engineering, construction, installations and maintenance. This aligns with the intentions of Zambia’s Green Growth Strategy which seeks to grow the sector’s current contribution to GDP of 8 percent contribution which falls short of the desired contribution of to 36.12 percent by 2030 ..
In the same vein, Zambia’s Vision 2030 aspires for the creation of a prosperous middle-income nation by 2030, with energy security and sustainability as pivotal components. The transition to renewable energy supports this vision by enhancing industrial productivity, reducing environmental impact, and promoting inclusive economic growth. This further aligns with and supports the 8NDP which emphasizes economic transformation and job creation, human and social development, environmental sustainability, and good governance. Renewable energy directly contributes to these pillars by ensuring a reliable energy supply, fostering sustainable industrialization, and supporting Zambia’s commitment to reducing carbon emissions and energy inefficiencies in manufacturing, across forward and backward linkages inherent within the Secor .
Similarly, the signing of the PPAs coupled with a drive towards more renewable energy sources, within the manufacturing sector, will play a critical step in advancing Sustainable Development Goals (SDGs), particularly; the SDG 7 on Affordable and Clean Energy through the expansion of solar capacity which enhances energy access and reliability across the country. Additionally, progress will be noted on SDG 9 which focuses on Industry, Innovation, and Infrastructure through the alternative provision of stable power supply which the manufacturing sector will greatly benefit from as it will further enhance industrial growth and technological innovation. Lastly, reducing dependence on hydropower, mitigates climate change risks associated with droughts, in response to SDG 13 on Climate Action.
Therefore, in a bid to nurture dynamism and resilience, embracing renewable energy is no longer a choice but a strategic necessity for Zambia’s manufacturing sector. By leveraging solar power and other renewable sources, manufacturers can overcome energy uncertainties, reduce production costs, and enhance competitive advantages. This transition aligns with Zambia’s Vision 2030, the 8NDP, and global ESG standards, paving the way for sustainable industrial growth. As Zambia continues its renewable energy journey, the manufacturing sector stands to benefit significantly, driving economic growth, job creation, and environmental stewardship.
The Author is Lead Policy Analyst at the Zambia Association of Manufacturers
