SEI Contact:

Anders Arvidson

Zambia PV ESCO Project

The goal of this project was to examine the framework necessary to provide electricity services to rural populations through the formation of energy service companies (ESCOs). These companies would furnish houses with a solar system that could generate and store electricity, and provide monthly maintenance and necessary repairs to keep these systems in working order. The clients would not purchase the panels, but rather would pay a monthly fee for the use of the panel and the service provided by the ESCO.

To combat high poverty levels among the rural populations in Zambia, the government of Zambia is aiming to extend electricity to the rural population, which currently only has an electrification rate of about 2%. It is doing this in a variety of ways. One is a pilot project called “Providing Electricity Services using Photovoltaic Systems through Energy Service Companies in Rural Areas in Zambia,” or the Zambia PV ESCOs project.

The Zambia PV ESCOs project was started in 1998 by the Ministry of Energy and Water Development (MEWD), the Swedish International Development Cooperation Agency (Sida), and the Stockholm Environment Institute (SEI).

The project succeeded in supporting the foundation of three ESCOs, in the towns of Nyimba, Chipata, and Lundazi in the Eastern Province of Zambia. These companies have now been operating for four years in Chipata and Lundazi and five years in Nyimba. The ESCOs currently have a total of 400 clients, and each ESCO has a very long waiting list of households, businesses, and institutions that are interested in becoming clients to the ESCOs.

The experiences of these three companies have provided a great deal of information about how the rural population is benefiting from the access to energy services, and the support services that the ESCOs need to operate profitably and sustainably. The companies have also generated significant interest in PV panels for home electrification in the community, and are looking to expand their roles to include supplying PV panels to the community for outright purchase.

Clients of the ESCOs are very happy with the energy service that they are receiving, and it is helping to improve their lifestyles by allowing better time management, recreation, and business opportunities. The ESCOs themselves are proving to be successful businesses that are accumulating significant experience with both the managerial and technical aspects of running an energy service company in a rural context.

The extension of the ESCO concept to a national scale is possible, but requires some additional support mechanisms to take over where the project leaves off. Foremost among these is the formation of a national facility devoted to the expansion of the PV ESCOs concept in Zambia. This facility will help with the funding for the formation of new ESCOs and the expansion of existing ESCOs, serve as an intermediary between the PV ESCOs and the government, and continue to develop the technical and managerial capacity of the ESCOs.

The ESCOs, both those already existing and potential future ones, will have to learn from the experiences of the project if they are to maximize their effectiveness in providing energy services to rural areas. In areas from business management to technical capacity, the experience generated during the project should serve as a guide to ESCOs in goals to aim for and pitfalls to avoid.

Funder: Swedish International Development Cooperation Agency