Renewable Energy Strategy and Action Plan

4.2.6 Enhance Information and Knowledge Dissemination.......................23 List of Abbreviations ...................................................................................vi Executive Summary.................................................................................... ix 4.2.7 Promote Capacity Building............................................................... 24

4.2.8 Promote Research, Development, Demonstration and Deployment.24 Introduction 4.3 Linkages Between Measures and Strategic Objectives......................25

1.1 Zambian Policy and Regulatory Environment...................................2

1.2 Objectives of the Renewable Energy Strategy and Action Plan.........3 S Renewable Energy Action Plan 26

5.1 Develop and/or Update Relevant Policy and Regulatory Frameworks..... 26 2 Situation Analysis 4 5.1.1 Activity 1: Revise, Test and Enact the Mini-Grid Regulations.............26

5.1.2 Activity 2: Streamline Renewable Energy Developerlicensing Procedures......27

2.1 Potential for and Status ofRenewable Energy in Zambia.................4 5.1.3 Activity 3: Streamline and Harmonise the Land Use Permitting Process.. 28

2.1.1 SolarEnergy.....................................................................................4 5.1.4 Activity 4: Streamline the Environmental Impact Assessment Procedures.......28 2. 1.2 Wind Energy.....................................................................................5

5.1.5 Activity 5: Develop New Renewable Energy Standards.....................29

2.1.3 Small Hydro-power..........................................................................5

5.1.6 Activity 6: Enforce Standards for Renewable Energy in Zambia........ 29

2.1.4 Biomass Energy................................................................................5

5.1.7 Activity 7: Review and Revisethe Renewable Energy Economic

2.1.5 Geothermal Energy...........................................................................6 Instruments and lncentives...............................................................30

2.2 Available Support Mechanisms for Renewable Energy.....................6 5.1.8 Activity 8: Finalise and Gazette the Charcoal Regulations................. 31

2.3 Key Challenges.................................................................................8 5.2 Develop Innovative Financing Mechanisms...................................... 31

2.3.1 Policy and Regulatory Barriers..........................................................8 5.2.1 Activity 1: Review and Rationalise Electricity Tariffs and Renewable

2.3.2 Economic and Financial Barriers....................................................... 1O Energy Pricing...................................................................................32

2.3.3 Electricity Tariffs...............................................................................11 5.2.2 Activity 2: Improve and Scale Up Existing Renewable Energy Financial

2.3.4 Technical Barriers.............................................................................12 lnstruments......................................................................................32

2.3.5 Rural Market Barriers....................................................................... 13 5.2.3 Activity 3: Develop New Financing Instruments, Including Risk Mitigation

2.3.6 Human Capacity Barriers..................................................................13 Facilities............................................................................................ 33

2.3.7 Institutional Capacity Barriers.......................................................... 13 5.2.4 Activity 4: Establish a Brokerage and Transaction Advisory Facility.. 34

2.3.8 Knowledge and Awareness Barriers................................................. 14 5.2.5 Activity 5: Develop an Innovative E-Procurement Platform.............. 34

5.2.6 Activity 6: Develop Sustainable Models for Rural Mini-Grids............ 35

5.3 Undertake Power Sector Reforms..................................................... 36 3 Vision, Rationale and Guiding Principles 16 5.3.1 Activity 1: Restructure ZESC0............................................................36

3.1 Vision............................................................................................... 16 5.3.2 Activity 2: Diagnose the Power Sector to Assess Viable Alternative Power

3.2 Rationale.......................................................................................... 16 Off-Take Models................................................................................37 5.3.3 Activity 3: Develop an Open-Access Regulatory Framework..............37

3.3 Guiding Principles............................................................................ 16

5.3.4 Activity 4: Establish an Independent System Operator......................38

3.4 Strategic Objectives..........................................................................17

5.4 Promote Productive Use of Renewable Energy..................................38

3.5 Renewable Energy Targets............................................................... 18 5.4.1 Activity 1: Mainstream Community Engagement for Developers...... 38

3.5.1 Grid-Connected Renewable Energy Electricity Targets..................... 18

5.4.2 Activity 2: Develop Rural Energy Economic Models........................... 39

3.5.2 Off-Grid Renewable EnergyTargets................................................. 18

5.4.3 Activity 3: Develop Energy-(entred Integrated Rural DevelopmentModels....40

3.5.3 Bio-fuels Targets.............................................................................. 18

5.4.4 Activity4: Develop Alternative Payment Systems forthe Off-Grid Market.......41

3.5.4 Bio-gas Targets................................................................................ 19 5.4.5 Activity 5: Develop Public-Private-Partnerships (PPP) for Rural Markets.41 3.5.5 Sustainable Charcoal Production and Consumption Targets............. 19

5.5 Enhance the Biomass Energy Market................................................42

5.5.1 Activity 1: Conduct and Update the Full Biomass Energy Market 4 Renewable Energy Strategy 20 Diagnostic Study...............................................................................42 5.5.2 Activity 2: Conduct Feasibility Studies for Various Biomass Energy

4.1 Key Elements of the Strategy........................................................... 20 Technologies.....................................................................................43

4.1.1 Political Commitment and Action .................................................... 20 5.5.3 Activity 3: Develop Viable Business Cases for lnvestment.................44 4.1 .2 Mainstreaming Renewable Energy, Including GenderConsiderations....21 5.5.4 Activity 4: Create an Enabling Environment for Modern Biomass Energy,44

4.1.3 Champions....................................................................................... 21 5.5.5 Activity 5: Develop aClean Cooking Strategy....................................45

4.1.4 Alignment with Regional Renewable Energy Strategies.................. 21 5.6 Enhance Information and Knowledge Dissemination.......................45

4.2 Proposed Measures.......................................................................... 21 5.6.1 Activity 1: Develop aRenewable Energy Information System...........46

4.2.3 Undertake Power Sector Reforms.....................................................22 5.6.2 Activity 3: Develop aFramework for Improved Stakeholder Interaction and Information Exchange................................................................................47 Renewable Energy Strategy and Action Plan

5.6.3 Activity 2: Develop Public Awareness Material for Renewable Energy......47

5.7 Promote Capacity Building................................................................48 5.7.1 Activity 1: Undertake Capacity Building for Public Bodies.................48 5.7.2 Activity 2: Develop Skills for Technical and Operational Personnel...49 5.7.3 Activity 3: Undertake Capacity Building for Financial lnstitutions.....49 5.7.4 Activity 4: Strengthen Renewable Energy Industry Bodies and Associations.............................................................................5O 5.7.5 Activity 5: Strengthen Coordination Mechanisms for the Renewable Energy Industry, Public Bodies and Development Partners................51

5.8 Promote Research, Development, Demonstration and Deployment..52 5.8.1 Activity 1: Undertake Research, Development, Demonstration and Deployment...................................................................................... 52

5.9 Summary of Action Plan Activities.................................................... 53 V) 6 Implementation framework: 61 Q) ::c (ti 6.1 Governance and Execution................................................................61 l- o -V) :.::i 6.1 .1 Public Sector Entities.........................................................................61 6.1 .2 Private Sector....................................................................................61

6.1.3 Nongovernmental Organisations and Civil Society...........................61 6.1 .4 Academia and Research and Development lnstitutions....................62

6.1.5 Development Partners......................................................................62

6.1.6 National Thematic Working Groups...................................................62

6.2 Legal Framework.................................................................................62

6.3 Resource Mobilisation.......................................................................62

6.4 Monitoring and Evaluation................................................................62 References 63 List of Tables Table l : Installed Power Plants in Zambia by Generation Technology (2019) ....................................1 Table 2: Grid Connected RE Capacity Targets for Zambia ...................................................................18 Table 3: Bio- ethanol and Bio-diesel Projections Up to 2030 (million liters)......................................19 Table 4: Matrix of Links Between Strategic Objectives and RE Measures...........................................25 Table 5: Summary of Activities Under the RE Action Plan.. ......................................... ...........53 List of Figures -Vl C QJ E Figure 1: Monitoring and Evaluation of Strategy lmplementation.......63 QJ O'I "'O QJ ~ 0 C .:.t:. :i:. Renewable Energy Strategy and Action Plan I2022 Foreword Access to clean and modern energy services is critical for sustainable socio-economic development. To this effect, the country has made significant efforts to extend the national electricity grid and provide off-grid options to the un-electrified areas. Despite these efforts, electrification levels are still low especially in rural areas thereby hindering socio-economic development in these areas. On the other hand, the continued reliance on traditional biomass by the majority of Zambians limits opportunities for poverty reduction and impacts negatively on especially women and children's health and productivity. The Government of the Republic of Zambia (GRZ) is committed to the attainment of universal access to affordable, reliable, sustainable and modern energy services in support of national socio-economic development and the United Nations-driven Sustainable Development Goals (SDGs). These goals are in line with the country's development objectives as articulated in Vision 2030 and successive National Development Plans that target to make Zambia a middle-income country by 2030. Renewable energy is expected to contribute significantly to Zambia's future energy mix and drive the expected economic growth. It is worth noting that Zambia has proactively supported renewable energy over the past decade by introducing supportive policies and incentives. These efforts are designed to promote not only the growth of the energy sector in general but also the renewable energy industry in particular. A market for renewable energy is gradually emerging but growth is limited by many market challenges. The GRZ is cognisant of these market challenges and has been working closely with stakeholders to ensure a conducive market environment is created. To guide the development of the renewable energy industry, the GRZ initiated the development of this Renewable Energy Strategy and Action Plan (RESAP). The RESAP provides a roadmap under which the country is expected to implement various identified market interventions that will transform the market and catalyse the accelerated diffusion of renewable energy technologies. The Ministry of Energy will work closely with other stakeholders through inter-sectoral collaboration to implement the activities proposed in the RESAP. These activities are expected to make the renewable energy industry attractive for investment, especially by the private sector, and also support the enhanced uptake of renewable energy services by end users. In the long term, a self-sustaining renewable energy market is expected to develop and deliver the desired national socio-economic development ambitions. Peter C. Kapala, MP MINISTER OF ENERGY Renewable Energy Strategy and Action Plan Acknowledgements The development of the Renewable Energy Strategy and Action Plan (RESAP) was based on a countrywide consultative process involving various stakeholders. Accordingly, appreciation is extended to all the key stakeholders who took part in the RESAP development process. These included representatives from the following institutions: (1) Cabinet Office; (2) Various Government Ministries/ Institutions; (3) Energy Utilities; (4) European Union and other Cooperating Partners; (5) Private Sector; (6) Academia; and (7) Civil Society. The successful implementation of the RESAP will depend on the continued participation of the institutions listed above and the support of all the Zambian citizens. The development and publication of the RESAP would not have been possible without the generous financial support and technical assistance of the European Union (EU). Therefore, I wish to register special thanks to the EU for their support to the development of the RESAP and for their continued support to Zambia's Energy Sector as a whole. ~ Francesca C. Zyambo (Mrs.) Permanent Secretary MINISTRY OF ENERGY Renewable Energy Sotrategy and Action Plan I20U Working Definitions Bio-fuel A wide range of liquid and gaseous fuels derived from biomass, including liquid fuel ethanol. bio-diesel and bio-gas, which can be combusted in vehicle engines as transport fuels and in stationary engines for motive power, heat and electricity generation Bio-gas A gaseous mixture consisting mainly of methane and carbon dioxide produced by the anaerobic decomposition of organic matter Biomass An organic matter, such as wood fuel (firewood and charcoal), agricultural waste, forestry waste, industrial/municipal organic waste, energy crops and products. and animal waste that is available for conversion into energy Clean Energy Energy, as electricity or nuclear power. which does not pollute the atmosphere when used Cost-Reflective Tariffs Tariffs set to recover all the allowable costs of each regulated and licensed activity. In this case, 'allowable costs' mean all operating costs reasonably incurred, all capital costs prudently invested and a fair rate of return on used and useful utility assets Distribution Transportation of electricity through a distribution system for delivery to a consumer Electricity Electrical energy produced by physical sources of energy, such as hydropower, wind power. solar power. petroleum. coal, biomass. nuclear energy or any other source Energy Any source of electrical, mechanical. thermal, nuclear or chemical power for any use Feed-In Tariffs A payment made to households or businesses generating their own electricity through the use of methods that do not contribute to the depletion of natural resources, proportional to the amount of power generated Generation The process of converting energy into electricity and/or useful heat from a primary energy source. such as wind, solar radiation. natural gas or biomass Geothermal Energy Energy available as heat emitted from within the Earth's crust. usually in the form of hot water or steam. It can be exploited for electricity generation using dry steam or high enthalpy brine after flushing Grid A system of high-tension cables through which electrical power is distributed through a region Hydro-power Electricity generated from capturing the potential of the kinetic energy of water when moving from higher to lower elevations Implementation Agreement An agreement that provides for direct contractual obligations and undertakings between the government and the supplier of electricity or project company, as the government is not a party to the Power Purchase Agreement Renewable Energy Stntegy and Action Plan Independent Power Producer A privately owned producer of electrical power Installed Capacity The maximum aggregate capacity of the plant to generate, transmit or distribute electricity Kilowatt Measurement of power meaning 1,000 Watts Large Hydropower Any hydropower station with a minimum output above 20 MW Megawatt Measurement of power meaning 1,000 kilowatts Off-Taker An entity that contracts, via Power Purchase Agreements, the purchase Cl) of power generated from specific power projects for a defined period at a C: 0 ·.;:::: defined price ra -~ Open Access Regime The possibility for any party selling or buying electricity to use transmission ..c ..c and distribution systems without discrimination, subject to transparently - <( 0 formulated security system constraints Power The rate at which energy is converted, expressed in Watts per unit of time Power Purchase Agreement A contract between two parties, where one party produces or generates power for sale (the seller/producer) and the other purchases power (the buyer/off-taker). This is sometimes referred to as the off-taker agreement. Renewable Energy Non-fossil sources of energy and energy derived from natural processes that are replenished constantly, including wind, solar, hydro, biomass and geothermal Small Hydropower Any hydropower station with a maximum output of up to 20 MW Solar Energy Energy irradiated from the Sun to the Earth for thermal applications and electricity generation Tariff Combination of charging parameters applied to recover measured quantities, such as consumption and capacity costs, as well as unmeasured quantities, such as service costs Tariff Structure The structure contains all the price components related to consumption and demand Traditional Biomass Solid biomass, such as wood fuel, used for energy using traditional and usually inefficient devices, such as three-stone open fires and inefficient wood or charcoal stoves Transmission Transportation of electricity from the source of electricity production through a transmission system for delivery to distribution network service providers and final consumers Wind Energy Kinetic energy of wind exploited for electricity generation in wind turbines Renewable Energy Strategy and Action Plan I2022 List of Abbreviations ACE-TAF Africa Clean Energy Technical Assistance Facility AfDB African Development Bank AMOA Africa Mini- grid Developers Association BAZ Biofuels Association of Zambia BAoZ Bankers Association of Zambia BEFS Bio-Energy and Food Security BGFA Beyond the Grid Fund for Africa BGFZ Beyond the Grid Fund for Zambia BRRA Business Regulatory Review Agency CBU Copperbelt University CHP Cogeneration of Heat and Power COMESA Common Market for Eastern and Southern Africa Coss Cost of Service Study DBZ Development Bank of Zambia DoE Department of Energy DPs Development Partners EIA Environmental Impact Assessment ERB Energy Regulation Board ESMAP Energy Sector Management Assistance Programme EU European Union FAQ Food and Agriculture Organization FCDO The (UK) Foreign, Commonwealth and Development Office GESAP Gender Equality Strategy and Action Plan GET FiT Global Energy Transfer Feed- in Tariffs for Zambia GRZ Government of the Republic of Zambia IAEREP Increased Access to Electricity and Renewable Energy Production IPPs Independent Power Producers IRP Integrated Resource Plan ISO Independent System Operator KfW German Development Bank KGRTC Kafue Gorge Regional Training Centre MCDSS Ministry of Community Development and Social Services MCTI Ministry of Commerce, Trade and Industry MECS Modern Energy Cooking Services MFls Multilateral Financial Institutions MGEE Ministry of Green Economy and Environment MLGRD Ministry of Local Government and Rural Development MFNP Ministry of Finance and National Planning MLNR Ministry of Lands and Natural Resources MoA Ministry of Agriculture MoE Ministry of Energy MoTA Ministry of Tourism and Arts MoTS Ministry of Technology and Science MU Mulungushi University MWDS Ministry of Water Development and Sanitation NCC National Control Centre NOC Nationally Determined Contribution Renewable Energy Strategy and Action Plan NGOs Non- Governmental Organisations (I) NHCC National Heritage Conservation Commission C: 0 ·.;::; NISIR National Institution for Scientific and Industrial Research co ·;;;: NTBC National Technology Business Centre <11 l5 OGTF Off-Grid Taskforce ..c --- <( OPPPI Office for Promoting Private Power Investment 0 (I) PayGo Pay-As-You-Go :.::J PPA Power Purchase Agreement PPP Public- Private Partnerships PUE Productive Use of Energy PV Photovoltaic R&D Research and Development RD&D Research, Development and Demonstration RDD&D Research, Development, Demonstration and Deployment RE Renewable Energy REA Rural Electrification Authority c:- co E REEEP Renewable Energy and Energy Efficiency Partnership E :, REFiT Renewable Energy Feed-in-Tariffs en <11 RESAP Renewable Energy Strategy and Action Plan > ·.;::; :, SADC Southern African Development Community u <11 SAPP Southern African Power Pool w>< SHS Solar Home Systems SIAZ Solar Industry Association of Zambia SIDA Swedish International Development Cooperation Agency SMEs Small- and Medium-Scale Enterprises TEVETA Technical Education, Vocational and Entrepreneurship Training Authority UNZA University of Zambia USAID United States Agency for International Development VAT Value Added Tax VRES Variable Renewable Energy Sources C: 0 ·.;::; WARMA Water Resources Management Authority u :, "C ZamStats Zambia Statistics Agency e ZARENA Zambia Renewable Energy Agency .E ZCSA Zambia Compulsory Standards Agency ZDA Zambia Development Agency ZEMA Zambia Environmental Management Agency ZESCO Zambia national electric utility ZICTA Zambia Information and Communications Technology Authority ZIPAR Zambia Institute for Policy Analysis and Research ZMW Zambian Kwacha ZPPA Zambia Public Procurement Authority ZRA Zambia Revenue Authority Renewable Energy Strategy and Action Plan I2022 Executive Summary Given the abundant and largely untapped Renewable Energy (RE) resources in the country, Zambia has the potential to grow the RE industry and attain its socioeconomic development objectives of increasing access to modern energy services and growing the economy. A RE market is gradually emerging in the country driven by private sector commercial interests and a proactive government drive to diversify the national energy mix and ensure energy security. Apart from large hydro, the current share of RE is still limited due to many market barriers that hamper supply-side investment and demand-side uptake of RE. To improve the diffusion of RE technologies, the Government of the Republic of Zambia (GRZ) has been reviewing and developing supportive policies and legal, regulatory and institutional frameworks. These include the Renewable Energy Feed in Tariff (REFiT) Strategy and its accompanying implementation programme Global Energy Transfer Feed in Tariff (GET FiT), the Grid Code, the Distribution Grid Code, development of mini- grid regulations and the biofuels blending mandates. The Energy Regulation Act No. 12 of 2019 and Electricity Act No. 11 of 2019 were also enacted to improve private sector participation in the energy sector. In addition, various support programmes have been initiated by Development Partners (DPs) to promote RE, e.g. Beyond the Grid Fund for Zambia, Scaling Solar and the GET FiT Zambia programmes. The Need to Grow the Renewable Energy Industry RE is being driven by various factors, including the need to develop a climate-resilient economy, enhance energy security and catalyse socioeconomic development. This is against a backdrop of power generation shortfalls in the country, low rural electrification rates and overdependence on traditional biomass. RE has the potential to contribute to increasing the power capacity and providing various modern energy carriers for many end-user applications, with far reaching socioeconomic and environmental benefits for the country. A recent analysis has shown that off-grid solar photovoltaic (PV) systems offer the least-cost trajectory to reach universal modern energy access for over 48% of the population by 2030. Objectives of the Renewable Energy Strategy and Action Plan Zambia's Renewable Energy Strategy and Action Plan (RESAP) was developed by the GRZ through the Ministry of Energy (MoE) to provide a structured roadmap that will guide the development of the sector. The RESAP builds and expands on the baseline report . Its ultimate goal is to significantly increase the uptake of RE technologies in Zambia and contribute to economic growth and poverty reduction. The RESAP elaborates on the activities to be undertaken to overcome the market barriers currently hindering the widescale diffusion of RE technologies. Key Renewable Energy Market Challenges Barriers to the exploitation of RE resources in Zambia include policy and regulatory barriers, economic and financial barriers, electricity tariffs and ZESCO's insolvency, technical barriers, rural market barriers, human and institutional capacity barriers and knowledge and awareness barriers. High investment requirements coupled with electricity tariffs that are not cost-reflective and limited availability of financial instruments remain the major constraints to RE development. The high costs of capital particularly limit local developers who struggle to create viable business models. This is worsened by an unstable currency and poor macroeconomic conditions. l. Technical report: Baseline Analysis for Zambia Renewable Energy Strategy and Action Plan. MoE, 2021. The baseline repon summarises the status of the RE industry in Zambia, prevailing policies and regulations, and opponumties and challenges for RE development in the country. Renewable Energy Strategy and Action Plan Although significant progress has been made to improve the policy and regulatory environment, these ~ regulations need to be actioned to create impact. There are still various licensing and permitting hurdles in cu the market. Standards are not fully developed, and the enforcement of the standards developed is limited. E E ::, Financial troubles at the national utility and de facto single power off-taker, ZESCO, have stalled investment Cl) Cl) in RE. Regulations for a truly open-access grid regime are not yet finalised, and a true Independent System ·=>u ::, Operator (ISO) is not yet in place. ~ Capacity is also limited in the public and private sectors, and skilled RE professionals are few. Many UJ prospective developers have limited capacity to develop bankable projects that can attract suitable funding. In addition, high levels of poverty in the target markets limit the capacity of the market to absorb various products and services. The off-grid market is driven by Small and Medium-Scale Entrepreneurs (SMEs) and is often financed by short-term donor support, which means that projects rarely survive after donor support ends. Servicing Zambia's dispersed communities and achieving energy access targets will require substantial investment. For example, mini-grids are typically only able to cover operational costs. Elements of the Renewable Energy Strategy Action Plan C: 0 Zambia's RE market needs to be stimulated and supported by an investor-friendly regulatory environment to -~ achieve scale. Transforming this RE market requires creating conducive conditions for investment in RE by ::, removing the identified market barriers. This will be achieved by implementing sets of complementary market -e "C C: interventions to create a viable and self-sustaining market for RE. A conducive market attracts private sector investment, resulting in a reasonable return on investment and enabling sustainable uptake of energy services. Such enabling conditions need to be long term and predictable as opposed to stop-and-go policies. While the government can set the right signals by stimulating the market and ensuring correct pricing and stability of the energy market, t he private sector also needs to play its part by contributing to exploring the market possibilities and showing proof of concept by conducting feasibility studies. The RESAP is, therefore, built on the following interventions and market enablers: (1) Policy and regulatory review and update: This will include revising, testing and deploying mini-grid regulations and streamlining the RE developer licensing procedures, land use permitting process and Environmental Impact Assessment (EIA) procedures. In addition, it will include developing and enforcing RE standards and reviewing RE economic instruments and incentives. (2) Developing innovative financing: Under this group of measures, activities will include reviewing and rationalising electricity tariffs and RE pricing, improving and scaling up existing RE financial instruments and access to local funding and developing new financing instruments, including risk mitigation facilities. In addition, other activities will include establishing a brokerage and transaction advisory facility, developing an innovative e-procurement platform and developing sustainable models for rural mini-grids. (3) Power sector reforms: This will ensure ZESCO's financial sustainability and restructuring; assessing alternative power off-take models; and developing open access regulations, which includes establishing an ISO. (4) Integrated productive use of RE: This intervention will include mainstreaming community engagement and developing rural energy-economic models and energy-centred integrated rural development models. Furthermore, alternative payment systems for the off-grid market and Public Private Partnership (PPP) models for rural markets will be developed. (5) Developing the biomass energy market: This will involve undertaking biomass energy market diagnostic studies followed by feasibility studies and creating viable business cases for various biomass energy technologies. Renewable Energy Strategy and Action Plan I2022 (6) Disseminating information and knowledge: This measure will include developing an RE information system and a framework for improved stakeholder interaction and information exchange. It will also include developing public awareness material for RE. (7) Capacity building: This will cover capacity building for public bodies, skills development for technical and operational personnel, capacity building for financial institutions, strengthening RE industry bodies and associations, and strengthening the coordination mechanisms for the RE industry, public bodies and DPs. (8) Research, Development, Demonstration and Deployment (RDD&D): This will entail technology and business innovation for commercialisation, policy and programme evaluation and sociotechnical systems that support technology uptake. Implementation Architecture The planning horizon for this RESAP is the period 2022-2030, which is expected to have the following phases: (1) Preparatory phase (2022-2024): setting the groundwork using existing resources; conducting §: preparatory studies; implementing institutional, regulatory and policy changes; and mobilising 0 Cl. technical assistance and financial support. Both public and private will be required to operationalise C: !l the strategy. o· ::, (2) Implementation phase (2024-2030): the roll-out of various activities and investments based on the proposed strategy are undertaken to achieve the RE strategy objectives. Implementation of the RESAP will be undertaken by a broad range of stakeholders led by the Ministry of Energy. MoE will be supported by key public sector institutions and line ministries as well as private sector and financial institutions. Academia, Non-Governmental Organisations (NGOs), local communities and DPs will also play a major role in supporting various activities. For effective implementation of the strategy, thematic- and activity-specific working groups will need to be established under the coordination of the relevant governmental departments. These working groups should be composed of relevant stakeholders drawn from key government agencies, the private sector and key thematic experts. Effective implementation of this strategy will require the efforts and close cooperation of the above stakeholders. In addition, monitoring and evaluation will be a continuous process to review and update the strategy in order to ensure that the national RE ambitions remain on track. The implementation of the RESAP will also be aligned with other related energy sector strategies developed by the GRZ through the MoE. Renewable Energy Strategy and Action Plan Introduction Zambia is well-suited to harness various Renewable Energy (RE) resources, ranging from hydropower, solar, wind and biomass to geothermal. These resources have great potential for electricity and fuel production for use in various applications and end uses. Despite the availability of these diverse RE resources, the energy supply in Zambia remains dominated by traditional biomass and waste, constituting about 60% of the total final energy consumption . Access to modern energy services is therefore still a challenge for the majority of Zambians. Only about 32.5% of Zambian households are connected to electricity services, with 70.6% and 8.1% of households electrified in urban and rural areas, respectively. Given their central responsibility for energy procurement and use in the household, women are disproportionately adversely affected by the lack of modern energy services as a result of the exposure to indoor air pollution. Acquiring and preparing biomass fuels (tasks mainly performed by women and children) are time-consuming, with over two-thirds of rural households spending 3- 7 hours per week on these tasks. Deforestation is also a major concern around the use of unsustainable biomass. To address these challenges, Zambia aims to achieve 51 % rural electricity access by 2030. In addition, it is important to develop strategies to modernise biomass fuels and ensure their use is sustainable. For decades, Zambia's power sector has been dominated by hydropower generation, which currently accounts for 80% of total electricity generated and 83% of on-grid generation capacity in the country, as shown in Table 1. However, due to the combination of a long-term lack of investment in power generation capacity, increasing electricity demand, and recent droughts linked with climate change in Southern Africa, Zambia has had to deal with an electricity supply crisis, which has resulted in extensive loadshedding since 2015. Loadshedding has also led to a shift by urban households to mainly use charcoal. Electricity supply is expected to improve with ongoing investment in the power sector, such as the Kafue Gorge Lower hydropower station. Table 1: Installed Power Plants in Zambia by Generation Technology (2019) Power Generation Technology Installed Capacity (MW) Large hydropower 2,354 Coal thermal power plants 300 Heavy Fuel Oil power plants 105 Large-scale grid-tied solar PV power plants 89 Diesel power plants 83.6 Small hydropower 45.19 Captive power stations Biomass cogeneration (Bagasse) 46 Coal thermal power plant (Dangote Cement) 0.298 Total 3,053.07 Source: The Energy Sector Report 2019 - ERB (2020); The Zambia Power Development Framework-MoE (2021b) 2. MoE. 2020a. The National Woodfuel Study 2017. Ministry of Energy. Lusaka 3. ZamStats, Ministry of Health Zambia and ICF 2019. Zambia Demographic and Health Survey 2018. Lusaka, Zambia and Rockville, Maryland, USA: Zambia Statistics Agency, Ministry of Health and ICF. 4. World Bank. June 2019. Multi-Tier Framework Survey for Measuring Energy Access 2017-2018. World Bank/ESMAP. Washington DC. 5. Owen, A.D. October 2016. Policy report on the Electricity Sector in Zambia. Freedom to Create/Energy Studies Institute. National University of Singapore. Renewable Energy Strategy and Action Plan I2022 The national electricity demand is expected to increase significantly in the coming years to 4,066- 5,406 MW by 2030. If there is no corresponding increase in generation capacity supported by energy efficiency and demand-side management interventions, supply shortfalls are likely to continue. This will continue to exert a ... 0 a. C pressure on the country's economic growth. According to a World Bank study, commerce and industry have !l suffered substantial losses due to reduced production capacity. In 2015, many manufacturers claimed to be o· ::s running at only 30-40% of production capacity during the worst parts of the electricity crisis . In the same period, the productive sector experienced increased input costs due to expensive backup power and production shifts. The cost of importing emergency power imposed additional costs on ZESCO and the Government of the Republic of Zambia (GRZ) of about USD 340 million, or about 45% of ZESCO's annual revenues in 2016. This led to national efforts to diversify the power generation mix to meet the increasing demand for electricity and to increase general access to modern energy services among the majority of Zambians who rely on traditional fuels. The recent climate change-linked droughts and the resultant adverse impacts on the economy and livelihoods have brought increasing focus on the need for climate change mitigation and adaptation in the country. According to an analysis done under Zambia's Nationally Determined Contribution (NDC), climate change poses a serious risk, especially to agriculture, energy, health and natural resources. Aggregated Gross Domestic Product (GDP) losses over a 10- year period are estimated to be USO 4.3- 5.4 billion. This has prompted Zambia to prioritise and commit to implementing RE programmes in its NOC to ensure that the country builds climate resilience and reduces its Green House Gasses (GHG) emissions by 25- 47% by 2030. RE has the potential to contribute to increased power capacity and provision of various modern energy carriers for many end-user applications, with far reaching socioeconomic and environmental benefits to the country. Recent analysis has shown that the least-cost option for reaching universal modern energy access for over 48% of the population by 2030 is through mini- grid or standalone systems based on solar photovoltaic (PV) . Diffusion of the various RE technologies has been limited for various reasons, which are discussed in greater detail later in the document. However, recent market activities and continued government support promise to enhance the diffusion of RE technologies in the country. Zambian Policy and Regulatory Environment Zambia's overall national energy objectives are to promote sustainable national development by creating conditions that ensure the availability of an adequate and reliable supply of a diverse energy mix at the least economic, social and environmental costs. These objectives are guided mainly by the Vision 2030, the National Development Plans and the National Energy Policy 2019 (NEP 2019). As part of its national energy strategy, Zambia emphasises the deployment of RE as well as increasing private sector participation in the energy sector. These national strategies have common goals-to facilitate universal energy access and achieve key sustainable development goals. To facilitate wider diffusion of RE technologies, NEP 2019 has five policy objectives that seek to: :J, It) (a) Strengthen institutional capacity in the energy sector by enhancing human resource capacity, ::::, It) improving institutional coordination, facilitating capacity building for the private sector, ~ CT decentralising energy institutions and establishing an energy fund. i'D" m ::, (b) Strengthen the sectoral regulatory frameworks by strengthening the energy regulator, establishing .a It) off-grid regulatory frameworks, strengthening sectoral standards and facilitating an open-access '< ~ .... regime to the electricity grid. II> ;;- IC '< 6. Lanfranconi, C.P., Renzulli, A. and Paladini, D. November 2018. Position Paper 1. Country Profile Zambia. Enhancing the Renewable Energy Transition in Zambia Position Papers. RES4Africa -Renewable Energy Solutions for the Mediterranean and Africa. 7. World Bank. 2015. Sixth Zambia Economic Brief. Powering the Zambian economy. Issue 6. World Bank. Washington, DC. 8. Samuel P. 2016. Meteorology and Energy Security Simulations, Projections, and Management Apple Academic Press, Oakville. 9. World Bank. 2017a. The West Lunga Scaling Solar Energy Project. Report No: 110675-ZM. Washington, DC 10. https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Zambia%20First/Zambia_Provisional_Updated..NDC_2020.pdf. 11. This implies that the country can meet its rural electrification target of 51 %using off-grid solar PV systems. Achieving these rural electrification targets at least-cost will allow for the reduction of the national financing burden and more effrcient resource allocation in the energy sector. Renewable Energy Strategy and Artlon Plan (c) Upscale the exploitation of RE to facilitate the diversification of the energy mix by strengthening C institutional capacity for research in RE, enhancing coordination among key stakeholders for the 0 'f; effective implementation of RE technologies and promoting the wider usage of RE technologies. ::I ... "CJ 0 (d) Encourage sustainable exploitation of biomass by promoting efficient biomass for household i utilisation, alternatives to wood fuel and the production and supply of sustainable biofuels without compromising food security. The GRZ has long recognised the need to support the RE subsector through various policy and regulatory instruments. Since 2008, some RE products have been exempted from Value Added Tax (VAT) and import tariffs. Several support programmes have been initiated by Development Partners (DPs) to address various market challenges encountered by the private sector and end users. Examples include Beyond the Grid Fund for Zambia (BGFZ), Scaling Solar programme and Global Energy Transfer Feed in Tariff (GET FiT) Zambia. Significant progress has been made in establishing a conducive policy and regulatory environment for promoting renewables, especially solar energy. Other renewables still require concerted efforts to build Cl) '(ii similar support structures. >- <C '° C: Several progressive policy and regulatory reviews and updates have been undertaken, such as the Renewable C: 0 ·.;::::: Energy Feed in Tariff (REFiT) Strategy and its accompanying implementation programme GET FiT. development '° .a U) of mini-grid regulations, the Distribution Grid Code of 2016 and the biofuels blending mandates. The Energy Regulation Act No. 12 of 2019 and Electricity Act No. 11 of 2019 were enacted to include provisions that facilitate improved participation of the private sector in the energy sector and better management of the RE subsector. Cl) a. a, Objectives of the Renewable Energy Strategy and Action Plan ·c3 C: ·.:: Cl. Despite the increased commercial interest of the private sector and consistent government support, the RE C, C: subsector is still in its nascent stages in Zambia. There are still various market challenges that need to '5 ·3 be addressed for the country to tap into the huge RE market potential and opportunities. To enable and C!) "t;I C: facilitate accelerated adoption and diffusion of RE, GRZ, through MoE, initiated a process to develop Zambia's '° a, "iii Renewable Energy Strategy and Action Plan (RESAP). C: 0 ·.;::::: The RESAP is a road map that guides and facilitates accelerated adoption and diffusion of RE technologies 0:'°c:· in the country. It provides insights into the potential and market of RE resources and technologies that can 0 "(ii be harnessed in the country. The RESAP identifies market challenges hindering the growth of the RE industry, > such as policy and regulatory gaps in the sector, and develops appropriate corresponding market interventions to support market transformation of RE. In addition, the RESAP elaborates the activities to be undertaken to overcome the market barriers currently hindering the wide-scale diffusion of RE technologies. Its ultimate goal is to significantly increase the uptake of RE technologies in Zambia and contribute to economic growth and poverty reduction wide-scale diffusion of RE technologies. >- c, ~ -~ C l) >- e' a, C: LU a, :c '°~ C: a, 0: 12. A parallel process has developed an EESAP for Zambia. Energy efficiency and demand-side management interventions support the transition to a more sustainable energy future in the country, alongside renewable energy. Renewable Energy Strategy and Action Plan I2022 Situation Analysis This section presents a summary of the potential for and status of RE in Zambia, available support mechanisms and key challenges . Potential for and Status of Renewable Energy in Zambia Zambia's RE resource base includes hydropower, solar, wind, biomass and geothermal. These sources have a great potential for electricity and fuel production, including hydrogen, and use in various applications and end uses. However, apart from large- scale hydro, the modern renewables subsector in Zambia is still in its nascent stages. It is encouraging that there has been a sustained effort by both the public and private sectors to promote the wide- scale deployment of RE technologies in Zambia.

2.1.1 Solar Energy Solar radiation levels in Zambia are among the highest in the world, with annual Global Horizontal Irradiation ranging from 1,900 to 2, l 00 kWh/m2. This translates into a specific yearly PV electricity output in the range of 1,550- 1,700 kWh/kWp, which is suitable for both small- and large- scale applications. Despite this huge potential, the penetration of solar energy technologies in Zambia remains low. Solar PV remains the dominant type of solar energy technology, especially small-scale Solar Home System (SHS) and other off-grid solar PV systems by donor organisations, Non-Governmental Organisations (NGOs) and public institutions. The Rural Electrification Authority (REA) estimates that about 7.4% of rural households have SHS. Some decentralised solar PV projects are emerging in the commercial sector as backups during loadshedding. There have also been recent investments in large- scale grid- connected solar PV power generation. Various DPs have supported off-grid and on-grid solar PV systems, including early programmes, which ran pilot projects installing hundreds of free or highly subsidised systems. More recent activities are occurring through an emerging commercial solar market. Solar systems have mainly been distributed through cash sales and via the Pay-As-You-Go (PayGo) financing model. The Swedish International Development Cooperation Agency (SIDA)-supported initiative BGFZ successfully incentivised off-grid energy businesses to enter or scale up their operations in the country, thus allowing energy access to more than 150,000 households. Additional support for the solar energy sector has been provided by Power Africa and United States Agency for International Development (USAID) Zambia through the Scaling Off-Grid Energy Grand Challenge that supported two private solar PV developers with financing to scale SHS in the country. There are more than l 0 mini-grids in operation in the country, mainly solar PV and mini hydro based. These mini- grids are now recognised as a pillar of the national electrification strategy and could therefore serve most of the off-grid household market. The sector is expected to develop rapidly in the coming years as a result of new funding from the European Union (EU) through the Increased Access to Electricity and Renewable Energy Production (IAEREP) programme, the World Bank and other rounds of Beyond the Grid Fund for Africa (BGFA). The first two utility-scale grid- connected PV projects, the 54 MW Bangweulu and the 34 MW Ngonye solar plants, were commissioned in 2019 through the International Finance Corporation (IFC) supported Scaling Solar Programme . In addition, the Copperbelt Energy Corporation (CEC) commissioned a l MW solar PV power plant in 2018. Zambia's GET FiT programme is expected to add about 220 MW of solar and small hydro capacity by 2024. As of 2021, 120 MW solar PV power generation capacity was awarded to private developers in the first round of the GET FiT programme . 13. A detailed baseline report containing a thorough analysis of the status of RE in the country, is available through MoEWorld Bank. 2019. Solar Resource and PV Potential of 14. Zambia: Solar Resource Atlas. World Bank. Washington, DC. 15. MoE. 2019a. National Energy Policy. Ministry of Energy. Lusaka. 16. BGFZ. 2019. Lighting up Zambia The Impacts of 1.5 Years of Beyond the Grid Fund for Zambia. Renewable Energy Strategy and Action Plan 2.1 .2 Wind Energy Cl) fC 0 ·.;:::, A recent Energy Sector Management Assistance Programme (ESMAP) wind resource assessment showed that Zambia has significant wind energy potential. The country now has a wind atlas and an established network of state- of-the- art wind measurement masts at eight locations across Zambia that can be used ca ::::, to support stakeholder wind analysis activities and future utility- scale wind development in the country. :t:: en Measured wind speeds over a 24-month period at a mast height of 80 m are 5.6-6.4 m/s. Currently, there is no utility-scale wind power plant in Zambia, although a few investors are carrying out wind power feasibility studies. The most active are Mphepo Power and Access Zambia Wind One Limited. Mphepo has identified a number of sites across the Eastern Province and plans to develop the first plant at Unika I, en with capacity of 150- 300 MW. Access Zambia Wind One Limited intends to develop a 130- 140 MW wind Q) a. power project near Pensulo in the Central Province. ·c3 -= ct Cl

2.1.3 Small Hydropower -= "C ·5 (.!) "C Zambia's small hydropower potential is estimated to be 1,l 06.95 MW. This includes 16 micro hydro sites C: (ti Q) with a total capacity of 560 kW, 28 mini hydro sites totalling 15.75 MW and 128 small hydro sites with a cii total capacity of 1,090.64 MW. Currently, the total installed capacity of small hydro is about 40 MW, with C: 0 ·.;:; about 20 MW under construction. Many more projects are under development by the private sector, testifying (ti a: c:· to the large, untapped potential for mini hydropower in Zambia. The second round of the GET FiT Zambia 0 "(i; programme is the l 00 MW GET FiT Small Hydro Tender. >

2.1.4 Biomass Energy Given the abundant agricultural and forestry biomass resources, Zambia has significant biomass energy potential. The country has large land areas, of which 58% are suitable for sustainably growing energy crops, such as cassava, sugarcane, soybean and sunflower. Biomass residues and waste are significant resources >, -Cl Q) ~ ci5 that can be harnessed for various energy applications, including wood logging residue, crop harvesting residues, animal farm residues, agro-processing residues, wood processing residues and municipal solid and liquid waste. >, e" Q) C: UJ Q) A recent Bio-Energy Food Security (BEFS) study, supported by the Food and Agriculture Organisation (FAO), J:i quantified the biomass resource potential in the country. The study showed that the country has about ; Q) C: 4.7 million tonnes of field crop residues and 133,000 tonnes of forestry residues that can support a power Q) a: generation capacity of about 1,192 MW. In addition, there are 3.124 million tonnes of cattle, pig, chicken and goat manure potentially available to produce about 2,370 TJ of biogas annually. About 72 million litres of bioethanol would be required annually to meet the El O blending mandate, while about 25 million litres are required annually to fulfil the 85 mandate. Current analysis shows that under the current conditions, it is not viable to produce this volume of biodiesel in Zambia. There is the potential to C: produce 74 million litres of bioethanol from both cassava and molasses. While soya bean-derived biodiesel (ti a: was found not to be viable, about 9.3 million litres could potentially be produced from sunflower seed, a level C: 0 that could meet the 82 mandate. Regulatory support for biofuels has already been developed, including the ·.;:; (.) biofuel mandates. <>, e" Q) C: LU Q) :0 (ti 3:: Q) C: Q) a: 17. ERB. 2020. The Energy Sector Report 2019. Energy Regulation Board. Lusaka. 18. GET FiT Secretariat. 2020. GET FiT Zambia Annual Report 2019. 19. World Bank. April 2019. Renewable energy wind mapping for Zambia. 24-month Site Resource Report. Document No.: 10003564-HDU-R-02. Washington, DC. 20. IAEREP, 2020. IAEREP Database of Hydro Potential and Sites in Zambia. 21. RECP. 2018. Stand-Alone Solar Businesses in Zambia. A Guide for Venture Developers and Investors. Africa-EU Renewable Energy Cooperation Programme (RECP). ??. FAD and MOE. 2020. Sustainable Bioenergy Potential in Zambia - An Integrated Bioenergy and Food Security Assessment. Environment and Natural Resources Management Working Papers No. 84. Rome. Renewable Energy Strategy and Action Plan I2022 ® In addition to its use in the transport sector, bioethanol can also be used as a domestic cooking fuel. About 74 million litres of bioethanol could provide sufficient cooking fuel for 203,000 households (based on one litre/household/day), which is equivalent to 34% of the households in Lusaka, saving about 111,650 tonnes of charcoal annually. This would contribute to energy security in Zambia and save foreign exchange for Liquefied Petroleum Gas (LPG) imports. There are at least three large-scale biomass energy-based Cogeneration of Heat and Power (CHP) plants in the sugar industry and over 4,000 domestic biogas systems in the country. Most of the domestic biogas systems have been installed through SNV's Energy for Agriculture programme, which was supported by Swedish funding. There are three biomass CHP plants in the sugar industry: 40 MW at Zambia Sugar and 3 MW each at Kafue Sugar and Mansa Sugar.

2.1.5 Geothermal Energy < in" 5· Zambia has a geological setting that is suitable for exploiting geothermal energy. There are over 80 thermal _:::s springs in the country hosted in fault systems within Proterozoic basement rocks and associated largely with ::x:, Karoo (Permian) era basins. In addition, there are younger East African Rift structures in the north-east of the a o· :::s country. Surface temperatures of geothermal systems, largely hot springs, indicate the range of 35-93°C. Q) ~ II> :::s There is currently no geothermal electricity generation in Zambia except for the 220 kW pilot plant at c.. C'l Kapishya Hot Springs, built in 1986. Due to the absence of market drive and the technical limitations of C: c.: the site, the plant was eventually abandoned. Recently, Kalahari GeoEnergy has made significant progress :5· IC towards establishing the first geothermal power plant in the Bweengwa River Geothermal Resource Area. :? The ongoing exploration has confirmed the existence of a geological setting conducive to the development :5· (") of a low- to medium-enthalpy geothermal resource with an average temperature of production wells of about -s· ~ 110°C, which can support a power generation project of at least 10 MW. Kalahari plans to pilot a sub-250 II) kW demonstration unit to show proof of concept, generate interest and attract funding for commercial-scale operations. - Available Support Mechanisms for Renewable Energy At the national level, Zambia has been supporting RE through on-grid and off-grid projects. There are various international support opportunities for players in the RE sector. Most entrepreneurs are typically financed ::x:, (I) :::s through a range of grants, equity and debt financing. Examples of sector-specific initiatives in Zambia include: (I) ~ c- ~ (a) Power Africa/BGFZ (2017-2021) was a SIDA-funded programme to assist in the electrification of one m :::s million Zambians using a EUR 20 million results-based 'social procurement' fund. The programme (I) aimed and succeeded to incentivise the emergence of new private-sector business models offering ..a '< affordable and clean energy access at scale to people living in rural and peri-urban areas. Four !a companies were awarded co-financed grants. The BGFZ programme was implemented by Renewable Energy and Energy Efficiency Partnership (REEEP). IC '< - ii, ( I) (b) ElectriFi (2019-2025) is an EU-supported financing mechanism aimed at supporting market development and private sector initiatives for affordable, sustainable and reliable energy solutions. The facility is flexible in its ability to provide a range of financing instruments at several stages of investment maturity and offers investments of up to EUR 10 million. (c) Scaling Up Renewable Energy Programme (2018-2020) was a funding window of the Strategic ::x:, (I) :::s Climate Fund with a budget of up to USD 40 million, which operated under the Climate Investment (I) ~ Funds and aimed to support the scaling up of green energy programmes and increasing access II> c- ~ to electricity. The programme's investment plan supported up to 100 MW of RE capacity from all m :::s sources, including wind and geothermal. Zambia was one of the pilot countries of the programme in (I) ..a '< low-income countries. - > (") 5· :::s -c i» :::s 23. REEEP. 2020. BGFZ: Country Analysis Repon - Zambia. Lusaka Renewable Energy Strategy and Action Plan ® (d) Alternatives to Charcoal (2021 - 2026) is a USAID-supported programme that aims to reduce Cl) deforestation related to the production of charcoal. With a budget of USD 24.9 million, it uses a IC 0 ·.;:::, market-driven approach to catalyse a shift in household cooking away from charcoal towards private sector-led low emissions technologies and fuels. In addition, some recent initiatives aimed at creating a more conducive environment for the development of ca ::::, -~ the RE sector include: Cl) (a) Increased Access to Electricity and Renewable Energy Production (IAEREP) project (2018-2023) is the EU-supported initiative aimed at increasing access to clean, reliable, more equitable and affordable energy and promoting renewable energy production and energy efficiency across Zambia. The project is utilising a budget of EUR 40 million for the enhancement of policy, legal and regulatory environment (I) and capacity building for renewable energy and energy efficiency, conducting feasibility studies and QJ ci implementing the RE and EE demonstration projects. ·c:; ·= ct 0, (b) GET FiT Zambia (2018-2024) is the implementation programme of the REFiT Strategy and aims at procuring and supporting Independent Power Producer (IPP) projects up to 20 MW. With EUR 41 ·=·5 "C million support from the KfW, GET FiT facilitates private sector investment in small- and medium- (!) "C scale RE IPPs in Zambia. The procurement and support of 220 MW RE capacity are at the core of the C ca programme and are divided into a 120 MW solar PV round and a l 00 MW small hydro round. QJ ca C: 0 ·.;::; (c) Electricity Services Access Project (2018-2023) is a World Bank-supported initiative that addresses ca a: existing regulatory impediments for private sector participation in off-grid electrification, capacity c· building for key institutions and the design and potential piloting of financial mechanisms to support 0 ·en private sector-led electrification through RE mini-grids and standalone solar systems. This project > will prepare the Least-Cost Geospatial Electrification Plan for grid and off-grid rollout. The project also provides a credit line for off-grid solar and mini-grids. (d) Africa Clean Energy-Technical Assistance Facility (2019- 2022) is a four-year Foreign, Commonwealth and Development Office- funded programme designed to follow up on Energy Africa Compacts, with activities tailored to support policy reforms, identify gaps and ensure buy-in and commitments made in the Compacts. It aims to catalyse a market-based approach for private sector delivery of RE >- electrification technologies, with a focus on high-quality standalone solar systems. -0, QJ ~ ci> >- (e) Southern Africa Energy Programme (2018 - 2023) is a USD 75 million project designed to increase the !? QJ C: supply of and access to electricity in Southern Africa. The programme is funded by USAID in support LU QJ of the Power Africa initiative. :0 ; (f) QJ C: Worldwide Fund for Nature-Zambia Country Office and MoE signed a five-year Memorandum of QJ a: Understanding in 2020 to collaborate on promoting RE development in the country. This created a platform for collaborative activities and support to promote RE development and achieve the NEP 2019 Implementation Plan provisions. A joint work plan was developed and includes support for hosting RE investment forums, capacity building support and community sensitisation programmes. C: (I) C: C: ·-r;0 < >- !? QJ C: LU QJ :c (I) 3: QJ C: QJ a: 24. REEEP. 2020. BGFZ: Country Analysis Report - Zambia, Lusaka, Renewable Energy Strategy and Action Plan I 2022 Key Challenges There are several significant barriers affecting the exploitation of RE resources in Zambia. High investment requirements with electricity tariffs that are not cost reflective and limited availability of financial instruments remain the major constraints to RE development. The high costs of capital especially limit local developers who struggle to create viable business models. Many prospective developers and Small and Medium-Scale Entrepreneurs (SMEs) have limited capacity to develop bankable projects that can attract suitable funding. There are limited innovative financing mechanisms to buy down the cost of capital, lower investment risks and enable the growth of RE development. In addition, high levels of poverty in the targeted markets limit the capacity of the market to absorb various products and services. The off-grid market that can benefit the majority of the population is driven by non-mainstream investors and is often financed by short-term donor support, which means that projects rarely survive after the donor support ends. Reaching Zambia's dispersed communities and achieving energy access targets will require substantial investment. Although market barriers vary by type of RE technology, the challenges facing the RE market can generally be classified into policy and regulatory shortfalls, financial and economic barriers, technical challenges, rural markets issues, human resource skills and institutional capacity, information/knowledge and awareness and behavioural and cultural barriers.

2.3.1 Policy and Regulatory Barriers RE has traditionally been promoted via policy and regulatory instruments to allow the technology to compete against incumbent technologies and facilitate the transition from conventional technologies. Until recently, Zambia had a poorly developed regulatory framework and procurement route for private sector investment, and this had been an impediment over the years. Given that RE is still an emerging market in the country, clear policy and regulatory signals are required to improve market penetration. However, Zambia has made significant strides over the last few years in creating an enabling environment to make the RE sector attractive for investment, increasing the uptake of RE technologies by improving the policy and regulatory environment and introducing procurement frameworks such as Scaling Solar and GET FiT. Some gaps still exist, as the market is dynamic, and the continuous updating of policies and regulations is required to meet market challenges and needs. Despite the difficult macroeconomic environment, Zambia has managed to put in place supportive policies and a regulatory framework for RE deployment. However, these policies and regulations are still largely on paper and need to be operationalised and tightened to catalyse the market. The Electricity Act No. 11 of 2019 and the Energy Regulations Act No. 12 of 2019, are considered to be very progressive, but their provisions need to be tested in practice to provide market confidence. IPPs also consider the Grid Code of 2016 to be limited when combined with commercial demands. In addition, recently drafted mini-grid regulations are not :JJ 11) :::, yet fully developed, and more work is needed to improve them. Similarly, various licensing and permitting ~ DJ procedures need to be fine-tuned to address various unnecessary bottlenecks that affect the efficiency of CT t5'" investment and market activities. m :::, 11) ..a '< -> C') s:::,· "'O iii :::, Renewable Energy Strategy and Action Plan ® While a lot of policy and regulatory support has been provided to the solar energy subsector, there are still significant gaps when it comes to the wind, biomass and geothermal subsectors. Although there has been significant support for small- scale renewables, there are few policy and regulatory instruments targeting large-scale renewables. There are various licensing and permitting hurdles in the market. For example, the RE developer licensing application process, which involves numerous government agencies, needs to be streamlined. In addition, the land use permitting process is elaborate and cumbersome, as it involves various administrative bodies. There is inconsistent treatment in the land use permit application process by local authorities (i.e. chiefs and local councils), which results in delays in the approval of site permits. This needs to be streamlined en Q) and harmonised. In addition, Zambia needs to develop a charter for the land use application, which has to be Q. ·c3 adhered to by various organisations involved in order to ensure consistency in the application of procedures ·=c:: and accountability. C'I ·=·:5 -c The Environmental and Impact Assessment (EIA) procedures have been identified as burdensome, especially C!) -c C: for small- scale developers. Clear EIA procedures and transparent criteria for the EIA requirements and (ti Q) processes are required together with a one-stop shop. The Environmental Management Act of 2011 and iii C: Environmental Licensing Regulations of 2013 (under revision) define the EIA requirements but leave the 0 ·.;:::; (ti decision on whether a project requires an EIA to the discretion of the inspector. Therefore, there is a need a: c:· to develop templates for preparing project briefs and environmental management plans. A widely accepted 0 "(ii template could be useful in reducing the turnaround time for the preparation and processing of applications. > Currently, the application time for the EIA is lengthy due to a low staffing capacity at Zambia Environmental Management Agency (ZEMA). Also, while some provisions for the EIA are generic, others are very sector- specific. For example, the construction sector has specific guidelines on civil engineering/construction codes, but other sectors, such as RE, do not. Therefore, ZEMA makes decisions for those sectors without clear guidelines. ZEMA needs to develop clear guidelines that cover other sectors. In addition, ZEMA needs >, -C'I ~ Q) ci5 to improve its screening process for EIA consultants by employing more comprehensive criteria. Finally, there appears to be duplication of mandates between the National Heritage Conservation Commission (NHCC) and various other institutions, such as ZEMA and Water Resources Management Authority (WARMA), which >, C'I li; C: results in additional costs to developers. It is therefore important to review and fine-tune these application LU Q) stages to reduce the burden on RE developers. ::c (ti ~ Q) C: There is a need to continue fine-tuning the policy and regulatory frameworks to keep up with the demands of Q) a: the sector. For example, it is necessary to finalise, test and implement net metering regulations to facilitate decentralised renewable investments. Net metering regulations are under development. There is also a need to keep fine- tuning the RE economic instruments and incentives. Currently, GRZ has put in place RE incentives based on Statutory Instruments (Sis) 17 and 104 which exempt key solar PV components from import duties and VAT respectively. While some solar PV components are cmrently exempt from the two stated taxes, other RE technologies are not. There is therefore a need to periodically review the two Sis to take onboard C: ca the emerging RE technologies. Further, there is need for periodical capacity building of both Zambia Revenue a: Authority (ZRA) staff at ports of entry and clearing agents to ensure correct and consistent implementation C: 0 '£ of the two Sis. <>, C'I li; C: LU Q) ::c (ti ~ Q) C: Q) a: 24. Statutory Instrument No. 17 of 2022: The Customs and Excise (Electronic Machinery and Equipment) (Suspension) (Amendment), Regulations 2022: Statutory Instrument No. 104 of 2008: The Value Added Tax Act (Zero-Rating) (Amendment) Order, 2021. Renewable Energy Strategy and Action Plan I2022 ® The regulation of the biomass subsector needs to be improved. For example, given the scale of charcoal production and its importance to energy provision and security in the country, it is not currently regulated by any regulatory agency or subject to taxation by ZRA. However, Ministry of Green Economy and Environment (MGEE) is currently drafting revised charcoal regulations, which will enhance enforcement of a series of permitting and licencing requirements aimed at making the sector more sustainable, but these regulations do not extend through to the retail side and end users of the value chain.

2.3.2 Economic and Financial Barriers Financing and economic challenges probably represent the biggest challenge for upscaling RE in Zambia by impeding both investment on the supply side and uptake on the demand side. Access to affordable, long-term finance is limited in Zambia, and this has been compounded by the COVID- 19 < u;· pandemic and the financial sustainability of the sector. The high cost of capital and limited availability of o· _:::, long-term concessional financing are major impediments to doing business in the country, especially for :,:, SMEs in the RE sector. RE developers struggle to secure loans from local financial institutions. Zambian a o· banks charge interest rates of 20- 30%, which makes it difficult for developers to achieve a good return on :::, I» investment. Banks are risk-averse and do not grant loans unless applicants have collateral. Interventions i'D"" I» that address financing bottlenecks and the affordability of energy services in the RE market are therefore :::, Q. of high priority. Zambian banks do not have experience in lending to RE projects and are therefore cautious C, C: towards RE business financing. Thus, it is important to build capacity and awareness within banks on how to c.: :5· ensure due diligence in assessing RE projects. This can be achieved through technical assistance from DPs geared towards capacity building. '°"3l :5· n -5· Some RE developers have international roots and are able to raise capital outside of Zambia, but even these i'D"" V, international companies face challenges due to poor macroeconomic conditions in the country. The instability of the Zambian Kwacha (ZMW) affects the viability of RE businesses, as the costs of inputs are in USO while the revenue is in an unstable local currency. Some of the business models being used, such as PayGo, demand that RE businesses operate as microcredit institutions by paying for stock upfront while revenue trickles in, typically over a three-year period. This is especially problematic in the off-grid sector, where the target market does not have a regular income and revenue is erratic. Annual income among the rural poor is only USO 50- 120. Therefore, it is important to have some form of targeted subsidies and financial support :,:, (grants or concessional loans) in order to improve the financial viability of RE projects, especially in the off- CD :::, CD grid sector. ~ 0- i'D"" Furthermore, RE systems require high upfront capital investment, even though costs have been declining m :::, over the years. The costs of smaller-scale systems are still relatively high when compared with traditional CD large-scale technologies. For instance, mini-grids are generally not viable in Zambia, and developers are .a '< only able to cover operational costs. There is, thus, a need for financial support mechanisms to provide ~ iil grants, subsidies and/or long-term, low-cost financing to offset upfront capital costs and improve system (0 affordability. '° '< High system costs exacerbate the inability of the poor rural market to pay for energy services, which is especially pronounced in female-headed households of which more than two-thirds (69%) are not willing to pay about USO 45 for an SHS, regardless of whether it is an upfront payment or instalments for up to 24 months, while 41 % of male-headed households are willing. When compared with men, the lower literacy levels and lack of awareness of SHS suppliers among women may also contribute to the low uptake of off- grid solutions in female-headed households. :,:, CD :::, A few international programmes provide concessional finance through local financial institutions, but this ~ I» finance is not being deployed quickly enough to scale the sector and maximise the leveraging effect of such 0- i'D"" development finance. In addition, local RE companies have not benefitted fully from such development m :::, finance, as these funds are not readily available, and the current model of disbursements of the loans is not CD efficient, as the banks charge very high transaction costs for international loans.These international .a '< programmes include a USAID loan guarantee scheme and the Bank of Zambia's ZMW l O billion refinancing facility, which has not trickled down via banks to the small-scale enterprises but is only available to existing - > n 0 :::, -0 clients. It is therefore important for any lines of credit extended by international Multilateral Financial iii :::, Institutions (MFls) via local commercial banks to be available under attract ive terms to encourage RE businesses to pursue these credit facilities. 26. In April 2020, the Bank of Zambia established a Targeted Medium-Term Refinancing Facility to enable financial service providers to support businesses and households impacted by COVID-19. This facility had an initial amount of ZMW l Obillion and a term of five years for priority sectors identified in the Seventh National Development Plan (i.e. agriculture, manufacturing, tourism and energy) and three years for other sectors. The RE private sector has been unable to access this facility. Renewable Energy Strategy and Action Plan

2.3.3 Electricity Tariffs One of the key problems affecting investments in renewables in Zambia is electricity tariffs that are not cost-reflective, which also applies to off-grid tariffs. This has contributed to financial distress within the national utility ZESCO. A combination of poor macroeconomic conditions and ZESCO's fiscal challenges have, therefore, adversely affected the power sector in general and RE in particular. At the moment, ZESCO is the off-taker of choice for grid-connected RE projects. Several IPP projects are now in limbo, as IPPs have been unable to secure funding and sign Power Purchase Agreements (PPAs) with ZESCO. With the removal of government-backed sovereign guarantees, financiers are unwilling to provide funding to the RE developers supplying ZESCO due to its poor creditworthiness. (J) Cl> Despite recent electricity tariff increases in 2020 ranging from 70% to 113%, the tariffs are still not ci. cost- reflective due to the instability of the ZMW. The increases were also only applicable to non-mining ·c:; ·= C: consumers. The new Cost of Service Study (CoSS) will provide clarity on planned investments since market C, condit ions are not yet conducive to an alternative power off-taker. In terms of the Electricity Act and Energy ·= -0 ·:5 Regulation Act of 2019, ERB will be able to approve tariffs for all consumer categories. It is, thus, critical that (.!) -0 the country finds ways of migrating towards economic, cost-reflective electricity tariffs if the sector is to C: (ti become sustainable and attract private investors. There is also a need to develop credit risk mitigation Cl> <a C: mechanisms and undertake reforms to improve the financial viability of ZESCO. 0 -~ (ti a: There is hope, however, with the Electricity Act No. 11 of 2019, which came into force in 2020 and provides c:· 0 ' cii for an open-access regime to the national grid. This, in principle, allows IPPs to sell to third party market > operators or directly to anchor consumers and pay wheeling charges. However, this open-access regime still needs to be fine-tuned. Although the law is progressive, in practice, the Act does not guarantee access, as there are some provisions for matters to be referred to ERB. Thus, open-access regulations and the transmission pricing methodology need to be developed to guarantee equal grid access to all market participants, including IPPs. >, In addition, the Electricity Act appears to give ERB unilateral powers to intervene and review tariffs and -C, Cl> ~ en>, contracts, which is considered risky and not bankable by IPPs and developers. At the moment, the interim system operator is effectively part of ZESCO, and therefore, there are risks that this entity will be compromised 0, t in its dispatch and control of the system. There are also other aspects of the open- access regime that require C: LU attention and make open access to the grid difficult to implement. For instance, corporate PPAs bring in Cl> ::i5 <ti different types of long-term risks, as business models and power demand may shift markedly over time, and ~ there are also risks of bankruptcy and insolvency of the off-taker companies. While short term PPAs have Cl> C: Cl> a: low risks, the term of the PPA should cover at least the debt term of the project's finance. Therefore, there is a need for an open-access market regime and regulations accompanied by a ringfenced independent market operator and risk mitigation instruments. At the level of the end user, tariff increases have a negative impact on the demand for electricity, as consumers switch to alternatives, such as LPG and charcoal. Observations made by the USAID's Alternative C: (ti to Charcoal (A2C) project show that between 2015 and 2018, the proportion of households cooking with a: electricity dropped from 35% to 18% due to tariff increases, indicating the price sensitivity of Zambian C: 0 households and the significant impact policy and regulatory changes can have on household practices. '<( fl >, However, recent studies by Modern Energy Cooking Services (MECS) and Climate Economic Analysis for Cl t Development, Investment and Resilience (CEADIR) indicate that even with the new tariff structure, electric C: LJ.J cooking is cost-competitive to charcoal, suggesting that consumer perceptions need to be addressed Cl> ::i5 (tl through behavioural change, education and campaigns to raise awareness. ~ Cl> C: Cl> a: 27. An anchor customer consumes the bulk of electricity from a power plant and thereby sustains the investment. The remaining power plant output is distributed to community members with smaller energy consumption. such as poor households. 28. A corporate PPA is a PPA where the off-taker is specifically a company buying electricity (rather than a utility, government or local authority) from an electricity producer, such as an IPP. Renewable Energy Strategy and Action Plan I2022

2.3.4 Technical Barriers There are various technical barriers that impede the harnessing of RE resources. As intermittent resources, solar PV and wind energy cannot provide baseload without significant investment in storage capacity. Integrating Variable Renewable Energy Sources (VRES) into the main grid may require additional operating reserves due to the variability and uncertainty of wind and solar radiation. A study conducted in Zambia to estimate the amount of VRES that could be integrated into the main grid by 2030 showed that in order to enable integration without technical challenges, a maximum of 36% of installed national power generation capacity (with regional interconnection) could be provided by VRES-based power plants. Some additional network reinforcements would also be required by 2030, but they are needed to meet the growing demand and not for VRES integration. There are options to manage variability, including demand response management supported by smart grid technologies and electricity storage options, such as pumped hydropower. With ongoing innovation and expected technological learning in electricity storage (especially battery systems, including those used in electric vehicles), the cost of electricity storage is expected to decline in the short- to medium-term, allowing for higher shares of VRES on the market. Comprehensive resource information and market intelligence are important for investment decision-making and planning as well as policy making. Recent assessments of the solar and wind resources and biomass have assisted by providing such technical information. Thus, it is necessary to conduct resource assessments for geothermal and mini hydro. A key drawback within the RE sector is the limited RE Research and Development (R&D) in the country and the lack of geospatial information to link resources to markets, especially for informing the national electrification strategy. In addition, there are still gaps in standards for the Zambian RE sector. Standardisation is important not only for ensuring quality control and protecting consumers against poor-quality products but ensuring safety, cost reduction and market confidence. Where standards for RE technologies exist, there has been limited enforcement, which has led to the proliferation of substandard systems in the market, including the importing of second-hand equipment. Therefore, there is a need for the development of standards by the ::0 n, :::J Zambia Bureau of Standards (ZABS) and support for the testing infrastructure. This should be accompanied n, ~ II) by a framework for enforcing standards. CT i'D" m :::J n, Another technical barrier to investment in renewables is the distance between the potential loads of RE ..a '< sources/plants and the market. This applies to sites with good wind speeds, geothermal sites and mini ~ hydro, but rooftop solar PV and SHS are not affected by this challenge. For mini-grid developers, a key problem is the dispersed settlement pattern in rural areas, as rural homesteads are typically built far apart, - iil n, '° '< making the distribution network very costly to implement. ::0 n, :::J n, ~ II) CT n, m :::J (1) ..a '< - > n s· :::J "'O ii> :::J 29. RES4Afnca and Enel, 2020. Integration of variable renewable energy sources in the national electric system of Zambia. 30. World Bank. 2019. Solar Resource and PV Potential of Zambia: Solar Resource Atlas. World Bank. Washington, DC. 31. FAO and MOE. 2020. Sustainable Bioenergy Potential in Zambia - An Integrated Bioenergy and Food Security Assessment. Environment and Natural Resources Management Working Papers No. 84. Rome. Renewable Energy Strategy and Action Plan

2.3.5 Rural Market Barriers The rural market for RE is challenging for developers as the uptake of RE is still very limited. Demand for electricity is very low, and most mini-grids are operating at low capacity. A key problem with the rural market is the lack of consistent income throughout the year; therefore, most rural people cannot consistently afford to pay for energy services, even if they are connected. Thus, providing RE without considering the potential to generate income and pay for energy services will not achieve a long-term impact. Due to the lack of economies of scale, the cost of electricity from mini-grids is generally high. Mini-grid investments in rural areas are thus not viable unless they are accompanied by subsidies due to the poor clientele and inherently high energy costs. In addition, the rural market is dispersed, and the roads are typically bad, making the cost of servicing such markets unsustainable. However, extending the public electricity grid to all parts of the en country is not economically viable, and a current analysis shows the least-cost electrification of remot e rural Cl.I Q. ·c:; areas will be achieved via standalone RE systems. ·= a: C'I

2.3.6 Human Capacity Barriers -= -c ·:5 (.!) -c Since renewables are generally new to the Zambian market, there is inadequate capacity in terms of technical C: ro Cl.I skills to design, install, operate and maintain various RE systems, such as biogas digesters, solar PV systems ,ii C: and solar water heaters. Until recently, RE developers have been training technicians in house, and in most 0 ·.:: cases, this is accompanied by micromanaging the technicians to ensure quality control. A curriculum for RE ro a: c:' skills' development is being developed, and Technical Education, Vocational and Entrepreneurship Training 0 "cij Authority (TEVETA) is the body responsible for providing dedicated vocational training on RE in the country. > However, this programme needs to be upscaled to support the growing industry. The country lacks the business skills and project packaging among SMEs to develop business plans and bankable proposals in order to get financing for their projects. While some capacity has been developing gradually for the solar energy subsector, it is still limited, and there is a need to build a critical mass of technical and business capacity to support the sector. Isolated initiatives to support different technologies >- -C'I Cl.I ~ en have been undertaken, but they have not generated enough critical mass to sustain the market. Thus, it is important to increase human resource capacity in RE through targeted capacity building programmes. >- c, ti; 2.3. 7 Institutional Capacity Barriers C: LU Cl.I ::i5 Another major barrier affecting RE investments is the shortage of investment-ready or bankable projects with ro ~ Cl.I C: attractive value propositions that can secure financing and generate sustainable revenue streams. Within the Cl.I a: financial sector, the capacity to undertake due diligence of RE proposals is also limited, despite the isolated and project-linked capacity building in the Development Bank of Zambia (DBZ). Given that RE is in its nascent stages in the country, government agencies require continuous capacity building. There are various technical aspects that require mastering to enable the public sector to efficiently execute its oversight and regulatory roles. C: ro The RE market is fragmented, with project developers, operators and importers operating in silos. RE a: developers and other private operators need to be organised better, and the industry bodies need to be C: 0 'ti strengthened. For instance, a well- functioning renewable industry association could assist its member s with < brokering, drawing plans and lobbying collectively around policy interventions. >- C'I ti; C: LU Cl.I ::i5 <ti ~ Cl.I C: Cl.I a: 32. Where firewood is in abundance, the thermal needs of rural households will continue to be served by traditional biomass unless their income levels improve. Firewood is typically collected for free, and with no motivation for efficiency, the three-stone fireplace can be constructed at no cost. Renewable Energy Strategy and Action Plan I2022 Similarly, government agencies and other public sector bodies require improved coordination to ensure resources are used efficiently, and programmes are well aligned with the development partner community. A typical concern is that some RE projects and programmes are being implemented without the involvement of MoE, which limits the ministry's oversight role and its ability to access information and keep track of the challenges facing the market. Another example of the need for improved institutional coordination is charcoal production and supply. Responsibility for charcoal falls between MGEE and MoE, thus requiring greater coordination. Such coordination could support a cross-sectoral clean cooking strategy that will drive the modernisation of the biomass subsector.

2.3.8 Knowledge and Awareness Barriers Given that renewables are relatively new technologies on the market, there is limited knowledge on both the supply and the demand side. On the supply side, there are gaps in information on RE resources and market intelligence. Although there have been recent studies on assessing solar, wind and biomass resources, some gaps still remain on the state of RE resources in the country (e.g., geothermal) and, more generally, the feasibility of different RE resources in different settings. Geothermal resource mapping is being driven by the private interests of Kalahari GeoEnergy, but more public support could leverage more activities for this technology. Although Zambia has better datasets than other countries in sub-Saharan Africa, comprehensive data on the energy sector are not available. Therefore, there is a need to collect more reliable energy sector statistics in the country, including energy supply and demand patterns. Currently, MoE relies on old surveys, and there is no regular national energy balance. There is also limited understanding of community needs, behaviour, structure and social stratification to help in designing interventions. This is mainly due to limited institutional capacity within national agencies and ::0 inadequate funding to implement data collection and analysis, which is also linked to limited R&D activities Cl) ::, Cl) in the RE sector. The Assessment of Energy Sector Research Needs, undertaken by MoE in 201 7, revealed == II) that R&D in the energy sector was inadequate to support decision making, policy formulation and investment CT i'D"" decisions. m ::, Cl) .a '< On the demand side, there is limited awareness of various RE technology options and their benefits. This ~ ; is particularly pertinent in rural areas, as this market generally has no access to mainstream media, either ti,' electronic or in print. Literacy levels are lower in rural areas than in urban areas, and this compounds the '° '< challenge of the limited access to information and the need to create marketing campaigns. However, even in urban areas where the RE market is slowly emerging, end users are unable to differentiate between poor- quality and good-quality systems or make judgments about value for money and standardisation. In rural areas, communities are typically unaware of whom to approach for energy services, and if they are aware, they do not know how to access finance and do not understand the terms and conditions of their service package or their contractual rights, including the right to after- sales services. What is of critical importance ::c Cl) ::, is the lack of knowledge among rural communities of how to transform their lives, improve their welfare, Cl) improve productivity and generate income by investing in modern energy services. == II) c- ib" m ::, Cl) NGOs have reported the desire by farmers to increase productivity through irrigation and diversification of .a '< crops, but they need to be linked to the market to ensure that the investments have long-term sustainability. Where information is available, it is often in English and has to be translated, where applicable, into vernacular to ensure that it is understood. However, the Africa Clean Energy-Technical Assistance Facility (ACE-TAF) is - > C") s· ::, "ti iii" supporting the Energy Access Explorer and could be a good starting point for developing a national ::, information system. This online, interactive platform uses mapping to visualise the state of energy access in unserved and underserved areas. Renewable Energy Strategy and Action Plan There is limited interaction between the public sector, private sector and potential beneficiaries of RE programmes. Typically, communities are not involved in electrification planning. At most, they are informed of pending developments, and their input in the design stage is limited. Limited meaningful engagement with communities can lead to failure to capture real community needs or local contextual dynamics. Although regulations require developers to consult local communities before they develop their projects, there is no guidance on how this process should be done. The private sector generally believes that there is no benefit to having more community engagement and that they have a good understanding of the energy needs of the community. If planned properly as part of local community development activities and private sector market assessment investigations, community engagement should not result in additional costs to developers but be seen as an opportunity to build more en QJ sustainable business models suitable for specific local settings. C. ·c::; ·=a: One of the challenges faced by communities across the country is limited access to the relevant public sector Cl ·=·:; -c and private sector energy bodies. MoE and REA are centralised in Lusaka with no presence in the provinces. ERB has a limited presence in the provinces. Most private sector players also operate from Lusaka and have (.!) -c C: a limited presence in the provinces and at the district level. (ti QJ <ii C: 0 ·.:: (ti a: c:· 0 ·c;; > >- -Cl QJ ~ z;; >- Cl :i:; C: LU QJ ::i5 (ti 3c: QJ C: QJ a: C: (ti a: C: 0 '£ < >- Cl :i:; C: LU QJ ::i5 n, 3c: QJ C: QJ a: Renewable Energy Strategy and Action Plan I2022 Vision, Rationale and Guiding Principles Vision The vision of this Renewable Energy Strategy and Action Plan is the scaled-up RE in Zambia, resulting in enhanced wider access to modern energy services, improved national energy security, increased sustainable national economic productivity and socioeconomic development. Rationale Although the country has a long history with large-scale hydropower development, the RE market is slowly developing in Zambia. Other renewable resources, such as solar, wind, geothermal and modern biomass, are not well developed in the country. Therefore, the industry is young and needs support. To date, only solar PV has gained a substantial market share in the national energy mix. Although there is considerable interest at the moment and existence of several ongoing initiatives to stimulate the RE market, there are numerous preconditions that need to be fulfilled before Zambia achieves widespread deployment of RE. These preconditions include ensuring the country has an enabling environment for private sector investment and encouraging adoption of RE technologies by the target end users. RE technologies are typically policy driven to facilitate market transformation and break market barriers. This is because renewables are, in most instances, not competitive against incumbent fossil-based technologies and other traditional forms of energy. Therefore, there is a need to promote RE technologies through establishing conducive policies and regulations that encourage adoption, increase awareness of technology options and build capacity to sustain the industry for the long term. Given that there are various market barriers that need to be addressed to achieve good penetration of RE, there are also many interventions that need to be implemented to overcome those barriers. It is important to note that Zambia has made significant progress in updating its policy and regulatory framework. Recent gazetting of the various supportive regulatory instruments, such as the Energy Regulatory Act No. 12 of 2019, the Electricity Act No. 11 of 2019, the Distribution Grid Code of 2013 and the recently drafted Mini-grid Regulations, among others, have greatly improved the market environment. Despite these efforts, there are still many areas that need to be addressed to increase penetration of renewables, including the revision of the Charcoal Regulations (Forest [Charcoal Production and Transportation] Regulations of 2017), which still need to be refined, gazetted and enforced to improve the charcoal subsector. Thus, to attain the national targets for selected technologies, it is critical to develop a roadmap, which will guide the development of the sector by outlining sets of activities that need to be implemented to achieve the national RE ambitions. To date, the developments in RE have followed an ad-hoc approach, with different isolated initiatives and pilot projects introduced by different entities that lacked coordination and national consolidation. With the mission to set up an enabling environment for removing the market barriers, this RESAP outlines the required market interventions and details specific activities that have to be implemented in order to accelerate the upscaling of investment in the sector and unlock the national RE potential. Guiding Principles The guiding principles on which the RESAP is anchored are aligned with key national and regional strategic values and development goals. These key principles, which will contribute to the success of the strategy, are: 33. Still under governmental review. Renewable Energy Strategy and Action Plan Morality & Ethics In implementing the RE programmes, Government will ensure that energy resources are exploited and utilised in an ethical manner. Government will also ensure that the players in the RE market uphold morality and ethics in conducting their business. Patriotism & Patriotism and national unity are a cornerstone for socioeconomic development. National Unity Infrastructure in the RE sector is very key to ensure efficient delivery of services and Government will ensure that the public exercise patriotism and national unity so as to ensure ownership of infrastructure and reduce vandalism. Social Justice In implementing RE programmes, Government will ensure that it protects vulnerable groups in society. Equality & Non- The Government will endeavour not to discriminate in the implementation of RE Discrimination programmes and provision of energy services. Accountability All stakeholders in the RE sector should be able to explain and account for their actions as well as be open to subject themselves to scrutiny. Government will ensure that all actors will provide information on services offered in the sector. >- C> .l!:! -~ en >- .... C> Cl) Strategic Objectives To realise the national RE vision, the strategic objectives of the RESAP are: C: LU Cl) ..c (a) To promote sustainable and inclusive socioeconomic development in Zambia by scaling up and co ~ accelerating the deployment and adoption of the full range of RE technologies, with particular consideration Cl) C: Cl) being paid to affordable applications that meet the needs of poor people. a:. (b) To minimise environmental risks and addressing climate change mitigation and adaptation by reducing local pollution, deforestation and greenhouse gas emissions and building resilience against climate change - in line with Zambia's NDC commitments. C: co a: (c) To enhance national energy supply and access to modern energy services through reduced dependency on C: 0 ·.;::: traditional biomass to facilitate increased national economic productivity and growth and improved <..) < national welfare (attainment of Sustainable Development Goal-SDG 7). >- E' Cl) C: LU (d) To improve energy security by increasing supply options and diversifying the energy supply mix, thereby Cl) :c reducing the impact of environmental and economic risks, such as climate change-linked droughts, price co ~ volatility and foreign currency exchange savings. Cl) C: Cl) a: (e) To improve the performance of the energy sector in general, and the power sector in particular, and enhancing the sectoral investment conditions through reforming the power sector, continuing to refine supportive policy and regulatory frameworks and implementing cost-reflective tariffs. ..:,,: 0 (f) To promote rural development and job creation through improving access to modern energy in rural areas, ~ Cl) E facilitating increased economic productivity, encouraging income generating activities, creating co II: employment through Productive Use of Energy (PUE) and transforming rural areas into vibrant economic C: 0 hubs. -~ ECl) E (g) To increase human resource and institutional capacity in the country to support the growth of the RE sector Cl) C. and increasing knowledge dissemination and awareness of RE to increase its uptake and adoption. E Renewable Energy Strategy and Action Plan I2022 (h) To minimise health risks and addressing the gender imbalance by reducing the burden on women and children while enhancing self-development opportunities and productivity and reducing indoor air pollution. Renewable Energy Targets Given the expected increase in the national energy demand, national ambition to upscale access to modern energy services, and desire to diversify the energy supply mix at least cost, Zambia's RE targets are given below. These include targets for grid-connected RE systems, off-grid RE systems and biofuels for transport. These targets consider the national RE development objectives set out under the Rural Electrification Master Plan, the Vision 2030 and the Sustainable Energy for All contribution to the Sustainable Development Goals.

3.5.1 Grid-Connected Renewable Energy Electricity Targets As shown in Table 2, Zambia aims to add about 2,015 MW of grid-connected RE capacity to the current generation capacity by 2030, including 1,383 MW of hydro, 500 MW of solar, 130 MW of wind and 2.2 MW of geothermal power. Table 2: Grid-Connected RE Capacity Targets for lambia30 (million liters) Technology Total capacity (MW) Percentage Contribution Hydro 1,383 68.6% Solar 500 24.8% Wind 130 6.5% Geothermal 2.2 0.1% Total 2,015 100%

3.5.2 Off-Grid Renewable Energy Targets The national targets for off-grid renewable technologies are based on the estimated off-grid demand for electricity services in rural areas through 2030 for both, households and agriculture. These off- grid systems will be mainly solar PV mini-grids and solar home systems. However, small hydro-based mini- grids will also contribute to the RE off-grid energy supply at a limited number of sites. The target is to connect 4,829 million Zambians to mini grids, or 19.l % of the population, with 1,851 GWh by 2030. In addition, the aim is to connect 7.999 million Zambians to SHS, or 31 .6% of the population, with 35 GWh by 2030.

3.5.3 Biofuels Targets By 2030, Zambia aims to blend both petrol and diesel with bioethanol and biodiesel under its biofuel mandates El 0 and B5. These targets are aligned with the projected transport fuel demand. As shown in Table 3, to attain the El 0 blending mandate by 2030, Zambia aims to produce 92.8 million litres of bioethanol. For biodiesel, the aim is to produce 75.3 million litres in 2030 to fulfil the B5 blending mandate. If a 10% capacity margin is considered for the biofuel plants, the targeted plant capacities should be l 05 million litres for bioethanol and 85 million litres for biodiesel. 34. Zambia's power system can absorb power generation capacity of up to 1,376 MW from solar PV and 1.400 MW from wind by 2030 (RES4Africa and Enel, 2020). Renewable Energy Strategy and Action Plan In addition to petrol blending, ethanol can be used as an alternat ive cooking fuel. About 92.8 million liters of V) ethanol would be sufficient to meet l 00% of the cooking needs of over 250,000 urban households. Cl.I 0. ·c:; c; ·.:: Table 3: Bio-ethanol and Bio-diesel Projections Up to 2030 (million liters) a.. 0, c; Fuel/Year 2025 2030 Plant Capacity '5 ·5 _, (!) Bio-ethanol 80.l 92.8 105 c; co Cl.I <ii Bio-diesel 64.9 75.3 85 c; .2 ca a: r;; 0 "iii 3.5.4 Biogas Targets ·;:;; There is potential for meeting 2,207 TJ of cooking energy using biogas, especially using cattle manure as feedstock, which is sufficient to supply the estimated annual target energy demand of 62,000 rural Zambian households by 2030. There is potential for increasing the contr ibution of biogas to cooking energy needs by employing the co-digestion of cattle manure together with other feedstocks, such as crop residues. By using 50% livestock manure and selected crop residues, about 3,700 TJ of cooking energy can be derived >- 0, from biogas annually, thus meeting the cooking energy demand of l 00,000 rural households. However, a Cl.I ~ conservative target for national dissemination of biogas digesters is 62,000 households by 2030 if only c'n livestock manure feedstock is considered. >- 0, a:; c; LU Cl.I

3.5.5 Sustainable Charcoal Production and Consumption Targets ::i5 co 3: Cl.I c; Targets for sustainable charcoal production are based on the amount of firewood that is saved by switching Cl.I a: to improved charcoal production. The target is to improve charcoal production efficiency from the current 20% to 35% by the year 2030. This will result in the saving of 8.176 million tonnes of firewood in 2030, or a 37.7% reduction in firewood consumption. This also represents a saving of 64,150 hectares of land in 2030. The USAID- supported A2C initiative aims at a 25% reduction in charcoal consumption by 2026 through the promotion of fuel switching from charcoal to alternatives, such as LPG, sustainable biomass (e.g. pellets), c; co ethanol, electricity and biogas. Furthermore, the promotion of improved charcoal cookstoves, such as the C: c; EcoZoom charcoal stove, would reduce charcoal consumption by about 45%. 0 "fl < >- 0, a:; c; LU Cl.I ::i5 co 3: Cl.I c; Cl.I a: -"' 0 3: Cl.I E co u:: c; 0 ·.;:; co E Cl.I E Cl.I 0. E Renewable Energy Strategy and Action Plan I2022 Renewable Energy Strategy For Zambia to meet its RE targets and achieve the corresponding national strategic developmental objectives presented in Section 3.5, it is necessary to improve the RE market conditions and enable wide- scale investment in and the adoption of RE technologies. Transforming the RE market in Zambia requires the removal of the identified market barriers, which may be achieved through implementing sets of complementary market interventions. These interventions collectively create an enabling environment conducive to supporting and facilitating the rapid growth of the RE sector. Creating such an environment goes beyond developing policies and enacting regulations to make the market attractive for investors, project developers and end users. It includes availing appropriate financial and risk mitigation, building capacity, enhancing skills, setting and enforcing standards, developing and sharing market intelligence and accurate information on the sector, securing political commitment and mainstreaming RE into national development. It is important to implement complementary measures to create sustainable growth in the RE market, which in turn will enable the attainment of Zambia's RE strategic objectives and, ultimately, its vision of universal modern energy access and sustainable development. Key Elements of the Strategy The RESAP is built on identified market enablers, expected to facilitate both supply- and demand-side investments and ultimately upscale RE development. At this stage in Zambia, the RE market needs to be stimulated, supported and, to some extent, regulated to realise the scale and attain national energy access goals. Establishing the enabling environment demands that Zambia focuses more on creating a viable and self- sustaining market for RE in the long-term rather than one-off projects and pilots. A conducive market attracts private sector investment, which results in a reasonable return on investment and enables the sustainable uptake of energy services. Such enabling conditions need to be long-term and predictable as opposed to stop- and-go policies. While the government can send the right signals by stimulating the market and ensuring correct pricing and stability of energy markets, the private sector needs to play its part alongside the public sector by contributing to exploring the market possibilities and showing proof of concept by conducting feasibility studies. Long-term planning accompanied by an investor-friendly procurement framework is important to boost the confidence of project developers and ensure commitment to investing in the RE sector. Furthermore, Public Private Partnerships (PPPs) should be encouraged to promote trust and confidence in the sector. These interventions must be accompanied by a strong political commitment and practical follow-up actions by both the public and private sectors. In addition, it is important to address gender and equity dimensions, including gender- specific awareness-raising, in all proposed measures to ensure the inclusive development of the RE industry. 4. 1. 1 Political Commitment and Action Strong political will and commitment by the GRZ, including long-term (financial) commitment, are critical to attaining RE targets. The government needs to act and show proactive initiative in developing the RE market by allocating financial resources, ensuring policy consistency and enact ing visible leadership that engages with and offers support to market actors. Having good policies and regulations on paper will not result in market development unless they are accompanied by sustained activities. Renewable Energy Strategy and Action Plan

4.1.2 Mainstreaming Renewable Energy, Including Gender Considerations RE needs to be mainstreamed in national development strategies, plans and initiatives to facilitate integrated energy-economic models that promote PUE and related support across various economic value chains. In order to ensure that both men's and women's energy needs are addressed and that the RE sector contributes to increased gender equality, the implementation of the RESAP will incorporate relevant activities that promote gender equality and social inclusion.

4.1.3 Champions Sector-specific or technology-specific champions for RE in the country are important for driving sectoral activities to ensure RE targets are achieved. In order to sustain the momentum, such champions must be the driving force behind achieving national targets and instrumental in mobilising other relevant players to achieve the shared national vision. Champions' belief in the desired outcomes and their positive contribution C: (tJ a: to solving contemporary problems are instrumental in driving the required changes. These champions include C: 0 private sector entities, associations, public sector bodies and other platforms. Consistent policy support for ·n <( the champions is necessary to assist them in achieving their goals. > en ~ C: LU

4.1.4 Alignment with Regional Renewable Energy Strategies IIJ J:l (tJ Zambia is part of the Southern African Development Community (SADC) and Common Market for Eastern and ~ C: IIJ Southern Africa (COMESA). These two regional organisations have developed Renewable Energy and Energy a: Efficiency Strategies and Action Plans, which need to be aligned with national RE strategies. These regional strategies, among other measures, aim to support the growth of regional markets through the harmonisation of RE policies, regulations, standardisation and capacity building. Therefore, Zambia is expected to align its national RE strategies with these regional strategies . .... ..::<: 0 3,: IIJ E Proposed Measures ~ LL C: 0 4.2.1 Develop and/or Update Relevant Policy and Regulatory Framework - ·.;:: (tJ C: IIJ E Zambia needs to create an enabling environment for RE to catalyse commercial activities in the emerging IIJ C. market, thereby facilitating growth in the sector. This includes implementing enabling policies and regulations, .§ streamlining licensing procedures and availing appropriate economic policy instruments. Furthermore, RE standards need to be developed and enforced to ensure the sustained dissemination of technologies. These policy and regulatory changes will attract more RE investment and consequently increase the contribution of RE to the energy mix. It will spur an increase in the adoption of and access to modern energy services and improve opportunities for rural growth and sustainable development.

4.2.2 Develop Innovative Financing Mechanisms There is a need to provide affordable finance to support both supply- and demand- side investments. For RE developers, innovative financing combined with de-risking instruments are required to improve the viability of their projects, but mature RE markets can only be achieved with large-scale public and private investment. Thus, there is a need to develop innovative financing mechanisms tailored for the local market and relevant business models. This should be supported by funding mobilisation, including tapping into green financing vehicles available via climate change mitigation (such as the Green Climate Fund and carbon credits facilities). Improved access to affordable finance will lead to increased RE diffusion and, ultimately, improved energy supply and security. Renewable Energy Strategy and Action Plan I20U

4.2.3 Undertake Power Sector Reforms Attracting grid-connected RE investment in the power sector requires the establishment of a suitable market structure within which there is fair and non-discriminatory network access for IPPs. This also requires power sector institutions that are financially and technically strong to support a flourishing RE market. A key precondition to increasing non-discriminatory access to grid-connected RE is, therefore, the reform of the power sector, investment in the network and the creation of a wholesale electricity market. This will entail restructuring power sector institutions and rationalising electricity tariffs to improve the technical and financial performance of the power industry. Restructuring the power sector will also involve optimising the organisational processes and structures in order to improve their performance. This is necessary to remove structural impediments under the current market regime and facilitate private sector participation. The restructuring will include financial, operational and organisational aspects to improve financial management, operational efficiency, accountability and :x, I'!) ::::, communication in the market. There is a need to establish an Independent System Operator (ISO), which would be responsible for planning generation capacity, entering into PPAs with IPPs, dispatching the generated i Q) CT power and coordinating the wholesale market for electricity trading. The Energy Regulation Board (ERB) will ii,' need to establish clear rules for operationalising the network open-access regime and the wholesale market m ::::, I'!) to minimise regulatory uncertainty. Similarly, other public and private sector bodies require institutional re- IQ '< imagining to make them more effective and efficient. This includes revising the reporting channels between > MoE and the power sector institutions, such as the Industrial Development Corporation (IDC) and ZESCO. ~ o· ::::, "'C ii>

4.2.4 Promote Productive Use of Renewable Energy ::::, If the off-grid and RE rural markets are to be sustainable, the provision of modern energy services via RE should be linked to economic activities. Given that the rural market in Zambia is mostly agrarian, catalysing increased agricultural productivity and building supporting agricultural industries is the best activity to 3 "C increase economic activities in rural areas and support the productive use of electricity. However, other ii,' productive uses of energy, such as timber processing, welding, carpentry, hair salons and information 3 I'!) technology businesses, can also be nurtured. In addition, public services, such as healthcare, education and ..... ::::, ..... Q) clean water supply, can also benefit from RE provision. These social development aspects cannot be left to o· ..., ::::, the private sector to nurture - this is the role of the state and civil society. iil 3 i0 There is a need for enhanced coordination in planning between the energy and economic sector ministries, ~ such as agriculture, livestock, fisheries, industry, commerce and mines. Information sharing among the various agencies implementing RE programmes is vital to enable MoE to support the sector more effectively. Energy- centric rural development strategies should follow integrated energy-economy models, especially prioritising the water- energy- food nexus and climate resilience as key elements of the modern rural development framework. Such rural growth strategies should also be modelled based on an 'ecosystem approach' that supports entire value chains from energy provision, economic production and access to markets. This can include supporting energy-driven agricultural value chains, including RE-based water pumping, irrigation, mechanisation, post-harvesting value addition, agricultural processing, cooling, transport and cold storage chains. This can be expanded to other non-agricultural PUE activities that support local industries, such as the use of power tools. Renewable Energy Strategy and Action Plan It is important to note that in order to increase RE for productive use, there must also be a strong focus on accelerating the use of clean energy for cooking, either through RE or other clean energy technologies. This would free up considerable amounts of time for households, especially time spent on firewood collection, which is mainly performed by women and children, thereby increasing the time available for economic activities. An overarching element of this rural energy market development should be a mainstreaming engagement between beneficiary communities, the private sector and public entities.

4.2.5 Enhance the Biomass Energy Market While other RE technologies are suitable for providing electricity, biomass energy is the only RE resource that can substitute for fossil fuels directly and provide for many of the thermal energy needs. There is recognition in the country that a gap still remains in satisfying thermal energy needs, especially of the poor majority. While solar PV is able to provide lighting and low power applications, there is no concrete RE alternative to C: firewood and charcoal in Zambia. There is also no substitute for petroleum fuels used for transportation, at co a: least at the moment when electric vehicles are not yet widespread. C: 0 ·u <( There are opportunities for using modern biomass energy to supply the cooking and heating needs as well >- c, as transport fuel. This will result in improved welfare and productivity, especially for women, a reduction in ~ w C: indoor air pollution and reduced deforestation. However, modern biomass energy is not well developed in Q) :c the country and has not received much support. Therefore, there is a need to create and scale- up modern co biomass energy markets in Zambia by providing market data, identifying finance and business models, f C: Q) building capacity and supporting its large- scale roll out. In addition, there is a need to foster synergies a:. between forest and energy policies to support the modernisation of biomass energy.

4.2.6 Enhance Information and Knowledge Dissemination .... ..:.:: 0 Information is an important ingredient in decision-making across the sector, from public bodies to the private ~ Q) sector and end users. This includes baseline market information on technology-specific market evolution E ~ and dynamics, track record and lessons learnt from applied business models, potential and feasibility of LL C: 0 different technologies, market mapping of value chains and potential project sites, financial modelling and - ·.= co C: Q) E Q) costing. This information, which is necessary for proper planning, should be collected, analysed and packaged appropriately for various audiences in the market and disseminated in a timely manner. a. .E The provision of market intelligence, resource maps and clear regulations is very important in assisting the private sector in understanding the market opportunities and risks. Policy makers also require market intelligence to develop appropriate policies, regulations, financing schemes, incentives, subsidies and tariffs to support the growth of the industry. It is especially important to collect and analyse information to monitor and evaluate financial instruments to ensure that the intended beneficiaries are benefiting from such schemes. In addition, it is vital to provide relevant market information to end users to improve awareness and enable them to make informed choices on technology options and performance, system size, financing options, support services and contracts. These interventions should build on various MoE initiatives supported by DPs, such as an RE knowledge management system, a coalition platform activities and Energy Access Explorer, an Energy Sector Management Information System, an NGO RE&EE Platform, project site maps for mini-grids and other. Renewable Energy Strategy and Action Plan I2022

4.2.7 Promote Capacity Building Capacity building is required to improve the performance of the actors across the RE sector, from decision makers and installers to end users. Government agencies require continuous capacity building to remain abreast of the dynamic RE industry. There are various technical aspects that have to be mastered to enable the public sector to execute its oversight and regulatory roles efficiently. For the private sector, capacity building will include training for developers on project packaging to enable them to produce bankable project proposals with an attractive value proposition that can generate sustainable revenue streams. Within the financial sector, the capacity to undertake due diligence of RE proposals is limited despite the isolated and project-linked capacity building, e.g. DBZ. For operational personnel, there is a great need to train a cadre of technicians that can support the design, installation and maintenance of the various RE technologies, such as biogas digesters, SHS and solar water heaters. Training should be accompanied by accreditation to ensure quality workmanship. These interventions can build on support from past and ongoing capacity building initiatives in the sector spearheaded by MoE and supported by DPs. The RE market is also fragmented, with project developers, operators and importers operating in silos, and thus, should be better organised and strengthened. Strong RE industry associations could support their members and collectively respond effectively to market challenges. Likewise, government agencies and other public sector bodies require improved coordination. Across the sector, the collaboration of practitioners is vital to create synergies. This includes reconceptualising business models and promoting coalitions, such as the PPPs, improving the sustainability of RE projects and programmes. In particular, it is important for market actors undertaking RE projects or programmes to engage with MoE so that the Ministry is aware of activities being undertaken in the country and can keep track of these activities, capture important project information and react to any obstacles in their implementation. 3 "C ii,

4.2.8 Promote Research, Development, Demonstration and Deployment 3 (I) ::::, ,-+ Q) ,-+ Given the limited RE Research, Development, Demonstration and Deployment (RDD&D) activities in the s· country, Zambia needs to support and nurture both RE technology hardware innovation, demonstration and ..., ::::, 0) commercialisation and the supporting soft market elements. RDD&D in RE hardware is important for improving 3 performance of existing technologies, adapting technology for different settings, developing new solutions ~ 0 to existing challenges and test new ideas in a dynamic market. For RE, it is important to support RDD&D to ~ ensure that technologies on the market are suited to the market needs and are affordable. Reducing the cost of RE products by identifying cheaper materials or investigating opportunities for increasing local content in system components, has the potential to lower the cost of RE technologies, thereby increasing uptake. Demonstrations of technologies are essential to increase awareness and show proof of concept. This will encourage increased adoption of RE and the corresponding access to modern energy services together with all the developmental benefits. However, there is a need to conduct research on the supporting soft technology aspects through the systematic collection and analysis of market data to inform policy formulation and the design of supporting regulations and instruments. In addition, there is a need to undertake systematic impact assessments of policies, regulations, programmes and projects to assess the implementation relevance, efficiency, effectiveness and sustainability. This is important to facilitate evidence-based decision making and the development of market interventions. The RDD&D activities will build on the MoE's recently developed Energy Sector Research and Development Strategy. Renewable Energy Strategy and Action Plan

4.3 Linkages Between Measures and Strategic Objectives As shown in Table 4, all the proposed measures to remove market barriers contribute to the attainment of the national RE strategic objectives. For example, to achieve any of the strategic objectives would require policy and regulatory support. However, the linkages vary in strength, as shown by the shaded boxes that depict stronger linkages between the measure and the strategic objective. Table 4: Matrix ofLinks Between Strategic Objectives and RE Measures >- .. C cu cu C, Ill i;l Ill._ CII CII U C g CII e cu cu C .. 0 . . C/1 .. .. !::I C IC7I cu ;- E :g ::I 0 .: ·.:: cu .: ., C .. i:,i"i, cu cu -i, -i,~5 C E 171 :! .. -a E cu >- cCE Measure/Strategic Objective .=!:.: CII C11 Ill Ill "D C11 111 . . ca·- cu C/1 · - ... ~ii ~ ._,_ ·-s 0 CL .5 > ·- ~ 111,_ •- la C >.: 0 _ _0_. C g: i l3 0 .2 cu .. .. ::I D. CII . . E'ii 0 > e.5 ~ ... > co 1l 0 ti E ~ u u EC~ .. cu a..-i, a. E C la CL la E cu C a: C ._ - C, _C .O, Ill CII - C CU Ill - cu·- ll. -i, - la u - .: cu C 0 ·u < l .Develop and/or Update Relevant Policy and Regulatory Framework ✓ ✓ ✓ ✓ >, 0, 2.Develop Innovative Financing ~ ✓ ✓ ✓ ✓ ✓ ✓ ✓ C w Mechanisms Cl) :c co 3.Undertake Power Sector Reforms ✓ ✓ ✓ ✓ ✓ ✓ ✓ ~ Cl) C Cl) 4.Promote Productive Use Of RE a: ✓ ✓ ✓ ✓ ✓ ✓ ✓ 5.Enhance the Biomass Energy Market ✓ ✓ ✓ ✓ ✓ ✓ ✓ 6.Enhance Information and ✓ ✓ ✓ ✓ ✓ ✓ ✓ ~ ... 0 Knowledge Dissemination ~ 7.Promote Capacity Building ✓ ✓ ✓ ✓ ✓ ✓ ✓ Cl) E ~ LL 8.Promote RDD&D C 0 ✓ ✓ ✓ ✓ ✓ ✓ ✓ - ·.= co C Cl) E Cl) Key: ✓ represents alink between the measure and the strategic objective Q. Grey shading represents astrong link between the measure and the strategic objective. .E Renewable Energy Strategy and Action Plan I2022 Renewable Energy Action Plan The RE Action Plan presents detailed activities that need to be implemented as part of a roadmap that will guide the country in creating a flourishing RE industry and attaining the national RE objectives and targets. These activities are designed to overcome the identified market barriers that have been hindering the adoption and diffusion of RE in the country. Develop and/or Update Relevant Policy and Regulatory Frameworks Zambia has made significant strides in creating an enabling environment to make the RE sector attractive for investment and the uptake of RE technologies. Despite the difficult macroeconomic environment, Zambia has managed to put supportive policies and a regulatory framework for the deployment of RE in place. However, these policies and regulations are still largely on paper and need to be operationalised and tightened to catalyse the market. The Electricity Act No. 11 of 2019 and the Energy Regulations Act No. 12 of 2019 are considered to be very progressive, but their provisions need to be tested in practice to provide market confidence. Other regulations still need to be further refined. Similarly, various licensing and permitting procedures need to be fine-tuned to address various unnecessary bottlenecks that affect the efficiency of investment and market activities. The proposed policy and regulatory changes and their successful enactment will eventually create a conducive environment for upscaling RE in the country.

5.1.1 Activity 1: Revise, Test and Enact the Mini-Grid Regulations Justification: A regulatory framework for mini-grids in Zambia was approved by ERB in 2018. These regulations were based on the Electricity Act of 1995 and differentiated three mini-grid categories by scale, i.e. less than 100 kW, 100 kW to 1 MW and above 1 MW, which affects the tariffs, standards, and compliance and monitoring protocols for each band. However, the Electricity Act No. 11 of 2019 has provisions for licensing under different bands, i.e. below 250 kW and 250 kW and above. Thus, while the basic framework is now in place, the mini-grid regulations need to be aligned with the Electricity Act No. 11 of 2019 and Energy Regulations Act No. 12 of 2019. In addition, there are other elements in the regulations that need to be revised and tested to provide clear guidance to the private sector. The revision of mini-grid regulations includes making clear distinctions between heavy- and light-handed regulations for different scales of mini-grid investment. In addition, grid encroachment provisions are still a cause for concern among developers and require further refinement. Tariffs for mini-grids also need revisiting to develop clear guidance on how to cover the viability gap. Lessons learned thus far point to the need to conduct market or feasibility assessments for each mini-grid to ensure the sustainability of investment in mini-grids. As a basic requirement, RE developers need to engage with ZESCO, REA and ERB before they install any mini-grid. It is important to periodically review the regulations and learn by doing, given the relatively nascent business concept in Zambia and the dynamic nature of the subsector. A simple process for the efficient review of regulations needs to be developed in order for mini-grid developers to provide coordinated feedback to ERB and platform or working group to facilitate continuous dialogue with the regulator. Clear and transparent mini-grid regulations will engender confidence in the subsector and attract more investment by the private sector, especially given the increased investment in mini-grids in the country. Timeline: It is anticipated that the alignment of mini-grid regulations with the new Acts will be completed in the short-term (by the end of 2022), but further refinement will be an ongoing exercise in the medium-term (up to 2025) as the market gains experience and more feedback is provided by market participants. 35. Regulatory reviews will be mainly initiated by the private sector to suit changing business models and the market; the process will be fully inclusive and participatory and geared towards continuous improvement of the investment climate. Ultimately. regulatory reviews will be for the benefit of the private sector as well as meeting the long-term national development ambitions. Renewable Energy Strategy and Action Plan Measurable Indicators: Indicators of success for this activity will be mini-grid regulations that are successfully C co aligned with new Acts, tested, gazetted and deployed. The number of complaints and disputes involving the 0:: C mini-grid developers should also decline. 0 'j >,. Responsible Parties: This activity will be led by ERB, which will coordinate the review and updating of the E' CII C regulations. In addition, MoE, Solar Industry Association of Zambia (SIAZ), REA, ZESCO and Africa Mini- I.I.I CII grid Developers Association (AMOA) will provide support, contribute inputs and participate in working group :2i consultations on this activity. i C CII cc: Resources: Funding will be required to develop the regulations. This support is currently provided by the EU's IAEREP project in the form of consultancy fees. There will be a need for funding for consultations with and meetings of the working groups . ..:.:: 0 Preconditions: This is an ongoing activity that needs to be sustained until the regulations are formally f gazetted. Therefore, its completion depends on continued funding by the EU and the active participation of E ~ stakeholders, including the private sector. LI.. C: 0 -~ 5.1.2 Activity 2: Streamline Renewable Energy Developer Licensing Procedures C: CV E CV ci. Justification: The current application process for an RE developer licence is elaborate and involves obtaining _§ several rights, permits, licences and approvals from numerous government agencies. Depending on the procurement process, the licensing process can include obtaining an Implementation Agreement from MoE, an Investment Licence from the Zambia Development Agency (ZDA), a Construction Licence and an Operational Licence from ERB, just to name a few. This process needs to be streamlined by establishing an efficient one-stop-shop to reduce the burden on RE project developers and speed up the entire process. Reduced bureaucracy in the licensing process will certainly be welcomed by the project developers. Timeline: The timeline for implementing this activity involves developing the concept (2022 to 2024) and testing (up to 2026). Measurable Indicators: Expected outputs will include establishing a one-stop-shop that successfully facilitates the licensing process. The activity should decrease the licensing time, increase the number of successful applications and decrease the number of recorded complaints. Responsible Parties: This activity will be led by ERB in collaboration with a working group comprising the MoE, Ministry of Lands and Natural Resources (MLNR), Ministry of Tourism and Arts (MoTA) and other relevant government bodies involved in the licensing process, such as WARMA, ZDA, ZEMA. NHCC, Business Regulatory Review Agency (BRRA) and organisations, such as SIAZ, Zambia Renewable Energy Association (ZAR ENA), AMOA. ZESCO and REA. While public sector bodies will ensure that key provisions for licensing are considered, the private sector will provide relevant inputs into the process. Resources: This activity will require funding to develop the one-stop-shop concept and for convening working group meetings and other public consultations. Preconditions: Funding will be required for the development and implementation of the one-stop-shop concept, including any tools and staffing. Its success will rely on the cooperation of relevant public entities. Renewable Energy Strategy and Action Plan I2022

5.1.3 Activity 3: Streamline and Harmonise the Land Use Permitting Process 't; Justification: Applications for land use permits is relevant, as RE developers have to deal with several public :::, bodies and have encountered inconsistencies in the way in which local authorities conduct the application ; QI er process, which delays the approval of site permits. Therefore, the land use permitting process needs to be ii" m :::, streamlined and harmonised through a land- use application charter, which will be adhered to by the various Ill institutions involved in order to maintain consistency in the application procedures and ensure accountability. ~ This will assist investors by reducing delays in investing. ro· :::, "C Timefine: Revising the land use permitting process will be undertaken from 2022 to 2024. Testing of the iii' :::, new procedures will be carried out in the following two years (up to 2025), during which time feedback from stakeholders will be used to refine the permitting process. Measurable Indicators: This activity will be considered a success when the land use permit application charter has been successfully developed and deployed. This activity should decrease the duration of the 3 "C ~ licensing procedure considerably, increase the number of successful applications and decrease the number 3r1) :, of complaints. a5 · :, Responsible Parties: This activity will be coordinated by MLNR and MoE, with key support from ERB, REA, "T1 iil Ministry of Local Government and Rural Development (MLGRD}, local councils, Society of Local Authority 3 r1) Chief Executives and NHCC. A working group will be formed around the current AMOA to support discussions ~ ~ around the development of the licencing. Resources: Additional funding will be required to leverage the current resources deployed by AMOA. Preconditions: This activity will build on the AMOA and Off-Grid Taskforce (OGTF} initiative to develop a national standardised land use permitting charter and train local authorities. Its success will depend on continued funding support and the cooperation of public entities, especially traditional leaders.

5.1.4 Activity 4: Streamline the Environmental Impact Assessment Procedures Justification: RE developers in Zambia, especially small- scale developers, consider the current EIA procedures a burden that adds unnecessary costs and delays to project start-ups. Current legislation does not provide clear criteria for EIA requirements to guide inspectors. ZEMA has a limited capacity as the body responsible for issuing EIA permits, which leads to long processing times. Thus, there is a need to develop templates for creating project briefs and environmental management plans, which will reduce the turnaround time for preparing and processing applications. This activity will include a review of the EIA permitting process and the development of simple but robust EIA procedures with clear and transparent guidelines for ZEMA and developers. Distinct EIA permitting requirements and processes will be developed for small- and large-scale RE projects and technologies, with standardised reporting templates for developers to use. This activity will also include the development of minimum social and gender requirements for the EIA and Environmental and Social Management Plan guidelines and templates initiated by MoE. Capacity building within ZEMA will be undertaken to enable the organisation to support the EIA process more effectively. Timeline: Reviewing the EIA procedures and improving/developing guidelines and standardised templates will be conducted from 2022 to 2024. Renewable Energy Strategy and Action Plan Measurable Indicators: This activity has several outcomes and outputs. The EIA permitting procedures will be C successfully reviewed and revised. The templates for EIA reporting will be developed and adopted. The time ca 0:: needed to process an application for an EIA permit will be significantly shortened. With regard to capacity C 0 building, several ZEMA personnel will be successfully trained. The screening procedure for consultants will ! >- be successfully developed, and the quality of the EIAs will improve. Duplication between NHCC and ERB will be minimised, and application costs will be significantly reduced. e' GI C LLI GI Responsible Parties: This activity will be led by ZEMA and ERB with support from MoE and Ministry of Water ii Development and Sanitation (MWDS). A working group, including NHCC, AMOA, SIAZ, ZARENA, Biofuel ~ C Association of Zambia (BAZ) and EIA experts from academia, will support the revisions. Capacity building in ~ ZEMA will ensure that EIA inspectors consistently apply the new EIA procedures. Resources: This activity will require funding to review and develop revised EIA procedures. Funding will also be required to convene the working group and other stakeholder discussions. In addition, resources will be ..:.:: 0 required for capacity building at ZEMA and with prospective developers. f E ca it Preconditions: Funding will be required for developing and implementing revised EIA procedures, including C: 0 any training and tools required to implement them. -~ 'E cu E 5.1 .5 Activity 5: Develop New Renewable Energy Standards cu a. E Justification: Standardisation is important to ensure quality control and protect consumers against poor- quality products. It is also useful to ensure safety, cost reduction and market confidence. Therefore, there is a need to develop new standards for all RE technologies, including wind, geothermal and biomass. This includes standards for system equipment specifications, system design, installation, testing, operation, maintenance and fuel specifications. Timeline: The development of new standards will be undertaken over a two- year period, starting in 2022. Measurable Indicators: The activity will result in new standards being successfully developed and gazetted, increased compliance with regulatory measures, reduced number of incidences of poor-quality products on the market and a reduction in customer complaints. These activities will build on current efforts to develop standards for mini-grids and SHS and establish a laboratory for testing, led by ACE-TAF, the World Bank and IFC, in collaboration with the IAEREP programme. IFC is one of the institutions that can support future advisory services and provide technical support for standards development. Responsible Parties: This activity will be led by ZABS in collaboration with MoE, ERB and other stakeholders, such as the University of Zambia (UNZA), ZARENA, SIAZ, BAZ and DPs. Resources: This activity will require funding to engage experts who will guide the development of the new RE standards and to convene working group meetings and public consultations. Resources will be allocated to ZABS to initiate standards development rather than react to requests from the market. MoE will provide the required standards for ZABS to convene stakeholders and initiate the approval process. Preconditions: Funding is required to develop new RE standards, and the success of the activity depends on cooperation between public and private stakeholders. 5.1 .6 Activity 6: Enforce Standards for Renewable Energy in Zambia Justification: Although some RE standards exist primarily for solar PV systems, some of these standards are not mandatory, and therefore, the enforcement is not effective. There is a need to put a framework in place to enforce existing standards and new RE standards that will be developed in the future. Renewable Energy Strategy and Action Plan I2022 The enforcement of standards is critical to ensure that the industry is complying with the standards in order to protect consumers against poor-quality products and workmanship. 'f; :::, Timeline: The development and implementation of the standards enforcement framework will take place ; I» C" from 2022 to 2030, considering that some standards have not yet been developed and the market for some ii' m :::, technologies may still need to develop. ftl ~ Measurable Indicators: This activity will result in the successful development and launch of a RE standards ~ s· enforcement framework. Compliance with regulatory measures will increase, resulting in fewer poor-quality :::, "ti products entering the markets and a decrease in the associated complaints. iii :::, Responsible Parties: This activity will be led by the Zambia Compulsory Standards Agency (ZCSA) and ERB, with support from MoE, ZABS, ZRA, Zambia Information and Communication Technology Authority (ZICTA), UNZA, SIAZ and ZARENA. A working group will be created to support the development of the standards enforcement framework. 3 'O ii' 3 (1) Resources: Funding will be required to develop the framework, convening stakeholder consultations and funding the ZCSA's human and institutional capacity building. - 3. I» i 5' ::, "Tl iil Preconditions: Funding is required for developing and implementing the standards enforcement framework. 3 (1) ~ ~

5.1.7 Activity 7: Review and Revise the Renewable Energy Economic Instruments and Incentives Justification: Currently, GRZ has put in place RE incentives based on SI 17 and 104 which exempt key solar PV components from import duties and VAT respectively. While some solar PV components are currently exempt from the two stated taxes, other non-solar RE technologies are not. This discourages investment in the non- solar RE in the country. This activity will develop clear and comprehensive guidelines for all RE technologies that need to be exempted from VAT and import duties. There is need for periodical capacity building of both ZRA staff at ports of entry and clearing agents to ensure correct and consistent implementation of the two Sis. This activity will include the revision of some clauses of the instruments to consider changes in the market and economy. Periodic reviews of incentives will be necessary to assess the impact of the instruments, to ensure that the benefits accruing from the incentives are actually trickling down to the intended beneficiaries and to reduce the number of 'free-riders'. There is also a need to review the fiscalisation taxation system for RE businesses, which is applied on 0.5% of turnover. This tax is eroding all the benefits that accrue from exemptions and affecting the viability of RE businesses. Timeline: The timeline for this activity is from 2022 to 2026. Measurable Indicators: These indicators include the number of economic instruments successfully revised and adopted, successful training of public officials, reduced incidence of complaints about the inconsistent application of RE incentives, successful development of a Customs Handbook and review of the f1scalisation taxation for RE SMEs. Responsible Parties: This activity will be led by Ministry of Finance and National Planning (MFNP) and MoE, with support from SIAZ, ZARENA, BAZ, AMDA, ERB and ZRA. MoE will steer and coordinate the process, and MFNP will provide guidance and assess the implications of the economic instruments and taxation. Other technical experts, such as RE industry experts, will identify the relevant RE components that need to be incentivised. Renewable Energy Strategy and Action Plan Resources: This activity will require funding to review and revise the economic instruments and train the C public officials. Additional financial resources will be required to broaden the scope of RE technologies that CV 0:: need to be incentivised. In addition, funding will be required to convene a working group that will support the C 0 development of the economic instruments, including convening stakeholder consultations and hiring experts .ti <>, to provide technical inputs. E' GI C LLI Preconditions: This activity will build on work being done by ACE-TAF on reviewing RE fiscal measures in GI 25 collaboration with MoE, MFNP and IFC. The ACE-TAF has been supporting GRZ in developing a fiscal i C GI incentive assessment programme, including tools to assess the status and impact of RE fiscal incentives. In addition, the ACE-TAF has supported the review of Statutory Instruments 32 (Custom and Excise Act), and 33 cc (Value Added Tax Act). The ACE-TAF has also supported the development of a Customs Handbook, which helps to clarify tax and duty exemptions for a range of SHS systems being sold in Zambia. The current ACE-TAF programme builds on the USAID-supported Southern Africa Energy Programme (SAEP) collaboration with MoE and SIAZ to clarify the rules relating to RE exemptions. In addition, the training of .:.: 0 public officials will build on the work that SIAZ has already done in the past and the ongoing activities by the 3: Q) ACE-TAF. The success of the activity will depend on continued funding for revising and implementing the E (ti financing instruments and training. Lt C: 0 -~ E 5.1.8 Activity 8: Finalise and Gazette the Charcoal Regulations Q) E Q) Justification: Even though the charcoal market is worth an estimated USO 600 million a year, representing C. E about 2.6% of Zambia's GDP and providing income-generating opportunities for roughly 500,000 people, it is largely unregulated. This has resulted in the unsustainable production and utilisation of charcoal, leading to significant negative environmental and health impacts. In recognition of this, MGEE has drafted the Forest (Charcoal Production and Transportation) Regulations, 2017, which aim to manage the production, conveyance and, to a lesser extent, trade of charcoal in a sustainable manner. These regulations need further refinement, followed by gazetting and enforcement. Timeline: It is anticipated that the regulations will be further refined by the end of 2022 and be ready for gazetting in the first quarter of 2023. Measurable Indicators: The primary indicator for success will be the successful testing, gazetting and deployment of the charcoal regulations. Responsible Parties: This activity will be led by MGEE, which will coordinate with MoE and be supported by other relevant bodies. Resources: Funding will be required to refine the regulations and facilitate their deployment. The USAID-funded Alternatives to Charcoal (A2C) project is well-positioned to support elements of this in coordination with other DPs. Develop Innovative Financing Mechanisms Financial and economic challenges are impeding the growth in RE investments in Zambia. The cost of capital is high and borrowing conditions are not sustainable. This is worsened by an unstable local currency and the poor pricing of energy services in a struggling market. International finance programmes have not benefitted the target businesses and are inadequate to meet the demand for financial and economic instruments to scale up market activities. 36. This activity will build on activities under the FCDD-supported IRP process being implemented by the Cities and Infrastructure for Growth Zambia. which was launched in 2021. 37. The Economic Recovery Programme provides a clear roadmap of strategic policy actions and enablers required to revive the economy over four years (2020-2023). The objec lives of the Economic Recovery Programme are to restore macroeconomic stability. attain fiscal and debt sustainability. restore growth, dismantle domestic arrears and safe guard social sector spending (MoF and MNDP. 2020. Economic Recovery Programme 2020-2023) Renewable Energy Strategy and Action Plan I2022

5.2.1 Activity 1: Review and Rationalise Electricity Tariffs and Renewable Energy Pricing Justification: Electricity tariffs that are not cost-reflective are an impediment to investment in the power ~ :::, sector, as the national utility is not generating sufficient revenue to cover electricity supply costs and generate ; II> er a reasonable return on investment. This has led to ZESCO's poor financial performance and negatively ii' m impacted the utility's creditworthiness. If the market is to attract private investors, it is necessary to review ,,, :::, the tariffs and migrate towards cost- reflective electricity tariffs, which will help to improve the financial ~ position of ZESCO and bring confidence back to the market. ZESCO's financial stability will enable the utility to be bankable and allow financiers to resume funding of IPPs. r i5' :::, "ti i» :::, Although this activity affects broader sustainability in the power sector, it specifically affects investments in RE, as IPPs are unable to secure financing for projects when the preferred off-taker is financially insolvent. This activity will be linked to the financial recovery plan, broader Economic Recovery Programme and reforms in the power sector, which are also recommended in this strategy. The rationale is that inefficiencies in the power sector and uncollected revenue may negate any adjustments in tariffs. 3 'C ii' 3 n, -a Timeline: Although tariff reviews will be an ongoing exercise, the timeline for implementing energy pricing Cl) rationalisation is from 2023 to 2024. This initial exercise will develop a Multi-Year Tariff Framework that o · ::::, will allow ERB to receive and review a tariff application from a regulated entity once every five years and "Tl iil automatically adjust the tariffs in the years between filings. 3 n, :e 0 Measurable indicators: In the short term, indicators will include the successful adoption of cost-reflective ~ tariffs. In the long term, up to 2030, indicators will include improved utility/developer revenue flows, increased number of PPAs concluded and an increase in successful investment in the RE sector by IPPs/the private sector. Responsible Parties: ERB will lead the review of energy pricing in collaboration with MoE, MFNP and ZESCO. ERB's role is to guide the process of tariff review as the body mandated with setting energy pricing in the country. Other bodies will provide inputs to ensure the appropriate technical and socioeconomic factors are considered. Resources: This activity will require funding to develop the Multi-Year Tariff Framework. This exercise will involve stakeholder engagement and, consequently, a budget is required for convening public consultations. Preconditions: The CoSS will be published in 2022 and provide the basis for a strategic and gradual transition (future tariff path) from existing financial cost-based tariffs to economic cost-reflective tariffs. Thus, this activity will build on the Coss and the Multi-Year Tariff Framework to deliver robust economic cost-reflective tariffs that will allow the power sector to be sustainable from 2023 to 2024. The success of this activity will depend on political will and cooperation from the treasury and other public entities.

5.2.2 Activity 2: Improve and Scale Up Existing Renewable Energy Financial Instruments Justification: Some recent financing schemes have been useful in catalysing RE market activities, but these programmes have been one-off programmes and pilots that impact few beneficiaries and have limited funding. In order to achieve the wide-scale diffusion of RE, there is a need for long-term inclusive programmes. This activity seeks to review recent and current financing schemes to identify weaknesses and gaps in their implementation. A typical complaint is that most of the financing schemes do not trickle down to the RE businesses that need support the most, and the financial institutions do not pass the benefits from such schemes on to SMEs. 38. SMEs in the RE sector include startups, typically with a small number of employees. limited turnover and undertaking small projects, such as small-scale mini-grids, SHS installations and biogas installations. Renewable Energy Strategy and Action Plan Some international financing schemes do not benefit local RE players, as the conditions inherently exclude local companies. Local companies are excluded because they are not experienced in writing proposals. In C cu addition, the bidding specifications are exclusionary and favour international companies, e.g. requirements 0::: for companies to have minimum balance sheet levels, experience in investing in large-scale projects and a C 0 significant depth of engineering expertise. In addition, local banks charge high bank fees for international ~>, transactions, thus, limiting the benefits of international financial instruments. Therefore, there is a need to E' review and reframe existing financial programmes to ensure that local SMEs get support. Options around GI C LU supporting SMEs include partnerships between international and local companies and PPPs. An alternative GI procurement system could allocate a quota for local companies. I C GI a: Timeline: A review of financial schemes will be implemented in 2022, followed by the rolling out of financing programmes from 2023 to 2026. Measurable Indicators: Monitoring indicators for this activity include the number of financial schemes and instruments successfully reviewed, revised, scaled up and implemented; the number of RE developers ..:0: benefitting from the schemes; and the number of investments directly supported by the funding. 0 3:: QJ Responsible Parties: This activity will be coordinated by MoE and MFNP, with support from DPs, financial E institutions and the RE private sector. ca i'.i: C: Resources: This activity will require funding to review and reframe existing financial programmes. Funding 0 -~ will also be required to convene working group meetings and other public consultations. E QJ E Preconditions: Funding is required for both revising the financial instruments and for the subsidies needed QJ C. while operationalising the instruments. The success of the activity depends on the buy-in of the treasury. E

5.2.3 Activity 3: Develop New Financing Instruments, Including Risk Mitigation Facilities Justification: Current financing schemes have not benefitted the RE SM Es. Many SMEs have closed due to a lack of long-term concessional financing coupled with the difficult market. Those that have remai ned in business are struggling and need to be supported by appropriate financing schemes. Thus, new innovative and inclusive finance (including carbon finance to support clean technologies) needs to be mobili sed to achieve scale and develop the young RE market in Zambia. A key need for such financing is to provide ZMW-denominated lines of credit. Different forms of blended finance provide financing options and can be augmented with credit risk mitigation mechanisms suited for different types of projects. Such financing mechanisms are vital to reduce the risks and costs of business and thereby encourage growth in RE investments and the uptake of energy services. In other countries in sub-Saharan Africa, local SMEs have made progress as a result of concessional financing. These financing schemes need to be accompanied by supportive policy and regulatory instruments, such as tax exemptions, to improve the affordability of energy services and help companies achieve economies of scale and operational efficiency. In addition, there is a need to provide smart subsidies (innovative consumer finance) to end users in targeted segments of the market to reduce the price of energy products. This can be paid directly to end users to bridge the affordability gap or through energy service companies. Thus, integrated financing models that cover technology value chains and include RE developers, retailers and end users need to be developed and implemented to drive growth in RE. Timeline: This activity will be implemented from 2023 to 2024, followed by pilots and the rollout from 2025. Measurable Indicators: Monitoring indicators include the number of new financial schemes developed, the amount of funding mobilised, the value of funds (loans) distributed and the number of market actors directly benefitting from the financing programme. Responsible Parties: This activity will be led by MoE and MFNP, with support from DPs, MFls, local banks and the private sector. While MoE will provide overall coordination, MFNP will provide input on the operationalisation of the financial schemes. The DPs and MFls will assist in identifying and mobilising financial resources and shaping the new financing schemes. Renewable Energy Strategy and Action Plan I2022 Resources: This activity will require funding to develop innovative concessionary finance and risk mitigation instruments. Financial resources will also be required to cover working group meetings and public ';; consultations. ::II ; II,) CT Preconditions: Funding is required for developing and operationalising the financing instruments. The success ii" m of the activity will depend on buy-in from relevant public entities, especially the treasury. ::II ID ~

5.2.4 Activity 4: Establish a Brokerage and Transaction Advisory Facility ts· ::II "ti Justification: Given the limited capacity of RE SMEs in Zambia to prepare bankable project proposals, iii" ::II it is necessary to create a unit that supports project development. Given the limited capacity for project development in the private sector, support for project preparation through capacity building is critical. The unit will also provide brokerage and transaction advice to support prefeasibility and feasibility studies, regulatory compliance, technical design and evaluation, procurement, preparation of business plans and models, financial and economic modelling, market and risk assessments and financial closure. As a unit 3 -0 ii)" housed at MoE, the Office for Promoting Private Power Investment (OPPPI) can assist in developing tools and 3 11) assisting project developers in this regard. The preparation of this written project documentation will enable a project developers to write high-quality project proposals. - Q) s::, · 'T'I iil Timeline: This activity will be implemented from 2022 to 2025. 3 11) :I: 0 Measurable Indicators: Monitoring indicators will include the successful establishment of the transaction ~ advisory unit, the number of market actors successfully trained and assisted, and the number of investments successfully developed by trained SM Es. Responsible Parties: This activity will be led by MoE and supported by DBZ and DPs. Resources: This activity will require funding to capacitate the brokerage and transaction advisory facility in the OPPPI. Further support will be needed for tools, which will be used to assist RE players during the operational phase. Funding will be required to convene working group meetings and public consultations. While support will be required initially through technical assistance and capacity building, it is expected that the country will build a critical mass of entrepreneurs who will sustain the market. Long-term follow-up support will be expected for new players, but this will not entail a cost to the government. Preconditions: Funding is required to strengthen and equip the unit, including infrastructure and staffing requirements.

5.2.5 Activity 5: Develop an Innovative E-Procurement Platform Justification: This activity will address the high transaction costs that are encountered by SMEs when developing proposals for funding. The chances of SM Es winning tenders are sometimes below 10%, despite the high cost and tedious process involved in preparing the project document. To overcome these difficulties, SM Es will submit their projects proposals using an e-procurement platform, which can provide aggregation options, and could be modelled on the innovative e-procurement platform, an RE industry platform providing tools to standardise and aggregate investment that is especially suited for small-scale distributed RE investments. Such aggregated projects can be more efficiently funded through coordinated international and local funding agencies. Aggregation can also reduce overall delivery costs by taking advantage of economies of scale and efficient procurement. Such a platform will allow for the development of a pipeline of projects for investment. This activity will be coordinated with the adoption of gender-responsive procurement, initiated by MoE under the related energy sector strategies. Renewable Energy Strategy and Action Plan Timeline:The activity for developing the procurement system will run from 2022 to 2023, and rollout will start in 2024. C ns 0:: Measurable Indicators: Indicators for monitoring include the successful establishment of thee-procurement C 0 aggregator platform, the number of projects developed on the platform and the number of proposals ~>, successfully funded using the platform. E' Cl.I C Responsible Parties: Developing this e-procurement facility will be led by MoE in collaboration with Zambia LI.I Cl.I Public Procurement Authority (ZPPA), MFNP, ERB and DPs. MoE will coordinate the working group of ::s I C stakeholders involved in designing and implementing the facility. ,! Resources: This activity will require funding to develop the e-procurement system, the infrastructure required to make it operational and the staff needed to run it. Convening working group meetings and public consultations will also require budgetary support. ..::.: 0 Preconditions: This activity will build on current MoE efforts to secure an e-procurement platform. Funding is 3:: QI required to develop thee-procurement system and the associated infrastructure. The success of the activity E (II will depend on support from stakeholders, including DPs and procurement bodies. i'.i: C 0 -~ 5.2.6 Activity 6: Develop Sustainable Models for Rural Mini-Grids E QI E QI Justification: Due to a lack of economies of scale, the cost of electricity from mini- grids is generally high. a. Mini-grid investments in rural areas are, therefore, not viable unless they are accompanied by subsidies due E to the poor clientele and the inherently high energy costs. In addition, the rural market is dispersed, making the cost of servicing such markets unsustainable. Therefore, there is a need to provide capital subsidies to rural mini-grid developers to ensure the segment is attractive for investment. These subsidies will need to vary depending on the location of the mini- grid; deep rural areas will require new models and more subsidies to ensure that they are served by modern energy services. A financial model will be developed in a consultative way to calculate the appropriate subsidies to ensure developers get a reasonable return on investment. In order to reduce the subsidy burden, it is necessary to explore mini-grid models that decrease investment costs through PPPs in which land, civil works and the distribution network are undertaken by the government, labour is provided by community beneficiaries, and the private sector focuses on the RE installation. This activity will also investigate whether the subsidies that are currently being used for rural electrification via grid extension can also be used to subsidise off-grid RE. In addition, the activity will investigate how to tap into rural electrification funds to support the private sector, especially in deep rural areas. This support could be implemented on a case-by- case basis with robust criteria. However, mini- grid developers are expected to undertake feasibility studies, and finance can be mobilised for such studies to assist with the determination of location-specific tariffs and subsidies, if applicable. Timeline: The timeline for developing the subsidy scheme is 2022 and 2023, followed by testing and roll-out from 2024. Measurable Indicators: The expected outcomes include the successful development and deployment of subsidies for mini-grids, including subsidies for deep rural areas, and increased investment in deep rural areas. Responsible Parties: This activity will be led by REA in collaboration with MoE, ERB, SIAZ and AMOA. Resources: Funding will be required to develop the mini-grid subsidy scheme and associated incentives for the off-grid market. Additional funding will be needed to convene working group meetings and public consultations. Renewable Energy Strategy and Action Plan I2022 Preconditions: These activities can build on current work and support by IFC. Funding will be required to develop the subsidy model and cover the subsidies. The success of the activity will depend on buy-in from the treasury. 'ril :::s ; ~ er - Undertake Power Sector Reforms ii" m :::s ID At the moment, ZESCO is the preferred off-taker of most IPPs. However, IPPs are at liberty to identify their own ~ power off-takers and use the ZESCO transmission line for wheeling for a fee. The utility has been struggling ~ i5" with insolvency, and this has negatively impacted its ability to pay IPPs, sign new PPAs with IPPs and roll :::s "ti out RE projects. While the Electricity Act No. 11 of 2019 provides for an open-access regime for the national iii" :::s grid, and the Grid Code provides for a liberalised market, ERB still needs to implement supporting regulations to ensure that the market operates efficiently and effectively. This includes the establishment of a true ISO.

5.3.1 Activity 1: Restructure ZESCO 3 -c ii" Justification: The restructuring of ZESCO is part of the broader power sector reforms. As the national utility 3Cl) :, and off-taker of choice for IPPs, the operational and financial stability of ZESCO is important for the sus §: tainability of the whole power sector. In order to ensure the financial stability of ZESCO, it is important to not o· :, only maintain cost-reflective electricity tariffs but also to ensure the utility has no operational or institutional "Tl iil inefficiencies, including collectables. It is important to settle outstanding arrears with IPPs and restructure 3 Cl) ZESCO's historical debt, which could be achieved with the assistance of MFls. The financial stability of ZES :Ii:: 0 CO and the sector will facilitate and attract investment in RE by IPPs, creating growth in RE capacity in the ~ country. In addition, it is necessary to establish clear reporting structures between ZESCO, IDC and MoE to improve organisational efficiency and decision-making. Timeline: This activity will be implemented from 2022 to 2025. Measurable Indicators: Indicators for this activity include the successful development of the ZESCO restructuring model, restructuring ZESCO's debt, settling the arrears with IPPs, achieving financial stability by improving cash flows and posting profit, reducing the percentage of outstanding collectables and achieving performance targets on all key performance indicators set by ERB. Responsible Parties: As the custodian of the energy sector, MoE will coordinate this activity in collaboration with ZESCO, IDC, ERB, African Development Bank (AfDB) and other DPs. AfDB and other DPs will provide technical assistance and funding for developing the new structure for the utility, and ZESCO, IDC and ERB will provide inputs to the process. Resources: Funding will be required to develop the new organisational model, including organising and synthesising stakeholder inputs. Additional resources will be required to convene stakeholders for the consultative process. Preconditions: This activity will build on the ongoing efforts by the AfDB in collaboration with IDC to assist in power sector transformation. Potential support from the AfDB will be used to undertake organisational restructuring to transform ZESCO into a world-class utility. The success of this activity will depend on the cooperation of ZESCO and other public bodies. 39. Under the Economic Recovery Plan (2020-2023). the GRZ plans to review all processes in ZESCO to promote efficiency in the utility and the whole power sector. This is likely to result in the unbundling of ZESCO into legally. structurally and operationally separate entities for generation. transmission and distriblltion. In addition. the plan intends to settle outstanding arrears owed by ZESCO to various IPPs Renewable Energy Strategy and Action Plan

5.3.2 Activity 2: Diagnose the Power Sector to Assess Viable Alternative Power Off-Take Models C cu 0:: Justification: Since reforming the power sector and restructuring ZESCO may be a long process involving C 0 some political considerations, it is important to investigate alternative off-taker arrangements, which can 'j be implemented in the short- to medium-term to enable IPPs to continue investing in the power sector. This >- is also necessary to maintain the momentum of RE investments, as there are technicalities that could make ~ GI C LLI open-access grids difficult to implement. This includes considerations around the feasibility of signing a GI 25-year PPA with a mine or ensuring a PPA between an IPP and a mine is respected over time. It is also likely I C ~ that consumers will prefer electricity supplied by ZESCO over IPPs if ZESCO continues to offer lower tariffs. Thus, a power sector diagnostic study will be implemented to assess potentially viable alternative off-take mechanisms, such as identifying alternative off-takers, using escrow accounts, developing risk guarantees or selling and exporting directly to anchor consumers. This activity can build on alternative models, such as the Africa GreenCo model. It offers an alternative risk mitigation facility, which intends to pool RE trading in the .:.:: 0 Southern African Power Pool (SAPP) region and sell to the market. However, this model has not been tested, ~ Q) E and it is not clear if the model is sustainable without cost-reflective tariffs. A thorough sector diagnostic (ti it study will therefore offer insights into alternative options for power sector trading in the country. C: 0 -~ Time/ine: This activity will be implemented in 2022, and its recommendations will be tested from 2023 'E Q) to 2026. E Q) C. E Measurable Indicators: Indicators of success include successfully undertaking and publishing the power sector diagnostic study; identifying, developing and implementing viable alternative business models; and recording more investments by IPPs. Responsible Parties: The study will be coordinated by ERB and MoE with support from other key public and private bodies, such as ZESCO, IDC, IPPs and DPs. Resources: Resources will be required to develop the report, supported by technical assistance relating to power sector reform. Preconditions: Funding will be required to undertake the power sector study. The success of this activity will depend on political will and the cooperation of public entities.

5.3.3 Activity 3: Develop an Open-Access Regulatory Framework Justification: There is a need to develop open-access regulations that will support the Electricity Act No. 11 of 2019 in order to guarantee grid access for IPPs and reduce uncertainty and perceived investment risks. This is linked to work currently being undertaken by ERB to establish open-access market rules and regulations. In addition, there is a need to align the Grid Code and Distribution Code with the Electricity Act and Energy Regulation Act. Timeline: This activity will be conducted from 2022 to 2024. Measurable Indicators: Expected milestones for this activity include successfully developing and enacting an open-access market design to support market rules and regulations, creating a transmission and distribution pricing methodology to facilitate equal and fair access to the grid for all market participants, successfully reviewing and updating the Grid Code and Distribution Code and aligning them with the Electricity Act and Energy Regulation Act, receiving fewer complaints from IPPs relating to grid access and increasing IPP investments. Renewable Energy Strategy and Action Plan I2022 Responsible Parties: Development of the open- access regulations entails a process of engagement with ERB (as the lead), MoE, ZESCO, IPPs and DPs. An expert consultant will be required to undertake the evaluation of :a ID the legislation, convene stakeholders, consolidate inputs and make the relevant amendments. ::II ; Ill er Resources: This activity will require funding to develop an Open Access Regulatory Framework and convene ,,,ii" working group meetings and public consultations. ::II ID ~ Preconditions: The success of the activity will depend on cooperation between public and private actors and ~ the availability of funding to support the process. s· ::II "ti iii'" ::II

5.3.4 Activity 4: Establish an Independent System Operator Justification: It is important to operationally and financially ringfence the National Control Centre (NCC) from ZESCO, create an ISO and establish a true open- access regime. This will ensure that an ISO is fair to all market players in its dispatch and control of the transmission and distribution of power in the country. 3 "C (I) An independent body will also bring more transparency to the power system, especially with respect to 3 - (I) pricing build-up. This work is related to Activity 3 (see Section 5.3.3) and will be accompanied by a suitable ::II transmission pricing methodology for the open-access regime. a o· ::, "TI Timefine: This activity will be implemented from 2022 to 2024. ~ 3 ; Measurable Indicators: Indicators for monitoring this activity include successfully developing the ISO 0 ~ organisational structure, ringfencing the ISO, adopting the transmission methodology and developing market rules and regulations to allow IPPs to successfully conduct power trading on the market. Responsible Parties: This activity will be led by ERB in collaboration with MoE, ZESCO, IPPs and NCC. Resources: This activity will require financial resources and institutional experts to draft the new institutional framework and operational guidelines for the ISO. Resources will also be required to convene stakeholder consultations. Preconditions: Funding is required for developing and implementing the ISO structure and the required infrastructure. This support will augment the support currently being provided by KfW to ERB to create an ISO. The success of the activity will depend on political will and the cooperation of ZESCO and other public entities. Promote Productive Use of Renewable Energy Due to the limited disposable income characteristic of rural Zambians, the rural market for RE is difficult to service. Mini-grids are generally not viable, and demand is typically very low. The dispersed population coupled with poor infrastructure, such as roads, make servicing the rural market very challenging for developers. It is, therefore, necessary to address these shortcomings in the rural market to ensure RE interventions are sustainable in that segment of the market.

5.4.1 Activity 1: Mainstream Community Engagement for Developers Justification: Once the rights to develop a site have been granted, the developer must engage with the rural community beneficiaries to understand their needs and priorities and receive feedback on the planned intervention. This is important, as developers tend to focus on technology- centric solutions rather than the users' needs and values, which can lead to limited developmental impacts. For example, mini- grids that support the productive uses of electricity, such as irrigation and agricultural processing, require participatory planning inputs from beneficiary communities to ensure that there is buy-in, ownership and a general understanding of the technology outcomes against the expectations. Renewable Energy Strategy and Action Plan In addition, an understanding of the different energy needs of men and women based on their traditional roles is critical, as this can have an impact on energy utilisation. A shared vision between a project developer and the C c,s E community is likely to lead to better outcomes and could support a long-term evolving relationship that goes C 0 beyond the transactional to the transformational. This activity can be part of the feasibility analysis conducted j by the developer. The market assessment offers an opportunity to engage with the beneficiary community ei representatives to understand their needs and consider those needs in the engineering and financial designs. CII C LLI Currently, the ERB regulations limit community engagement to operational contacts between developers and CII communities and provide no guidance on the scope, depth and process of the engagement. :cs c,s fC CII Community engagement should not bring additional costs and burdens into a project but should be seen a: as an important element that creates greater value for the energy business through increased sales of energy services and reduced project risk. An inclusive community engagement framework that incentivises developer-community consultation will be co-designed by the public and private sector with inputs from local government and traditional leaders. ..:.: 0 ~ QJ Timeline: This activity will be implemented from 2022 to 2025, starting with developing a community E ro LI: engagement strategy in 2022, testing it in 2023 and rolling it out from 2024. C: 0 ·.;; ro Measurable Indicators: Expected outputs will include successfully developing and rolling out the community E QJ E engagement strategy, improving the performance of RE community projects, as measured by increased QJ ci. energy utilisation, and decreasing complaints from beneficiaries. .§ Responsible Parties: This activity will be led by MoE in collaboration with ERB, Ministry of Small and Medium Enterprises (MSME), MLGRD, REA, AMOA, SIAZ, DPs and NGOs. Resources: This activity will require funding to develop the community engagement strategy and for convening working group meetings and public consultations. Preconditions: Funding is required to develop the engagement framework. The success of the activity will depend on buy-in from different stakeholder groups.

5.4.2 Activity 2: Develop Rural Energy Economic Models Justification: The rural market needs to be stimulated and nurtured by ensuring that there is sufficient energy demand to make investments viable and empowering end users to enable them to pay for energy services. Therefore, to create self-sustaining rural RE markets in Zambia, it is necessary to empower the target beneficiaries by not only offering consumptive energy services but also catalysing PUE, such as RE- based water pumping, irrigation, farm mechanisation and post-harvesting activities that reduce production waste. This will enable rural communities to pay for energy services and potentially grow the energy demand and the market. As indicated earlier, other productive activities can also be developed. If economic activities are linked to energy provision through PUE, RE has the potential to improve livelihoods, increase disposable income and enable sustained economic growth in communities. Therefore, it is necessary to design rural energy-economic models that can work in Zambia and be used in different settings and locations in the country. These models will provide generic templates that can be adopted and refined for specific locations. An example of such a model is the 'farm block' where a core venture investor supports out-growers in a rural community. The core investor acts as the anchor client for the energy investment while supporting farmers to grow and achieve scale over time. 40. Community engagement does not imply that communities must be involved in the engineering design or mini-grids or other forms or electrification proiects. It also does not imply that developers must engage in elaborate sessions with all villagers to deliberate on the engineering design of the proposed mini-grids. Local authorities, traditional leaders and community representatives are expected to engage in local development planning that feeds into the public-private engagement. This facilitates combined top- down techno-centric planning and bottom-up user-inspired innovative business models. Ultimately, community engagement should not burden developers when it becomes part or the market assessment processes but should help to create bigger markets for their services and transform lives. Renewable Energy Strategy and Action Plan I2022 This concept can be expanded to other non-agricultural PUE activities that support local industries, such as the use of power tools. This activity will build on work by some developers who are already piloting mini-grid ::1:1 ID models that include some anchor activities, such as health facilities and promoting PUE while subsidising :::s connections to households. Examples include the Smart Village concept. ; SU IT ii' l'TI It should be noted that women's economic activities are, to a large extent, limited by the time spent on firewood :::s ID collection, a task mainly performed by women and children in the household. Therefore, it is necessary to ~ increase the use of clean energy for cooking in tandem with promoting PUE, since the former has the potential to· to reinforce the latter by freeing up time for women. This would enable women to engage in PUE through RE :::s "0 technologies, especially if RE markets identify and respond to gender-specific needs since men and women iii" :::s may be involved in different livelihood activities and value chains. Therefore, this activity will be linked to the Clean Energy for Cooking and PUE programmes initiated by MoE under the relevant energy sector strategies. Timeline: The timeline for implementing this activity is from 2022 to 2030. Development of the energy- economic model framework will be from 2022 to 2023, followed by testing during 2024 and 2025 and roll out 3 "'C ~ after 2025. 3 (D ::, ~ Measurable Indicators: Expected outputs will include successfully developing, piloting and deploying energy- o· ::, economic models; increasing income generated in rural communities; increasing the uptake of RE energy "TI i» systems; increasing demand for energy services and improving the affordability of energy services in rural 3 areas. ~ 0 ~ Responsible Parties: This activity will be led by MoE in collaboration with MFNP. Ministry of Agriculture (MoA), Ministry of Commerce, Trade and Industry (MCTI), MLGRD, SIAZ, AMOA and DPs. There is need to develop rural energy-economic models that can work in Zambia and provide generic templates, which can be adapted to and refined for specific locations. Resources: This activity will require funding to develop the integrated rural development models and convening working group meetings and public consultations. Preconditions: Funding is required for developing the energy economic model concept. The success of the activity will depend on the buy-in of target rural communities.

5.4.3 Activity 3: Develop Energy-Centred Integrated Rural Development Models Justification: In addition to linking energy to economic activities in rural areas, it is necessary to develop integrated rural development models that will especially support the agricultural value chain from using energy productively at the farm level to creating markets for rural products. Empowering rural communities to increase productivity using modern energy will not lead to sustainable outcomes if there is no corresponding support for the entire agricultural value chain. Therefore, it is necessary to design integrated rural development models covering the entire agricultural value chain, including training farmers, providing energy, providing agricultural inputs and technical support, adding value, providing agricultural processing opportunities, and establishing cold storage and transport to the market. A link to ready markets (with aggregation support where necessary) will be critical to complete the value chain. This will be supported by the 'ecosystem financing mechanism', which must still be developed. It will be necessary to enhance coordination in planning between the energy and economic sector ministries, such as agriculture, livestock and fisheries, industry and commerce, and mines. 41. The Smart Village concept uses electricity as a catalyst lor development in rural communities, such as empowerment or women's groups. This concept is being piloted in Zambia by Vero Power at two rural schools and clinics. Renewable Energy Strategy and Action Plan This coordination framework will be developed by building on current inter- ministerial working groups. In addition, given the limited technical skills for commercial activities in rural communities, continuous C ftl supervision is needed, which can be provided in addition to training by resident extension workers. Pilot E testing of proof of concept will be necessary to encourage buy- in from communities. C 0 l Timeline: The timeline for implementing this activity is from 2022 to 2030. An initial period from 2022 to 2024 ei cu will be dedicated to developing the integrated rural development models. This will be followed by testing the C LLI models and rolling them out from 2025. cu ::2i ftl Measurable Indicators: This activity should result in the successful production, and roll- out of integrated rural ~ C development models accompanied by increased uptake of RE, increased productivity of rural communities, cu a: the establishment of markets for rural products, increased income generation in rural communities. reduced food waste and growth in rural economies. Responsible Parties: This activity will be led by MoE, which will coordinate the development of the models. Other line ministries, such as MoA and MFNP, will provide sector-relevant inputs into the model development. ~ 0 Other stakeholders, such as OGTF, NGOs and DPs, will provide expert knowledge inputs and technical 3: <11 assistance. E ro II: Resources: This activity will require funding to develop alternative payment models and convening public C: 0 consultations. ·.;:; ro E <11 Preconditions: Funding is required for developing and implementing the rural development models. The E <11 ci. success of the activity will depend on the buy-in of the target rural communities. _§

5.4.4 Activity 4: Develop Alternative Payment Systems for the Off-Grid Market Justification: In some cases. alternative payment systems may be appropriate, as the rural economy may not have liquidity. Rural communities could be allowed to pay using their produce, such as livestock or grain, instead of cash payments. In order for this to work, a supportive model is needed that requires the energy provider to aggregate such agricultural produce and deliver it to suitable markets. preferably government- guaranteed markets. The model must be developed, appropriate commodities and suitable markets must be identified, and a fair pricing methodology must be created. Timeline: The timeline for implementing this activity is from 2022 to 2025. Measurable Indicators: The expected outputs include the successful development and implementation of alternative payment models. Responsible Parties: This activity will be led by MoE with support from MoA and MFNP, in collaboration with OGTF, SIAZ, NGOs and DPs. Resources: This activity will require funding to develop alternative payment models and convening public consultations. Preconditions: The success of this activity depends on buy-in by public and private bodies, as well as securing markets for rural produce.

5.4.5 Activity 5: Develop Public-Private-Partnerships (PPP) for Rural Markets Justification: While the off-grid market is currently served mainly by private sector, it cannot be left to be driven solely by the private sector, as the market is not bankable. Therefore, the off- grid sector requires public support. This activity will explore models in which the public sector will work alongside private developers to roll out mini- grids through PPPs. This activity can build on the current REA tender, which is designed to promote private sector mini- grids using identified sites. As an alternative model, t he Rural Electrification Act of 2003 could be amended to allow REA to own and run assets, which would allow it to offer services to public institutions, such as rural government institutions and some strategic rural communities. Renewable Energy Strat~J and Action Plan I2022 Timeline: The implementation of this activity will start in 2022. A two-year period will be devoted to developing the appropriate PPP framework, followed by testing and fine-tuning the models over the following three years. ~ Measurable Indicators: Expected measurable outputs include the development and implementation of PPP ;= Ill c:r models, the number of successfully developed projects under the PPP, the successful amendment of the ii' Rural Electrification Act and the increase in the number of sites developed by REA. "" = ft> ia '< Responsible Parties: This activity will be led by MoE in collaboration with the PPP Department under MFNP, ~ REA, ZESCO, ZARENA and DPs. 2r = ~ iii" Resources: Funding will be required for technical assistance to develop the PPP framework and to convene = working group meetings and public consultations. Preconditions: The success of this activity depends on cooperation between public and private actors. 3 "C Enhance the Biomass Energy Market i'D"' 3 When compared with other RE technologies, such as solar PV, the biomass energy subsector has not received much attention nationally and is thus lagging behind. Exceptions are SIDA and SNV Energy for - l'D ::, !!l. o ::, · "T1 Agriculture programmes, which promote biogas dissemination by creating markets and raising awareness. iil 3 There has been no focused support for biomass energy and no interest from the private sector, even though i it is the single most important energy resource in the country, as the majority of the population relies on it. By 0 ~ comparison, the solar industry has received various types of support over the last few years, and a large-scale market is emerging. There is now a wealth of information on solar, and DPs have availed funding to support various business models, which have been tested, allowing for upscaling and replication. A key challenge with upscaling biomass energy is the ability of developers to mobilise enough volume of biomass feedstock to satisfy the market demand. Sufficient feedstock production is a precondition for developing a sustainable biomass energy market. There are also supplier risks, as feedstock producers can decide to sell to other markets if they get a better price. In addition, infrastructure, such as biofuel storage, is needed to facilitate in marketing bioenergy carriers. In Zambia, at the moment, it is not clear who pays for such infrastructure, the government or the private sector. Therefore, there is a need for dialogue and the use of best practices in the interest of national sustainable development objectives. 5.5. l Activity l: Conduct and Update the Full Biomass Energy Market Diagnostic Study Justification: Biomass energy production and use need to be modernised to ensure biomass is a truly sustainable RE resource. However, there is limited market intelligence on the subsector and no tested business model for bioenergy deployment. These data and models are required to understand the opportunities and risks in the subsector and thereby provide the basis for developing appropriate financing and support for the subsector. Special consideration is required to make the charcoal subsector more sustainable through efficient production, supply and end use and to provide options for charcoal substitution. In order to unlock the biomass energy potential in the country, it is necessary to take a deep dive through full market diagnostic studies of the biomass energy subsector. 42. PPP models will need to be developed consultatively using experience from other countries and tested to ensure that lessons learned are used to improve the outcomes and create impact. Participation in these PPPs will be voluntary, with the ultimate aim of improving the performance of initiatives by combining the mobilisation strength of the public sector and the efficiency of private actors, anchored on common vision. Renewable Energy Strategy and Action Plan This will provide insight into the market evolution and dynamics, investment risks and lessons learned in the C subsector over time. In addition, the studies will inform the process of developing appropriate policies and ca ii: regulations, financing schemes, incentives and subsidies that may be required. To date, this information is C 0 not available. ~ ei GI This activity will build on current market activity, including the efforts of MoE to develop a roadmap for C biofuels, which was delayed due to the COVID-19 pandemic. In addition, the FAQ-supported BEFS study "" GI ::iS provides a good baseline, although it only focuses on the resource potential. ca E C Timeline: The market diagnostic study will be implemented in 2022. ~ Measurable Indicators: This activity will deliver a comprehensive and in-depth study on the biomass energy market in Zambia . .::,!. 0 Responsible Parties: This activity will be led by MoE in collaboration with other stakeholders, such as BAZ 3: C1I E and DPs. <ti II: C: 0 Resources: Funding will be required to develop the biomass energy market study and convening working ·;:; <ti group meetings and public consultations. E C1I E C1I a. Preconditions: Funding is required to conduct the biomass energy market study. .E

5.5.2 Activity 2: Conduct Feasibility Studies for Various Biomass Energy Technologies Justification: It is necessary to assess the feasibility of different biomass energy technologies in the Zambian market, in particular, transport biofuels, CHP and biogas, which have been identified as the most promising. Currently, there is limited information on the viability of the large-scale deployment of these technologies. For biofuels, it is necessary to conduct feasibility studies to identify the potential for mobilising adequate feedstock to produce the targeted volumes of biofuel (e.g. El Oor D5). This includes assessing the resource base and the potential for establishing greenfield energy crop plantations and identifying business models that suit the country. For CHP, it is necessary to conduct feasibility studies to identify the viability of cogeneration in identified agricultural industries. From these analyses, specific business cases for investment support will be identified. For biogas, it is necessary to conduct feasibility studies to identify target locations in each country where biogas dissemination will achieve the greatest impact. It is recommended that dissemination efforts target rural areas with a significant livestock population, especially areas with moderate or severe wood fuel shortages. It is necessary to identify institutions and industries that have significant organic biomass waste streams, such as abattoirs and fruit factories, which can be viably harnessed for biogas production. In addition, it is important to identify municipalities that have significant organic and liquid waste streams. Where land is a critical precondition for feedstock production, there will be a need to conduct land identification and zoning, taking into account socioeconomic and environmental sustainability criteria. Timeline: Feasibility studies for selected biomass energy technologies proposed under this activity will be undertaken after the full market diagnostic study is completed in 2023. Measurable Indicators: This activity will deliver successfully completed feasibility studies for selected biomass energy technologies and increased investment in modern biomass energy. Responsible Parties: This activity will be led by MoE in collaboration with BAZ and National Technology Business Centre (NTBC). Renewable Energy Strategy and Action Plan I2022 Resources: This activity will require funding to conduct the feasibility studies and convening public consultations. Preconditions: Funding is required to undertake the feasibility studies. This activity follows the successful completion of the full market diagnostic study.

5.5.3 Activity 3: Develop Viable Business Cases for Investment Justification: After identifying feasible biomass energy options, the next step will be identifying specific business cases and models for investment development and conducting due diligence assessments for the selected biomass energy technology businesses. As explained below, this will include biomass refineries, micro distilleries, biogas, CHP, etc. The identified business models for different biomass energy technologies will then be tested. One of the strategies making modern biomass energy more sustainable in the long term is developing biomass refinery models that not only focus on the primary fuel but also explore a wide array of by- or co-products that can be derived in biomass refineries. About 7,000 products can potentially be developed from biomass refineries, and this product diversification has been used by the sugar industry to 3 hedge against fluctuating sugar prices on international markets. "C tt> 3 tt> The advantage of biomass energy is that it is primarily produced in rural areas, which can facilitate income a generation and rural development. It is possible to establish micro distilleries in rural areas and create local ~ o· ::I markets. As a strategy, developers can establish modular systems, which can be upgraded easily over "Tl time. There is the potential to collaborate at the regional level, pool resources and create bigger markets for ii3 renewable fuels. In order to grow the market while demonstrating proof of concept, biofuels can be supplied 3 to meet the demand of a captive market, such as the government fleet, then extended to symbiotic industries i 0 ;a.. and industrial clusters, or clusters of communities can be supplied with bioethanol cooking fuel to replace charcoal and paraffin. Timeline: The identification of business cases that will be supported will follow the completion of the feasibility studies, which will be conducted from 2023 to 2024. Measurable Indicators: A number of biomass energy technology business cases will be identified and developed for funding. Responsible Parties: This activity will be led by MoE in collaboration with BAZ, NTBC and DPs. Resources: A budget is required to develop viable business cases and for convening public consultations. Preconditions: Funding is required for the development of the business plans, and this activity is preceded by the successful completion of the feasibility studies.

5.5.4 Activity 4: Create an Enabling Environment for Modern Biomass Energy Justification: To support the growth of the biomass energy subsector, it is important to specifically develop policies and regulations that promote modern biomass energy in addition to the more generic policy and regulatory framework developed for the broader RE industry. This will include establishing supportive institutional, policy and regulatory frameworks for promoting the identified bioenergy business models, including blending mandates, financing schemes, incentives and subsidies. Given the widespread use of charcoal in the country, it is important to develop a framework for promoting a sustainable charcoal value chain, especially encouraging fuel switching (charcoal substitution) in restaurants, educational facilities and hospitals. Required infrastructure, such as biofuel blending and distribution facilities, will need to be established. In addition, it will be necessary to set up quality standards and a quality assurance system for bioenergy technology systems, production, supply and use at different scales to ensure consistency of installations and fuel on the market. Renewable Energy Stntegy and Action Plan In addition, it will be important to undertake capacity building and accreditation of local businesses along the value chain, and it will be critical to provide access to financing as necessary. In order to ensure the market C ftl uptake of biomass energy, it will be necessary to conduct public and consumer awareness-raising ii: C campaigns highlighting the benefits of bioenergy and demystifying its use. For charcoal, it will be important 0 to work with traditional and local community leaders to promote alternative livelihoods and make the ~ charcoal value chain more sustainable. e'cu C LI.I Timeline: The period for implementing this activity is from 2022 to 2024. Individual elements of the enabling cu ::;s framework will be gradually developed over this period in parallel with conducting supporting studies and ftl developing business cases. ~ C ~ Measurable Indicators: Expected outputs will include elements of the enabling framework, e.g. institutional changes, policy changes, regulatory changes, the establishment of infrastructure, the development and promulgation of standards, the completion of capacity building and the establishment of the financing mechanism. This should lead to long-term investment in biomass energy. .:.: 0 Responsible Parties: This activity will be led by MoE in collaboration with ERB, BAZ, oil companies and MFNP. 3:: QI MoE will coordinate the creation of an enabling environment for biomass energy, and other bodies, such as E <ll ERB, will develop relevant regulatory instruments. BAZ will provide inputs on the expectations of the biomass ~ energy industry, and MFNP will provide inputs on the design of any economic instruments and the allocation C: 0 ·.::: of financial resources. <ll E QI Resources: This activity will require funding to review and develop institutional policy and regulatory EQI c.. instruments for biomass energy. Resources will be required for building infrastructure and capacity and .E setting standards. Other resources will be required for convening public consultations. Preconditions: Funding is required for developing regulations and investing in infrastructure. The success of the activity requires the cooperation of public entities. This activity will build on the USAID supported A2C programme, which aims to catalyse charcoal substitution for household cooking. In addition, this activity can leverage the Nordic Development Fund-supported initiative to promote biomass pellets and substitute charcoal. The activity will also build on the revised Charcoal Regulations.

5.5.5 Activity 5: Develop a Clean Cooking Strategy Justification: Given the overreliance on biomass energy in Zambia, which is largely driven by the household need for affordable and accessible cooking fuel, it is essential to develop a comprehensive strategy that cuts across fuels (e.g. electricity, ethanol, biogas, LPG, pellets and briquettes) and technologies (e.g. improved cookstoves, biogas digesters and electric appliances) and recognises the contributions of various options. The alternatives to charcoal are expected to develop rapidly in the coming years as a result of new interventions aimed at growing the markets for alternatives through private sector investments. Timeline: The development of a cleaner cooking strategy should take place after the feasibility studies and alongside the development of viable business cases for investment in 2023. This activity will be coordinated with other relevant energy sector strategies. Measurable Indicators: The clean cooking strategy will be launched, which will provide a pathway to universal access to sustainable cooking solutions by 2030. Responsible Parties: This activity will be led by MoE in close collaboration with MGEE. Resources: This activity will require funding to engage stakeholders, conduct research and draft the strategy for validation by stakeholders. Enhance Information and Knowledge Dissemination Properly packaged and accessible information and knowledge are important for proper decision making for investing in RE projects and adopting RE services. Renewable Energy Strategy and Action Plan I 2022 Currently, both supply-side resource information and market intelligence are limited. On the demand side, awareness of RE technology options and their performance, costs and benefits are very limited, which :,g ftl hampers the rapid diffusion of RE technologies. Therefore, it is proposed to implement a programme that :::s will collect, analyse, document and share RE data with interested stakeholders. This information will enable ; II) c:T policymakers to plan effectively, make timely interventions and develop appropriate policies and regulations. ii' l'TI It will allow investors and project developers to identify opportunities and make appropriate investment :::s decisions. i ~ The communication and knowledge management programme includes data collection, information o· :::s "'ti dissemination and knowledge management. This programme needs to be sustained over a long period of i» :::s time to facilitate and monitor the change in mindset and adoption of RE technologies by end users. During the monitoring and evaluation of programmes, MoE has often observed that end users regress and go back to old energy systems.

5.6.1 Activity 1: Develop a Renewable Energy Information System 3 "C ~ 3 n, Justification: The provision of information for decision-making is a vital aspect in upscaling RE, both on :::s ~ the supply side and on the demand side. Investors and developers require reliable resources and market o· :::s information to make investment decisions. Reliable statistics on the energy sector and market dynamics help "T1 i» in national planning, policy making and regulatory reviews by the public sector. Thus, it is important for the 3 RE information system to be regularly updated in order for it to be useful for proper planning and investment ~ 0 decisions. This system will include the development of an integrated resource map for optimised RE resource ~ investments. It is necessary for the country to compile and regularly update a comprehensive energy balance to provide information on trends in and the state of the energy sector. This activity will build on the Energy Access Explorer and the monitoring and evaluation framework for the energy sector. Timeline: The timeline for implementing this activity is from 2022 to 2030. In the short-term, there will be a period for developing the RE energy information system from 2022 to 2023. This sub-activity can be linked to a broader energy sector information system that will include RE data and feed into outputs, such as regular national energy balance reports. This activity will build on the Integrated Resource Plan (IRP) process that was launched in 2021 . Measurable Indicators: Expected outputs will include developing and setting up an RE information framework, successfully deploying the system, and collecting, analysing and disseminating data. Responsible Parties: This activity will be led by MoE in collaboration with Ministry of Community Development and Social Services (MCDSS), NGOs and DPs. The MoE will lead the process by guiding other stakeholders on the information requirements, and it will house the information system and update it regularly. Other stakeholders will support the activity by providing information and the necessary sub- sectoral inputs. To facilitate data collection, selected national institutions will be identified to supply information regularly. Resources: This activity will require funding to develop the information system, purchasing Information Technology infrastructure, and collecting and analysing data. In addition, resources will be needed for convening public consultations. A consulting firm will be contracted to develop the RE information system and train MoE officials to operate and maintain the system. Preconditions: Funding is required for developing the information system, securing the infrastructure, providing training and supporting dissemination. Renewable Energy Strategy and Action Plan

5.6.2 Activity 2: Develop a Framework for Improved Stakeholder Interaction and Information Exchange C ca ii: Justification: There is a need for regular and improved interaction and information flow between the public C 0 sector, private sector and the potential beneficiaries of RE programmes. Such interaction will result in better -~ development outcomes. Communities will need to be organised to ensure collective representation, which ~ cu can be on the basis of interest groups, such as women's groups or community action groups. This activity C IJ,I can build on work being undertaken by the OGTF and NGOs, such as Volunteers Welfare for Community- cu 25 Based Care of Zambia and the Youth Development Organisation. ca ~ C ~ In addition, this activity will build on the EU-supported NGO platform developed by the IAEREP programme to create a virtual space that facilitates the enhanced interaction of NGOs and other stakeholders to share information and experiences on RE and energy efficiency issues, build capacity and offer training. This NGO platform also includes a web-based resource database of NG Os and a virtual library of RE and energy efficiency .:,,: information. The aim of the platform is to improve the impact of NGO outreach activities in communities 0 through enhanced gender-responsive advocacy and information dissemination. 3: <V E (tJ it Timeline: This activity will start in 2022 by reviewing the current interactions and information flow and C: 0 ·.;:; developing a framework, with suitable structures, to enhance the interaction between the public and private (tJ 'E sector. Testing and rolling out of the framework will follow in 2023. CII E CII C. Measurable Indicators: This activity will deliver a stakeholder engagement framework that allows for more .E meaningful interactions, which will be measured by better representation of key stakeholder groups in the decision-making for and planning and implementation of RE projects. In addition, this activity will result in reduced stakeholder complaints (especially the private sector and end users). Responsible Parties: This activity will be led by the MoE in collaboration with the MCDSS and NGOs. Resources: This activity will require funding to develop the stakeholder interaction framework. In addition, resources will be needed for convening public consultations. Continued support will also be required from the EU and other DPs to sustain the web-based NGO platform. Preconditions: Funding is required for developing the framework. The success of the activity depends on the cooperation of various stakeholders.

5.6.3 Activity 3: Develop Public Awareness Material for Renewable Energy Justification: On the demand side, there is a need to empower end users with knowledge and awareness of various RE technology options and their benefits, especially how modern energy access can be implemented for productive use and income generation. Awareness is required to equip end users with knowledge of standards, performance of technologies, financing options and conditions, and who to approach for different RE needs. Timeline: The development of the RE communication strategy will be undertaken in 2022, starting with hiring communication experts to design and translate the communication materials, followed by a roll out in 2023. Measurable Indicators: Expected outputs will include the development of RE consumer information (including some in vernacular languages where necessary), increased investment activity by the private sector and increased uptake of RE systems. Responsible Parties: This activity will be led by the MoE in collaboration with the MCDSS and NG Os. Resources: This activity will require funding to develop the stakeholder interaction framework. In addition, resources will be needed for convening public consultations. Continued support will also be required from the EU and other DPs to sustain the web-based NGO platform. Renewable Energy Strategy and Action Plan (2022 Preconditions: Funding is required for developing the framework. The success of the activity depends on the cooperation of various stakeholders. ~ Ill ::I 11111111 Promote Capacity Building ! c::r iii m ::I There is generally limited RE capacity across Zambia, including public sector institutional capacity to Ill provide adequate support for RE and private sector institutional capacity to mobilise investments. ~ Technical skills to support RE are limited, as is the financial capacity to perform due diligence for RE t o· projects. Capacity building is necessary in government ministries, agencies and regulators; financial ::I "'0 sector institutions; RE developers; the private sector value chain and more generally among various i stakeholders in the country.

5.7.1 Activity 1: Undertake Capacity Building for Public Bodies Justification: The RE market is in its embryonic stages in Zambia, and there is a significant need to build institutional capacity and a cadre of human resources to support the growth of the sector. Within government agencies and public bodies, such as MoE, ERB, REA, MFNP/PPP Department, ZEMA, ZABS and ZESCO, to name a few, there is a need to build absorptive capacity for various RE technological facets that will affect regulatory activities and the application of various policy instruments. Geothermal energy is the area in most need of capacity building to support the techrnology. Training of public officials can target specific institutions dealing with specific issues with professional development courses and postgraduate training. Timeline: Capacity building will be an ongoing programme undertaken in phases, as the industry is dynamic and requires continuous review to check if RE-linked institutions are sufficiently resourced to enable them to effectively support the industry. This activity will start in 2022 with an analysis of the capacity needs in the country and will be followed in 2023 and 2024 by phased training and institutional restructuring using the recommendations in the capacity building findings. Measurable Indicators: The expected outputs include a capacity building assessment report, implemented institutional changes and the number of officials trained. In addition, the activity will lead to improved efficiency within public bodies and fewer complaints from RE stakeholders. Responsible Parties: This activity will be led by MoE in collaboration with other public bodies, such as ERB, REA and NTBC. MoE will coordinate the capacity building activity together with other public and private RE-linked institutions. These bodies will provide inputs into the planning of the activity and will benefit from the institutional support and training resulting from the activity. This activity can build on the AfDB's Sustainable Energy Fund for Africa and the Global Climate Fund's support to MoE and REA to build capacity in the development and preparation of RE projects. The IFC can extend their technical assistance for strengthening and capacity building in public bodies. Resources: This activity will require funding for conducting a capacity building needs assessment and implementing the recommendations of the assessment, such as institutional changes and the training programme. Resources will be required for convening working group meetings and public consultations. Preconditions: Funding will be required for programme development and implementation. Renewable Energy Strategy and Action Plan

5.7.2 Activity 2: Develop Skills for Technical and Operational Personnel C ca ii: Justification: To support the implementation and operational functions of the RE market, it is necessary to C 0 build a critical mass of technical expertise for artisans and fabricators and improve the skills of construction i workers and management personnel. This will be accompanied by an accreditation and certification ei cu programme for technical personnel to ensure quality workmanship in the country. Training will be offered C w by the technical, educational, vocational and entrepreneurship training institutions, Kafue Gorge Regional cu Training Centre (KGRTC) and public and private universities, such as the UNZA Solar Centre and other centres :E ;cu of excellence at the Copperbelt University (CBU) and Mulungushi University (MU). This activity will build on j current curriculum development efforts suited to Zambia's RE needs. Skills development activities will build on ongoing programmes supported by SIDA, AMDA, IAEREP, and ILO. Short courses and refresher courses are also needed to build specific skills. Capacity building should be less about in-class learning and more about hands-on training, including work placements and exchange .::.! 0 programmes. Training should be extended into deeper rural markets where improved RE uptake can provide 3': Cl> E more career opportunities for local technicians. This activity will assess the skills needed in the RE sector and <1! i.t recommend a corresponding training curriculum that suits the Zambian market. C: .g <1! Timeline: Training of technical and operational personnel will be an ongoing process from 2022 to 2030. The 'E Cl> E most immediate activity will be to conduct a skills assessment study in 2022 followed by the development of Cl> ci an appropriate curriculum and training material in 2023. The training programme will be rolled out in 2024. .E Regular reviews of the training needs will be done in consultation with industry, and recommended changes to the training programmes will be implemented. Measurable Indicators: This activity will deliver an RE skills assessment report and training material. It will be necessary to track the number of trained and certified technicians in various skills. Over the long term, the activity will result in a more highly skilled workforce, better performance of the RE industry and fewer complaints related to poor workmanship. Responsible Parties: This activity will be led by MoE in collaboration with TEVETA, KGRTC, public and private universities, such as UNZA, CBU and MU and the RE private sector. Resources: Funding will be required to conduct the skills assessment study, producing training materials and rolling out the training programme. Preconditions: This activity will build on the ongoing GIZ Green People's Energy programme, which focuses on vocational training and education on off-grid system technology. Success of the activity depends on the continued interest of the target group.

5.7.3 Activity 3: Undertake Capacity Building for Financial Institutions Justification: Financial institutions in Zambia have limited experience in undertaking due diligence for RE projects. As a new area of investment with few projects to provide reference, bank personnel will require capacity building to understand RE and the nature of the businesses and models used so that they can facilitate financing of RE projects. So far, a few financial institutions have benefitted from capacity building, e.g. Zambia Development Bank (ZDB), Zambia National Commercial (ZANACO) Bank and National Pension Scheme Authority (NAPSA). Stanbic Bank is one of the banks that has specific portfolios for financing energy projects. Renewable Energy Strategy and Action Plan I2022 This activity can build on and be based under the Zambia RE Financing Framework, the ongoing AfDB/Global Climate Fund technical assistance programme provided to ZANACO and NAPSA. However, there is a need for :ii:, Ill a more extensive national sectoral capacity building programme. = Timeline: This activity will be implemented from 2022 to 2024. A capacity building needs assessment will i c::r iii' m be conducted in 2022 followed by the development of training course curricula and the roll out of the actual ::, Ill capacity building in 2023. ~ Measurable Indicators: Expected outputs will include a capacity building needs assessment report for the ts· ::, "ti financial sector and training material, and the number of trained institutions and personnel will be monitored. i Responsible Parties: This activity will be led by MoE in collaboration with the Bankers' Association of Zambia (BAoZ) and DPs. Resources: Funding will be required for carrying out a capacity building needs assessment, developing training material and rolling out the capacity building. Preconditions: Funding is required for developing the programme and the training material and conducting the actual training.

5.7.4 Activity 4: Strengthen Renewable Energy Industry Bodies and Associations Justification: It is necessary to strengthen existing RE institutions and, if necessary, create new institutions to facilitate the coordination and organised representation of sub-sectoral programmes. Currently, ZAR ENA is the umbrella organisation under which all RE projects fall. In addition, SIAZ was established to promote solar energy activities in the country. Other organisations include BAZ and the Zambia National Biagas and Alternative Energy Association (ZNBAEA). These institutions are poorly funded and fragmented, offering a limited value proposition to their members. Strengthening RE industry bodies and associations will be done by providing institutional support, allocating resources, training staff and facilitating networking. This activity will build on the current support provided by ACE-TAF and SAEP to SIAZ. Timeline: The timeline for implementing this activity is from 2022 to 2024. Initial activities will focus on identifying the needs of current institutions and exploring the need to create additional institutions. A needs assessment study will be conducted in 2022 and 2023. The recommendations from the study to strengthen existing institutions or create new institutions will be implemented in 2023 and 2024. Measurable Indicators: This activity will deliver a study identifying the needs of RE industry bodies and providing recommendations on areas that require strengthening. In the medium to long term, stronger RE industry bodies should emerge, which will be able to effectively promote sub-sectoral programmes. Responsible Parties: This activity will be led by MoE in collaboration with private sector bodies, such as ZARENA, SIAZ, BAZ and DPs. Preconditions: Funding is required to conduct and implement the assessment, including meeting infrastructure and staffing needs. Renewable Energy Strategy and Action Plan

5.7.5 Activity 5: Strengthen Coordination Mechanisms for the Renewable Energy Industry, Public Bodies and Development Partners C ca ii: C 0 Justification: To create impact, more coordination and consolidation of activities in the RE industry among ~ inter-sectoral public bodies and DPs are needed. Coordination is also required to create synergies and avoid e: GI C duplication of national initiatives and programmes. Coordination is required among government agencies and the public sector, as these work mainly in silos and do not deliver integrated development plans. For w GI example, an intergovernmental charcoal taskforce is needed, which will bring together representatives from :a ; GI different ministries, departments, law enforcement agencies and communities to coordinate the enforcement i of charcoal regulations. a: In addition, coordination among the development community is needed to create synergies and a greater impact through consolidated efforts. For example, MoE is unaware of various off- grid RE projects, such as mini-grids, being implemented, and this limits the ministry's ability to adequately support the actors involved. ~ 0 ~ Cl) To date, the OGTF has facilitated the coordination of the off- grid subsector, but it is not a formal institution E <1l and is, therefore, constrained in how much it can practically achieve by facilitating the deployment of tools, i.t C: 0 coordinating activities and providing information. This practical coordination role could sit within a formal ·.;:::; <1l government body, such as REA, to ensure long-term sustainability. The inter-ministerial task force on energy 'E Cl) has been constituted and needs to coordinate and support inter-sectoral planning to achieve alignment E Cl) a. between different sectoral programmes. .E This activity will evaluate the potential of establishing a DPs' working group to coordinate and align donor support and activities in the country. International assistance programmes need to be aligned to avoid duplication of effort and to ensure alignment with national priorities and strategies. The working group could facilitate regular interaction between public and private institutions to address key sectoral challenges and compare approaches. Time/ine: Starting in 2022, coordination will be an ongoing activity. It will be necessary to investigate the frameworks for inter- sectoral coordination based on current activities and inter-ministerial working groups with the intention of consolidating and improving these existing structures. A similar analysis will be done for the current activities of DPs to develop a working group. Recommendations from these assessments will be implemented from 2023 and reviewed periodically. Measurable Indicators: The expected outputs include a report with recommendations for better coordination between the public sector, RE industry and DPs. After implementation, the activity should deliver a new framework for coordinating activities in the sector. In the long term, the industry should experience increased coordination between public and private bodies and more efficient use of resources. Responsible Parties: This activity will be led by MoE in collaboration with the private sector and DPs. MoE will coordinate the activity, as they have oversight over RE activities, but other public and private bodies will also provide inputs into the design and execution of the framework. DPs will play a similar role and will provide technical assistance as needed. Resources: Funding will be needed to conduct an analysis of the current working relationships and develop recommendations for improved coordination frameworks that will need to be established. Preconditions: Funding is required for developing the framework. The success of this activity depends on the cooperation of the relevant stakeholders. Renewable Energy Strategy and Action Plan I2022 Promote Research, Development, Demonstration and Deployment :ii:, RDD&D in RE is not well developed in Zambia due to limited resources and capacity. Currently, research on RE Ill = is not well coordinated and is largely undertaken on an ad hoc basis. Therefore, it is necessary to implement systematic research on RE to promote innovation and commercialisation of RE technologies, understand the i CT iii" m market better and resolve the challenges in the sector. There is no systematic monitoring and evaluation by = Ill RDD&D institutions to assess the relevance, efficiency, effectiveness and sustainability of policies, ~ regulations, incentives, initiatives and projects. ~ s· = "ti

5.8.1 Activity 1: Undertake Research, Development, Demonstration and Deployment i Justification: RDD&D is important in RE deployment to investigate and find solutions to the technical, economic and social dimensions of promoting the wide-scale dissemination of RE. Some technologies need to be adapted and optimised to suit local conditions and markets. New technologies that suit the local market can also be developed through innovation, development, deployment and commercialisation to meet 3 -0 1D the country's energy needs. 3 ti) ::, g Apart from the hardware, there is always a need to investigate the soft issues, such as business models and o· the needs of end users. This activity will therefore develop a framework for the systematic support of RDD&D = 'Tl iil activities in the country, including fundamental innovation support and the collection and analysis of 3 evidenced-based data that will inform policy formulation and the design of public interventions to promote i 0 the upscaling of RE in the country. It builds on the MoE's Energy Sector Research and Development Strategy, ~ which also seeks to develop RDD&D capacity around resource mapping and IRP. upscaling RE deployment, developing modern energy services in rural areas, promoting energy markets, formulating pricing and financing models, and addressing other cross cutting issues. Timeline: RDD&D is an ongoing process, so the timeline runs from 2022 to 2030. An initial exercise that will be conducted is a scoping study to map the RDD&D activities in the country, identify the institutions involved and their focal areas and capacity needs, and identify gaps in RDD&D that need attention. In addition, a framework will be developed to guide the development of RDD&D based on the recommendations of the scoping study. This activity will be done in 2022 and 2023 and will be followed by implementing the recommendations of the scoping study. Measurable Indicators: The expected outputs will include the scoping study on RDD&D in the RE sector in Zambia and a guiding framework that will support the implementation of RDD&D activities. Other outcomes will include the number of RDD&D products developed. Responsible Parties: This activity will be led by MoE in collaboration with other relevant stakeholders, such as line ministries (e.g. MoTS), public and private universities (e.g. UNZA, CBU and MU), National Institute of Scientific Industrial Research (NISIR), NTBC, Policy Monitoring and Research Centre (PMRC), Zambia Institute for Policy Analysis and Research (ZIPAR) and DPs. MoE will provide oversight and will coordinate research themes and priorities in key RE areas that need RDD&D. NTBC will use its position as the key government entity supporting R&D institutions in Zambia, including incubation and commercialisation of technologies. This activity will build on the recently concluded Memorandum of Understanding (MoU) between MoE and UNZA. Resources: This activity will require funding for conducting the scoping study, supporting RDD&D institutions and convening working groups and public consultations. Preconditions: Funding will be required to undertake the RDD&D needs assessment, develop the RDD&D strategy and support RDD&D institutions. Renewable Energy Strategy and Action Plan f::::, Summary of Action Plan Activities ; II) er ii' ,,, ::::, II> Table 5: Summary of Activities Under the RE Action Plan ~ !la· ■ Organisation leading Other organisations ::::, Activity . Timeline Measurable indicators the implementation of assisting in the Preconditions "ti the activity implementation iii" ::::, Develop and/or Update Relevant Policy and Regulatory Framework a)Mini-grid regulations gazetted a)Continued EU support Activity 1: Revise, test and a)Policy and b)Number of mini-grid MoE, AMOA, SIAZ, REA, 2022-2023 ERB 2,262,000 and stakeholder enact mini-grid regulations regulatory complaints decrease ZESCO participation 3 "C ii' a)One-stop shop established 3 ti) MoE, MLNR, MLGRD, a)Funding for developing ::::, b)Shortened licensing time Activity 2: Streamline a)Policy and c)Number of successful WARMA, ZDA, ZEMA, the concept §: RE developer licensing 2022-2026 ERB NHCC, BRRA, SIAZ, 6,786,000 b)Cooperation of public 5· procedures regulatory applications increase d)Fewer recorded complaints ZARENA, AMOA, ZESCO, entities ..,, ::::, REA ii, 3 ti) a)Land use permit application :.I:: 0 charter developed a)Continued funding ~ b)Duration of licensing procedure support Activity 3: Streamline ERB, AMOA, OGTF, MoE, a)Policy and shortened b)Cooperation of public and harmonise land use 2022-2026 MLNR MLGRD, Local government, 9,048,000 regulatory c)Successful applications entities, especially permitting process NHCC increase traditional leaders d)Fewer complaints recorded a)EIA permitting procedures revised b)Templates for EIA reporting a)Funding for developing Activity 4: Streamline the EIA a)Policy and developed ERB, MoE, MWDS, NHCC, 2022-2024 ZEMA 9,048,000 and implementing revised procedures regulatory c)Application time for EIA permit AMOA, SIAZ, ZARENA, BAZ procedures shortened d)Fewer complaints recorded a)New standards developed a)Funding for new a)Policy and b)Reduced number of incidences standards development Activity 5: Develop new RE regulatory of poor-quality products on the MoE, UNZA, ZARENA, SIAZ, and enforcement 2022-2024 ZABS 18,096,000 standards b)Technical markets BAZ,ERB,REA,ZESCO b)Cooperation of public c)Reduced customer complaints and private stakeholders Renewable Energy Strategy and Action Plan I2022 @ :i:, n, ::II ■ Activity Timeline Measurable indicators Organisation leading the implementation of Other organisations assisting in the Preconditions i CT . ii' the activity implementation m ::II n, a)RE standards enforcement ~ a)Policy and framework developed ZABS, ZRA, ERB, MoE, a)Funding for developing ~ Activity 6: Enforce standards regulatory b)Reduced number of poor- 6' 2022-2030 ZCSA ZICTA, UNZA, SIAZ, 4,524,000 and implementing the ::II for RE in Zambia b)Technical quality products on the market "ti ZARENA framework iii" c)Reduced number of customer ::II complaints a)Number of economic a)Funding for revising and instruments revised implementing instruments, a)Policy and b)Number of trained public Activity 7: Review and regulatory officials MoE, ZRA, SIAZ, ZARENA, including training 3 "C revise the RE economic 2022-2026 MFNP 5,655,000 b)Cooperation of the b)Financial c)Reduced complaints on RE BAZ, AMDA, ERB ii' instruments and incentives incentives treasury 3 ti) -.,, ::II d)Customs handbook published iii o· ::II a)Policy and regulatory a)Charcoal regulations Q) Activity 8: Finalise and a)Funding to refine the 3 b)Biomass successfully tested, gazetted and ti) gazette the charcoal 2022-2026 MGEE MoE 1,131,000 regulations and facilitate ::e market deployed 0 regulations their deployment. development ~ Develop Innovative Financing Mechanisms a)Cost-reflective tariffs developed a)Finalisation of the Coss b)lmproved utility/developer a)Financial b)Continued funding Activity 1 : Review and revenue flows b)Policy and support for processes rationalise electricity tariffs 2022-2023 c)lncreased number of PPAs ERB MoE, MFNP, ZESCO 4,524,000 regulatory c)Cooperation of public and RE pricing concluded entities d)lncreased number of IPPs/ private sector investments a)Number of financial schemes a)Financial a)Funding for the activity Activity 2: Improve and scale and instruments revised and b)Policy and and financial instruments up existing RE financial 2022-2026 scaled up MoE MFNP, ERB, MFls, DPs 4,524,000 regulatory b)Buy-in by the treasury instruments b)Number of RE developers benefitting from schemes Renewable Energy Strategy and ActionPlan I2022 @ ~ ::I ■ II> Organisation leading Other organisations i CT Activity Timeline Measurable indicators the implementation of assisting in the Preconditions . ii" m the activity implementation ::I II> a)Number of new financial .a '< Activity 3: Develop new a)Financial a)Funding for developing financing instruments, b)Pol icy and schemes developed and operationalising ~ 2022- 2026 b)Amount of funding mobilised MoE MFNP. MFls, DPs 9,048,000 s· including risk mitigation facilities Regulatory and distributed instruments b)Buy-in from public .,, ::I c)Number of market i» ::I Beneficiaries entities a)Transaction advisory unit a)Financial established 3 -c Activity 4: Establish a b)Capacity b)Number of market actors ii" a)Funding for developing 3(1) brokerage and transaction advisory facility building 2022- 2025 trained c)Performance of trained SMEs improved MoE ZARENA, DBZ, DPs 11,310,000 and implementing the unit -- ::, Q) o· ::, "TI ii, 3 (1) a)Funding for developing :e 0 the system and associated ~ a)E-procurement aggregator infrastructure platform established Activity 5: Develop an b)Support from a)Financial b)Number of projects developed innovative e- procurement 2022-2026 MoE ZPPA, MFNP. ERB, DPs 5,655,000 stakeholders, including on the platform platform DPs and procurement c)Number of investments bodies developed using platform a)Funding for developing a)Subsidies developed for mini- Activity 6: Develop a)Financial a model and to cover grids MoE, ERB, ZESCO, SIAZ, sustainable models for rural 2022-2024 REA 6,786,000 subsidies b)lncreased number of RE AMOA mini-grids b)Buy-in from the treasury investments in deep rural areas Undertake Power Sector Reforms Renewable Energy Strategy and Action Plan I2022 (@ ~ ::I ■ Ill Organisation leading Other organisations ier Activity Timeline Measurable indicators the implementation of assisting in the Preconditions . ii' m the activity implementation ::I Ill c '< a)ZESCO restructuring model successfully developed a)Funding for the ~ b)ZESCO debt successfully restructuring process 6' ::I Activity 1: Restructure a)Power restructured ZESCO, ERB, IDC, AfDB, b)Political will "ti 2022-2025 MoE 14,703,000 ii,; ZESCO sector reform c)Financial stability achieved DPs c)Cooperation of ZESCO ::I d)Outstanding collectables and other public bodies reduced e)ZESCO improves on all KPls a)Power a)Open-access regulations Activity 3: Develop an a)Funding for the experts open-access regulatory sector reform 2022-2024 developed ERB MoE, ZESCO, IPPs, DPs 4,524,000 and consultative process 3 -0 b)Policy and b)Grid code successfully updated ii' framework b)Cooperation of public 3 c)Market rules and regulations and transmission pricing methodology and private actors -- (1) ::, I I) i5" ::, Regulatory "TI d)Fewer complaints from IPPs on ii, grid access 3 (1) :e Q ;:,;- a)ISO structure successfully Activity 4: Establish an a)Funding for developing a)Power developed ISO (including other and implementing the sector reform b)ISO ringfenced recommended outcomes structure b)Policy and c)Transmission methodology from the open-access 2022-2024 ERB MoE, ZESCO, NCC, IPPs 6,786,000 b)Political will regulatory adopted market regulations to create c)Cooperation of ZESCO d)IPPs successfully conduct a truly open-access grid and other public entities power trading on the market regime) Develop Innovative Financing Mechanisms a)Community engagement strategy developed a)Funding for developing b)lncreased energy utilisation the concept Activity 1: Mainstream a)Rural c)Fewer complaints from ERB, MCTI, MLGRD, REA, b)Buy- in from different community engagement for development 2022-2025 MoE 3,393,000 beneficiaries AMOA, SIAZ, DPs, NGOs. stakeholder groups developers Renewable Energy Strategy and Action Plan I2022 ® f ::, ■ Ill Organisation leading Other organisations ier Activity . Timeline Measurable indicators the implementation of assisting in the Preconditions ii' the activity implementation m ::, Ill a)Energy economic models ~ developed. ~ b)lncreased income generation in a)Funding for developing iS' ::, a)Rural "ti rural communities and implementing models development iii" ::, Activity 2: Develop rural c)lncreased uptake of RE energy MFNP. MoA, MCTI, MLGRD, b)Buy- in by rural b)Financial 2022-2030 MoE 9,048,000 energy economic models systems SIAZ, AMDA, DPs communities d)lncreased demand for energy services e)lmproved affordability for energy services in rural areas 3 "C a)New standards developed a)Funding for new i'ii"' 3 Activity 5: Develop new RE standards a)Policy and regulatory b)Technical 2022- 2024 b)Reduced number of incidences of poor-quality products on the markets c)Reduced customer complaints ZABS MoE, UNZA, ZARENA, SIAZ, BAZ,ERB,REA,ZESCO 18,096,000 standards development and enforcement b)Cooperation of public and private stakeholders --.,, (1) ::::, I ll s· ::::, @ Generation in rural communities 3 (1) :e Q ;;,;- a)Buy-in by public and a)Rural private bodies Activity 4: Develop a)Alternative payment models development b)Securing the market for alternative payment developed MoA, MFNP. OGTF, SIAZ, b)Financial 2022- 2025 MoE 2,262,000 rural produce systems for the off-grid NGOs, DPs market a)Rural development a)PPP models developed a)Cooperation between Activity 5: Develop PPPs for ERB, MFNP. REA, ZESCO, b)lnstitutional 2022-2024 b)Number of PPP projects MoE 3,393,000 public and private actors rural markets ZARENA, DPs developed Undertake Power Sector Reforms a)Biomass Activity l: Conduct and a)Comprehensive biomass a)Funding for conducting market update the full bioenergy 2022-2023 energy market study published MoE BAZ, DPs. 7,917,000 the study b)lnformation market diagnostic study Renewable Energy Strategy and Action Plan I2022 (@ :1:1 (I) :::, ■ Activity Timeline Measurable indicators Organisation leading the implementation of Other organisations assisting in the Preconditions i r:r . ii" the activity implementation "' :::, (I) a)Biomass 10 '< Activity 2: Conduct feasibility studies for market a)Feasibility studies completed a)Funding for studies, is ~ various biomass energy b)lnformation 2023-2024 b)lncreased investment in MoE BAZ, NTBC 22,620,000 preceded by the full market o· :::, c)Financial modern biomass energy studies technologies "'0 iii" :::, a)Biomass a)Funding for development Activity 3: Develop viable market a)Number of biomass energy of business plans business cases for b)Financial 2024-2025 technology business cases MoE BAoZ, NTBC, DPs 11,310,000 preceded by feasibility investment developed for funding studies a)lnstitutional changes made 3 -0 b)Policy and regulatory changes iii'" a)Funding for developing 3 -- (I) developed ::l regulations c)Biofuel infrastructure I» a)Biomass b)Funding for Activity 4: Create an established 27,144,000 o· market ERB, BAZ, oil companies, infrastructure ::l enabling environment for modern biomass energy b)Policy and 2022-2023 d)Standards developed e)Capacity building completed MoE MFNP. excludes infrastructure c)Cooperation of public ... "Tl I» regulatory entities 3 f)Financing mechanism established ; 0 g)lncreased investment in ~ biomass energy a)Funding for experts a)Biomass Activity 5: Develop a clean a)Clean cooking strategy to engage stakeholders, market 2023-2025 MoE MGEE 9,048,000 cooking strategy developed and launched conduct research and Enhance Information and Knowledge Dissemination a)Funding for developing a)RE information system information system, Activity 1 : Develop an RE developed a)lnformation 2022-2023 MoE MCDSS, NGOs, DPs 4,524,000 infrastructure, training and information system b)Data collection, analysis and dissemination dissemination completed a)Stakeholder engagement framework developed Activity 2: Develop a a)Funding for developing a)lnformation b)lncreased participation of key framework for improved the framework 2022-2023 stakeholder groups in RE projects MoE MCDSS, NGOs 1,131,000 stakeholder interaction and b)Cooperation of various c)Reduced stakeholder information exchange stakeholders complaints Renewable Energy Strategyand Action Plan I2022 @ ::g II> ::I ■ Activity Timeline Measurable indicators Organisation leading the implementation of Other organisations assisting in the Preconditions i -a- ;;- . m the activity implementation ::I II> 10 '< a)RE consumer information ts· developed a)Funding for packaging, ::I Activity 3: Develop public "0 a)lnformation 2022- 2023 b)lncreased uptake of RE translating and awareness material for RE MoE MCDSS, NGOs, DPs 11,310,000 iii" systems disseminating information ::I Promote Capacity Building 3 -0 ;:;- a)Capacity building assessment 3 -- ti) report developed ::l Activity 1: Undertake a)Capacity b)Number of officials trained a)Funding for programme I» capacity building for public building 2022-2024 c)Fewer complaints from RE MoE ERB, REA, NTBC 5,655,000 development and 5· ::l bodies stakeholders implementation .... "Tl I» 3 ti) ::e 0 ~ a)RE skills assessment report a)Funding for programme developed TEVETA, KGRTC, public and development, training Activity 2: Develop skills a)Skills b)Training material developed private universities (e.g. material and actual for technical and b)Human 2023-2024 c)Number of trained and certified MoE 33,930,000 UNZA, CBU and MU), SIAZ, training operational personnel resource technicians ZARENA, AMOA, DPs b)lnterest from target d)Fewer complaints related to group poor workmanship a)Capacity building needs assessment report completed a)Funding for programme Activity 3: Undertake a)Capacity b)Training material prepared Bankers Association of development, training capacity building for building 2022-2023 MoE 4,524,000 c)Number of institutions and Zambia.DPs material and actual financial institutions b)Financial personnel trained. training Renewable Energy Strategy and Action Plan I2022 (@ ::,g tD ::, ■ Activity ....... , Timeline Measurable indicators Organisation leading the implementation of Other organisations assisting in the Preconditions l ii" m the activity implementation ::, tD a)lnstitutional changes made b)Policy and regulatory changes 't° '< developed a)Funding for developing o· ::, c)Biofuel infrastructure regulations a)Biomass "0 established b)Funding for iii" Activity 4: Create an market 27,144,000 ::, d)Standards developed ERB, BAZ. oil companies. infrastructure enabling environment for b)Policy and 2022- 2023 MoE excludes e)Capacity building completed MFNP. c)Cooperation of public modern biomass energy regulatory infrastructure f)Financing mechanism entities established g)lncreased investment in biomass energy 3 -0 ii" a)Funding for experts 3 Activity 5: Develop a clean cooking strategy a)Biomass market 2023-2025 a)Clean cooking strategy developed and launched MoE MGEE 9,048,000 to engage stakeholders. conduct research and - n> ::I aa· ::I "Tl a)RE institutional needs a)Funding for assessment iil a)Capacity assessment report completed and implementation, 3 Activity 4: Strengthen building n> RE industry bodies and b)lnstitutional 2022-2024 b)Stronger RE industry bodies MoE ZARENA, SIAZ, BAZ, AMDA, 5,655,000 including infrastructure :e 0 DPs. and staffing ~ associations a)Capacity a)RE stakeholder coordination building report completed a)Funding for developing Activity 5: Strengthen b)Financial b)Framework developed for framework and coordination mechanisms c) coordinating activities in RE ERB, ZARENA, SIAZ, REA, 2022- 2023 MoE 2,262,000 cooperation from different for the RE industry, public Coordination c)More cooperative events ZESCO, AMDA, DPs stakeholders bodies and DPs d}More collaboration in RE Promote Research, Development, Demonstration and Deployment a)Funding for conducting a needs assessment, Activity 1: Undertake MoTS, NISIR, public and developing the R&D research, development, a)RDD&D private universities (e.g., 2022- 2030 MoE 27,144,000 strategy and supporting demonstration and UNZA, CBU and MU), institutions deployment ZIPAR, NTBC, DPs. Renewable Energy Strat@!Jy and Action Plan I2022 @ Implementation Framework Implementation of the RESAP will be undertaken by a broad range of stakeholders led by MoE, as the cust odian of the energy sector. MoE will be supported by key public sector institutions and line ministries, as well as the private sector and financial institutions. Academia, NGOs, local communities and DPs will play a major role in supporting various activities. Effective implementation will require the efforts and close cooperation of these stakeholders. The planning horizon for this Renewable Energy Action Plan is 2022-2030, and it is expected to have the following two phases: (a) Preparatory Phase (2022-2024): Preparation of studies; implementing institutional, regulatory and policy changes; developing human resources; laying the groundwork; using existing resources and preparatory grants; and mobilising more technical assistance funds and financial support from various sources. (b) Implementation Phase (2024-2030): Rolling out various activities and investments based on the proposed strategy to achieve the RE strategic objectives. The implementation plan distinguishes operational functions that will be performed by the key stakeholders, including governance and execution, resource mobilisation, and monitoring and evaluation. Governance and Execution

6.1.1 Public Sector Entities Since RE activities cut across many sectors, several government institutions will be involved in the implementation of sector-specific activities, working in collaboration with other public entities and key stakeholders. These roles and responsibilities for each activity have been presented in Chapter 5. MoE will oversee and coordinate most activities and will be involved in all activities. ERB will play a coordinating role for many activities as the independent regulator of the energy sector. Similarly, other public entities, such as ZESCO, REA, IDC and NTBC, will be actively involved in the development and implementation of the identified interventions.

6.1.2 Private Sector The private sector is increasingly responsible for RE investments alongside the public sector and plays an important role in delivering energy services using various business models. Most of the activities in this strategy are aimed at enabling private sector investment by removing market barriers that prevent efficient private sector participation. Therefore, the private sector will be actively involved by providing inputs into the design of the interventions, participating in working groups and actively participating in the implementation of the activities. In addition, the private sector is expected to provide feedback and data to MoE for monitoring and evaluation purposes.

6.1.3 Nongovernmental Organisations and Civil Society NGOs and civil society play an important role in RE dissemination, as their organisations work closely and directly with communities. They understand community needs and challenges better than other organisations, as they are embedded in communities. Therefore, NGOs will be involved in designing and implementing relevant community interventions. Renewable Energy Strattgy and Action Plan I2022 They will provide useful information to track implementation and on-the- ground support for RE projects and programmes. 6. 1 .4 Academia and Research and Development Institutions Academic and research institutions will play an important role under this strategy in interventions related to capacity building, technology development and demonstration. R&D institutions will participate in thematic working groups to provide technical inputs and ensure interventions are grounded on sound scientific principles. 6.1 .5 Development Partners DPs have been playing an important role in catalysing RE investment in Zambia. They will be involved in the design and implementation of the interventions by providing support and resources to the government to undertake the various activities. This support will be in the form of technical assistance, capacity building and grants. 6. 1 .6 National Thematic Working Groups For the effective implementation of the strategy, thematic and activity-specific working groups will need to be established under the coordination of the relevant governmental departments. These working groups will be composed of relevant stakeholders drawn from key government agencies, the private sector and key thematic experts. Overall coordination of the implementation of the strategy will be under the MoE's designated RE unit. This unit will provide strategic, policy and institutional guidance for the strategy implementation; guide the national working groups and ensure coordinated implementation of the strategy at a national level. In addition, the unit will be the link with the regional SADC and COMESA Renewable Energy and Energy Efficiency Strategy and Action Plan. Legal Framework The RESAP will be implemented within the existing legal framework through the various Acts of Parliament which govern the resource management and development for the energy sector. These pieces of legislation include among others: The Constitution of Zambia (Amendment Act No. 2 of 2016); The Electricity Act No. 11 of 2019; The Energy Regulation Act No.12 of 2019; The Rural Electrification Act No. 20 of 2003. In the process of implementation, any norms, practices or legislation that might inhibit the successful implementation of the RESAP will be reviewed and/or revised accordingly. Resource Mobilisation Both public and private funds will be required to operationalise the strategy. Public funds will be derived from the national budget, funded by local or external sources, and private funds will come from participating non- state entities, such as private sector and financial institutions. Public funds will cover the government expenses for policy and regulatory management and monitoring, capacity building and project management, investment in state infrastructure, public awareness campaigns and grass-root sensitisation, and subsidies for participating entities, including private sector entities. Public subsidies will be necessary to support and catalyse private investments in the framework of PPP schemes, which may include investment subsidies for RE developers. Renewable Energy Strategy and Action Plan Private finance will mostly be for the operational components of the strategy directly linked with rolling out the selected RE technologies, including capital required by RE developers and end-user finance. Monitoring and Evaluation It is important to monitor the implementation of the Renewable Energy Action Plan to assess if it is achieving its objectives. This progress tracking will allow Zambian stakeholders, led by the MoE, to review and update the strategy to ensure the national RE ambitions remain on track. The indicators that were developed for the various activities provide quantitative and qualitative metrics that will be used to assess the roadmap's successes and shortcomings. These data will be used to improve policies and regulations, adjust targets or adjust policy instruments, if needed. Monitoring will be a continuous process, with tracking and monitoring occurring on a regular basis, as shown in Figure 1. This process requires significant data collection efforts and is budgeted for in the overall programme activities. Update the strategy Figure 1: Monitoring and Evaluation of Strategy Implementation Renewable Energy Strategy and Action Plan I2022 References 1. BGFZ. 2019. Lighting up Zambia. The Impacts of 1.5 Years of Beyond the Grid Fund for Zambia. 2. ERB. 2020. The Energy Sector Report 2019. Energy Regulation Board. Lusaka. 3. FAO and MOE. 2020. Sustainable Bioenergy Potential in Zambia - An Integrated Bioenergy and Food Security Assessment. Environment and Natural Resources Management Working Papers No. 84. Rome. 4. GET FiT Secretariat. 2020. GET FiT Zambia Annual Report 2019. 5. IEA. 2019. IEA World Energy Balances 2019. Available at: www.iea.org/subscribe- to-data-services/ world-energy-balances-and-statistics. 6. IAEREP, 2020. IAEREP Database of Hydro Potential and Sites in Zambia. 7. Lanfranconi, C.P., Renzulli, A. and Paladini, D. November 2018. Position Paper 1. 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