Zambia’s Energy Opportunity Is Real — But What Will It Take to Unlock Project Finance?
By Alicia Kay Lewis
Zambia has one of the strongest long-term energy and industrial opportunities in Africa.
Power demand is growing rapidly. Mining expansion is accelerating. Industrialization is increasing. And the country possesses strong solar resources alongside significant long-term infrastructure needs.
The opportunity is real.
At the same time, there is an important conversation that developers, investors, policymakers, utilities, DFIs, and infrastructure professionals increasingly need to have openly:
How does Zambia move from signing energy projects to successfully financing and building them at scale?
A Market With Real Opportunity
Over the past year, I have worked alongside an experienced international solar promoter that entered Zambia believing the country represented one of Africa’s most promising energy markets.
That belief was not misplaced.
Real projects are being developed. Real investors are interested. And meaningful capital is available.
In one case alone, over $50 million in equity — alongside a family office prepared to support up to $300 million in debt financing — was positioned for deployment.
Yet despite technically viable projects, strong demand fundamentals, and investor interest, many projects continue facing difficulties reaching full financial close.
The issue is not a lack of projects.
The issue is that many institutional investors, lenders, and insurers still require stronger guarantee structures and long-term payment-security mechanisms before they can comfortably deploy large-scale debt capital into the market.
Zambia and ZESCO Have Made Meaningful Progress
It is important to acknowledge that both ZESCO and the Government of Zambia have made significant efforts to improve the sector.
Recent reforms and initiatives have included:
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debt restructuring efforts,
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reductions in arrears,
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implementation of open-access regulations,
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multi-year tariff frameworks,
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and broader efforts aimed at stabilizing the energy sector financially.
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According to reporting by Phoenix FM Zambia in 2023, ZESCO announced reductions in outstanding debt obligations to Independent Power Producers and subsidiaries. Additional reforms tied to Zambia’s broader sovereign restructuring process have also been referenced through IMF and World Bank reporting.
From many people working within Zambia’s energy ecosystem, there is recognition that serious work is being done to address long-standing structural challenges.
Those efforts matter.
The question now is whether market confidence is recovering at the same pace as the reforms themselves.
Because from the outside looking in, Zambia appears to be addressing many of the areas international institutions previously highlighted as concerns.
However, many lenders, insurers, and infrastructure investors still believe additional de-risking mechanisms are needed before large-scale capital can be deployed comfortably.
The Challenge Is Not Lack of Investor Interest
One misconception is that Zambia’s energy sector lacks investor appetite.
That is simply not accurate.
There are:
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pension funds,
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infrastructure investors,
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renewable energy funds,
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family offices,
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and private capital groups actively evaluating opportunities in Zambia.
But large-scale energy infrastructure projects require more than equity capital alone.
They also require:
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senior debt,
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political risk insurance,
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guarantee structures,
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export credit support,
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and long-term payment-security mechanisms.
Several institutions continue raising concerns around:
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foreign exchange risk,
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sovereign risk,
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currency convertibility,
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transmission access,
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and long-term repayment certainty.
As a result, even when:
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projects are technically viable,
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PPAs are signed,
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investors are interested,
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and equity capital is available,
the financing stack can still struggle to close.
That is where many projects continue stalling.
The Gap Between Signed PPAs and Construction
One issue increasingly discussed within the market is the gap between projects reaching signed PPA stages and projects ultimately progressing into construction and operation.
Importantly, this challenge is not unique to Zambia. Similar bankability constraints exist across many emerging infrastructure markets.
ZESCO has signed multiple PPAs with developers, reflecting genuine efforts to expand generation capacity and attract private-sector investment.
However, many projects still appear to require additional institutional support before reaching full financial close.
This raises an important question:
Are current project structures fully aligned with the risk requirements of international lenders and infrastructure investors?
Because under current market conditions, a signed PPA alone does not always guarantee financeability.
Even Private Industry Still Depends on ZESCO Infrastructure
Some observers suggest developers should simply sell directly to mining companies or private industrial users.
But even that approach remains closely tied to the broader utility ecosystem.
Many mining and industrial projects still depend heavily on ZESCO infrastructure for:
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transmission access,
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wheeling agreements,
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grid integration,
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dispatch coordination,
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and approvals.
So even when developers attempt alternative structures, projects often remain connected to the broader transmission and utility framework.
Why Chinese Financing Often Becomes One of the Few Remaining Options
This is another difficult reality many developers quietly acknowledge.
Most developers do not initially pursue Chinese financing structures.
However, Chinese-backed groups are often among the few financing channels still willing to move in more complex financing environments when Western lenders, DFIs, insurers, and guarantee providers remain cautious.
This raises an important strategic question for Zambia and its partners:
How can additional institutional mechanisms, guarantee platforms, blended-finance structures, or sovereign-backed frameworks be created to allow a broader range of Western, African, Gulf, and multilateral institutions to compete more effectively in supporting Zambia’s energy expansion?
Because ultimately, Zambia benefits most when multiple financing ecosystems are actively participating in the market.
Potential Solutions Worth Exploring
The encouraging reality is that many of these challenges are solvable.
Potential solutions stakeholders continue discussing include:
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expanded ATIDI and multilateral guarantee coverage,
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Partial Risk Guarantees (PRGs),
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blended finance structures,
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escrow-backed payment mechanisms,
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mining-backed power purchase structures,
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export credit agency support,
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utility liquidity support facilities,
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faster implementation of open-access frameworks,
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and greater local-currency financing participation.
Many countries facing similar bankability challenges have successfully used combinations of these tools to unlock large-scale infrastructure investment.
The question is whether additional mechanisms can now be implemented quickly enough to accelerate project execution — because many stakeholders believe the market cannot afford to wait another five to eight years for confidence alone to gradually improve.
Zambia’s Opportunity Remains Significant
Zambia’s long-term opportunity remains substantial.
The country possesses:
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rising mining demand,
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growing industrialization,
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strong renewable-energy potential,
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and major infrastructure needs that will require additional generation and transmission capacity.
The projects exist. The investors exist. And there is meaningful capital interest.
The central question is:
How does Zambia move from signing projects to successfully financing and building them at scale?
And what additional mechanisms, protections, partnerships, or institutional structures are still needed to bridge the final gap between investor interest and deployable project finance?
That is the conversation many stakeholders across the energy and infrastructure ecosystem are now trying to solve.
And it is a conversation worth having constructively.
If there are additional solutions, guarantee mechanisms, institutional structures, or financing models that others have seen work successfully in similar markets, I would genuinely welcome the insight.
And for those within DFIs, export credit agencies, insurers, infrastructure funds, or development institutions, I would also appreciate a better understanding of what additional changes, protections, or reforms are still needed for institutions to feel fully secure deploying capital at scale into Zambia’s energy sector.