CEC’S $200 Million Green Bond:
A Step Toward Zambia’s Green Energy Transition
Zambia is a nation that stands at the crossroads of economic development and environmental sustainability. As the global community intensifies its focus on mitigating the impacts of climate change, Zambia emerges as a pivotal player in the quest for a greener, more resilient future.
Against the backdrop of a changing climate and the imperative to transition towards renewable energy sources, Zambia stands as a beacon of promise. Richly endowed with abundant solar, hydro, and wind resources, the country is poised to harness these renewable energy sources to meet its growing energy demands and catalyse socio-economic progress. The question that resonates is how Zambia can leverage climate finance to unlock the full potential of its renewable energy sector and build a robust foundation for a low-carbon, resilient economy.
Leading Zambia into the future of clean energy is Copperbelt Energy Corporation (CEC), a company that has distinguished itself by making bold bets on the future with renewable energy investments in Zambia. Through its subsidiary, CEC Renewables, CEC Group announced the issuance of a staggering $200 million Green Bond, a first for Zambia and its capital markets. The Green Bond will support CEC’s ambition to develop a combined 200MW of solar energy. CEC is on track to meet this target with an already operational 34MW solar plant and a 60MW due for completion by the end of 2024’s first quarter.
CEC’s existing renewable energy developments are a testament to their environmental impact. The current 34MW operational plant has offset over 14,000 tonnes of carbon emissions, additionally, CEC is committed to biodiversity preservation with snake-catching and the adopted technologies in the wake of climate change and a growing awareness of environmental and social responsibilities. Financial markets are witnessing a transformative trend with the rise of green bonds. These financial instruments are reshaping the investment landscape and proving to be catalysts for sustainable development.
Green bonds are debt securities specifically designed to finance projects with environmental and social benefits. Issued by governments, municipalities, financial institutions, and corporations, these bonds raise capital with a commitment to channelling funds into projects that promote sustainability. The proceeds from green bonds are dedicated to renewable energy, energy efficiency, clean transportation, and other environmentally friendly endeavours.
With the global, ever-burgeoning cost of capital, CEC’s decision to use Green Bonds to further its ambitions is a mark of the innovation and strategic vision that permeates the company. In an exemplary feat, the company has recently issued the first tranche of the Green Bond valued at $53.8 million. Less than a month after issuance, the bond was remarkably oversubscribed, a strong signal of the vibrancy of Zambia’s capital markets and the private sector’s desire to participate in diversifying Zambia’s energy mix.
Historically, Zambia has relied heavily on hydropower to meet its electricity needs. With the iconic Kariba Dam and other hydroelectric facilities harnessing the energy potential of the Zambezi River, the country has benefited from a relatively clean and renewable energy source. Recognising the importance of a diversified energy mix, Zambia is making strides to reduce its reliance on a single source. Diversification is not merely a strategic move to mitigate risks but a progressive approach to embracing cleaner, more resilient and technologically advanced solutions.
Furthermore, dependence on hydropower comes with challenges, including vulnerability to climate change shocks such as droughts, which have proved to be Zambia’s Achilles’ heel over the decades. Zambia has been facing its worst drought in recent years, with record-low rainfall leading to reduced water allocation at the Kariba Dam for 2024. The Zambezi River Authority (ZRA), responsible for the operation and maintenance of the Kariba Dam Complex, recently announced a reduction in water allocation to 16 billion cubic litres, down from 30 billion cubic metres in 2023, to be equally shared between Zambia and Zimbabwe.
CEC’s investment ambition is a bright spot in the sector’s outlook. The additional generation capacity that CEC will develop with the Green Bond will ease dependence on hydropower and spur Zambia’s economic development. Moreover, Zambia is yet to harness its full solar energy potential. The country’s proximity to the equator ensures abundant sunlight throughout the year, providing an optimal environment for solar energy projects. From large-scale solar farms to decentralised solar solutions for rural electrification, solar energy is emerging as a game-changer in Zambia’s pursuit of a diversified and sustainable energy portfolio.
The diversification of Zambia’s energy mix goes beyond environmental considerations; it carries profound economic and social implications. Investments in renewable energy projects stimulate economic growth, create job opportunities, and foster technological innovation. Furthermore, decentralised energy solutions, such as mini solar grids, contribute to rural electrification, bringing power to previously underserved communities.
Economic transformation requires boldness in the face of adversity. It also requires strategic direction and rigorous dedication to achieve the intended targets. CEC embodies all these tenets necessary to transform Zambia into a prospering economy that delivers essential services to its people. Most importantly, CEC is a reminder to all that Zambia can deliver innovative solutions to challenges at a national level.
