Posted on by Uche Udechukwu

AN ANALYSIS OF ZAMBIA’S ELECTRICITY (OPEN ACCESS) REGULATIONS, 2024

GENERAL OVERVIEW

Open access in the context of electricity typically refers to a framework that allows multiple power providers to access transmission and distribution networks on a non-discriminatory basis. In a true open access market, regulations are usually put in place to ensure that market participants can use the grid infrastructure without being unfairly treated. Proponents of open access electricity markets believe that opening up the electricity sector to different players will bring about numerous benefits, such as: 

  1. Increased competition: Open access opens up the electricity market to various players, potentially leading to increased efficiency and lower prices. It is believed that a market with different players gives consumers the opportunity to choose the provider best suited for their needs based on some metrics like price, service quality, or contract terms.
  2. Access to electricity: Open access allows a diversified mix of generators to contribute to the grid, thereby reducing reliance on any single generation source.
  3. Investment acceleration: A more competitive and non-discriminatory market encourages investment into the electricity sector.
  4. Economic growth and job creation: More opportunities for new businesses and energy services in the energy sector means more job opportunities and economic growth.

ZAMBIA’S ELECTRICITY (OPEN ACCESS) REGULATIONS, 2024

The aim of the regulations which came into force on July 19, 2024 is to attract investments to address Zambia’s persistent energy challenges, especially severe hydro-based shortages during drought. Under the regulations, Independent Power Producers (IPPs) and large consumers can access Zambia’s transmission and distribution systems, and sell electricity directly to consumers, if they meet the regulatory requirements. 

Access (Regulations 2, 4)

Participants may apply under three categories:

  1. Long-term access: More than 5 years.
  2. Medium-term access: Greater than 3 months, and less than or equal to 5 years.
  3. Short-term access: Less than or equal to 3 months.

Participation (Regulation 5)

The following are qualifying participants for open access:

  1. A licensee that holds a license to trade in electricity.
  2. A supplier.
  3. A system user.
  4. A consumer.

Eligibility (Regulation 5)

A qualifying participant is eligible to apply for open access if the participant is not or has not been declared insolvent or bankrupt, and is licensed by the Energy Regulation Board. The capacity are as follows:

  1. In the case of a licensee that holds a license to trade in electricity, that licensee should have a trading capacity of at least 1 Megawatt.
  2.  In the case of a supplier, the supplier should have an installed generating capacity of at least 1 Megawatt. 
  3. In the case of a consumer, that consumer should have a  consumption capacity of at least 1 Megawatt.

Application, Review and Approval (Regulations 6,7,8,9,10)

  1. Applications must be submitted to the relevant Transmission Network Service Provider (TNSP) or Distribution Network Service Provider (DNSP).
  2. Applications must use the prescribed Form I provided in the Schedule of the Open Access Regulations and include supporting documents such as participant’s infrastructure details, entity details, financial security statements, planned volumes of electricity, the intended points for drawing or injecting electricity, and intended duration for open access.
  3. The TNSP or DNSP must respond within 30 days; considering capacity, obligations, need for network upgrades, and other existing users.
  4. If approved, the TNSP or DNSP notifies the system operator, who must assess the potential grid congestion before final approval.
  5. If rejected, written reasons must be provided for rejection.

Allotment priority (Regulation 11)

Priority is given on a first-come, first-served basis, and  in the following order:

  1. Qualifying participants meeting demand/security needs.
  2. Long-term access.
  3. Medium-term access.
  4. Short-term access.

Charging, trading and liability (Regulations 14,16, 20)

  1. System operator is indemnified under Regulation 20 for third party claims arising from open access operations.
  2. Transmission and distribution charges are levied by the TNSP or DNSP, subject to approval by the Energy Regulation Board.
  3. An open access user is permitted to trade electricity if the open access user:
  1. enters into a participation and balancing agreement with the system operator,
  2. provides a proof of notice of approval from a TNSP or DNSP, 
  3. uses the transmission or distribution system granted by the TNSP or DNSP, 
  4. deposits the necessary financial security to cover energy imbalances requirements,
  5. registers the relevant power purchase agreement or power supply agreement with the system operator in the case of bilateral transactions. 

Roles of key institutions

The Energy Regulation Board

  1. Issues licenses.
  2. Sets pricing methodology.
  3. Approves participation agreements and trading guidelines.

System Operator

  1. Manages scheduling.
  2. Approves access if no congestion.
  3. Develops and administers guidelines with the approval of the Energy Regulation Board.
  4. Curtails power where necessary.
  5. Monitors the compliance of open access users with the rules, codes, practices and guidelines issued by the Energy Regulation Board in relation to open access.

TNSP/DNSP

  1. Receives and processes application.
  2. Liaises with the system operator.
  3. Approves, rejects, or refers applications.

Outlook and Implementation so far

  1. Delay in pricing methodology: The Energy Regulation Board is yet to develop a pricing methodology as required by the regulations. The absence of a clear and approved access fees or transmission pricing model has created uncertainty and lack of clarity. 
  2. Zambia Electricity Supply Corporation Limited (ZESCO) still plays a dominant role: ZESCO, the state-owned power company in Zambia, is the main supplier of electricity to the nation and is involved in the whole power business chain (generation, transmission, distribution, and supply). In addition to that, ZESCO currently maintains the system operator role. While there are Independent Power Transmission and Distribution Companies like Copperbelt Energy Corporation, and IPPs like Lunsemfwa Hydro Power Company Limited, Kwama Energy, CGM Power Group Limited etc., ZESCO’s continued play raises concerns about fair market access for participants.
  3. Market readiness and Infrastructure: For a successful implementation of the regulations, there is a need for the existing grid infrastructure to be expanded and upgraded to accommodate increased power flow from diverse sources, and ensure grid reliability. In November 2023, the Integrated Resource Plan (IRP)  that maps the country’s 30-year energy plan was approved, and subsequently launched in February 2024. The IRP recognizes the importance of improving grid infrastructure. However, grid reinforcement is capital intensive, necessitating substantial investments. Despite the challenges, Zambia has rolled out some power stations like the 100 MW Chisamba Solar Power Plant which was commissioned in June 2025, and the 110 MW Mailo Solar Power Plant which currently injects 25 MW into Zambia’s electricity grid with the completion of its first phase. 
  4. Calls for reform: Pressure mounts from parliamentary and civil society actors to separate ZESCO’s roles and operationalize the Open Access Regulations. 
  5. For the regulations to succeed in accelerating Zambia’s energy sector and meeting the country’s energy demands; it is important that authorities work towards regulation clarity, and strengthening the grid infrastructure to accommodate the influx of energy mix being directed to the grid. It is believed that with thorough implementation, the Open Access Regulations can foster economic growth and attract new investments.