Assessing the Financial Viability of Utility-Scale Solar Power Investment in Zambia: Evidence from Copperbelt Energy Corporation

Abstract

The purpose of this study was to examine the financial viability of Copperbelt Energy Corporation’s (CEC’s) solar investment in Zambia, considering the recently installed 34MW Riverside Solar Power Plant and ongoing construction of the 60MW Itimpi Phase 1 solar plant. The current paper fills a gap in the literature regarding the topic of renewable energy investments in terms of practical experience of firm-level renewable projects in sub-Saharan Africa, since most previous research in the area has focused on either macro-level policies, policy-related issues, or pre-construction feasibility studies of the potential renewable energy project. This research aimed to achieve several objectives: to examine the return profile of CEC’s solar investment, to estimate the solar generation capacity that CEC has built through its solar plants, and to analyse the payback and financial break-even aspects of the solar projects. The Resource-Based View and Capital Budgeting Theory were employed as theoretical frameworks in order to consider solar energy investment in terms of the firm’s ability to build resources as well as long-term capital project that require formal financial analysis. A mixed-methods approach to single case design was adopted for the research. According to the findings, the strategies resulted in significant expansion in the CEC’s portfolio of renewable power generation capacity. Solar power installation reached 94 MW in 2024, while solar power generation increased to 153.8 GWh. Solar revenue improved from USD 2.54 million in 2023 to USD 8.66 million in 2024 and solar net profit from USD 0.22 million to USD 1.08 million during the same period. These figures suggest that the solar business unit became commercially viable by 2024 but did not recover its initial capital expenditure fully during the study period. Accordingly, a future-oriented financial projection for the project was conducted to determine its midterm viability. The management case scenario yielded an estimated IRR of 12.0%, an NPV of USD 16.60 million at a 10% discount rate, and an estimated payback period of 7.9 years starting from January 2024. The research finds that the decision by CEC to invest in solar energy is both operationally sound, strategically important, and commercially viable within the assumed conditions for the medium term. The paper claims that the current case is valuable to the body of knowledge because it proves that even when corporate solar initiatives in Zambia have a low accounting recovery at the beginning of the projects, they can still be viable throughout their life span.