The Government of the Republic of Zambia, in partnership with the Kingdom of Norway, has launched a call for proposals under a new Carbon Feed In Premium program aimed at accelerating investment in solar PV with storage. The initiative follows a bilateral agreement signed on 16 November 2024 to develop mitigation activities and enable the transfer of internationally transferred mitigation outcomes under Article 6 of the Paris Agreement.

Program Structure and Funding Mechanism

Under this framework, Zambia will host projects that generate carbon credits for transfer to Norway, unlocking results-based climate finance to support clean energy deployment. The program is backed by the Norwegian Article 6 Climate Action Fund, established in 2024 and managed by the Global Green Growth Institute as trustee.

Through this mechanism, a fixed carbon price will be paid for verified emission reductions over a minimum period of 10 years, creating a predictable additional revenue stream for project developers. The Carbon Feed In Premium is designed to complement existing power purchase agreement revenues rather than replace them. By topping up electricity tariffs with carbon payments, the scheme aims to close financing gaps and enable projects that would otherwise struggle to reach financial close.

Project Requirements and Technical Specifications

The first application window focuses exclusively on grid-connected solar PV projects with a combined capacity of up to 300 MW. Eligible projects must include battery energy storage systems with a minimum duration of 30 minutes to support grid stability and reduce reliance on coal-based generation.

Projects must be at an advanced stage of development but not yet under construction. Requirements include completed feasibility studies, secured land, environmental approvals, and evidence of investor interest. Project developers have a two-month window to submit proposals, with a deadline set for 31 May 2026.

Financial Criteria and Assessment Process

Submissions will be assessed against strict eligibility criteria, including financial additionality, contribution to Zambia's nationally determined contribution, and alignment with sustainable development goals. Only projects demonstrating a clear financing gap will qualify.

Developers must provide detailed financial models showing that the project's internal rate of return falls below the benchmark commercial lending rate of 12.5% per year without the carbon premium. The program will then bridge this gap through carbon payments linked to verified emission reductions.

The scheme introduces competitive bidding for carbon premiums by technology, marking a shift towards market-based mechanisms to allocate climate finance efficiently. The bidding process applies only to the carbon component, while electricity tariffs remain governed by existing power purchase agreements, primarily with ZESCO.

Development Impact and Compliance Standards

In addition to financial viability, projects must demonstrate measurable development impacts, including emissions reductions, electricity generation, and job creation. Compliance with international environmental and social safeguards, including Gold Standard and Global Green Growth Institute requirements, is also mandatory. Shortlisted projects will undergo due diligence between July and August 2026, covering technical, financial, and environmental aspects.

Successful developers will enter into a standardized contract with ZANACO, acting as fund manager, which will define carbon payment terms and require the transfer of all emission reduction rights to the program. By integrating carbon finance with energy infrastructure development, Zambia is positioning itself to leverage international carbon markets to scale up renewable energy capacity, improve energy security, and advance its decarbonization objectives.

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