Wednesday, May 18, 2016


Terms of Reference to Formulate a Comprehensive Policy and Regulatory Framework for Strengthening Investment Climate for Biomass Technology in Zambia
  1. Background
Electricity demand in Zambia constitutes only 11 percent of total national energy demand. The dominant energy source is firewood and charcoal, on which more than 90 percent of the rural people depend to meet domestic energy needs. There is a close correlation between the high incidence of poverty in rural areas and the low access to electricity which averages about 5%. Increased application of electricity would increase productivity and incomes, and therefore reduce poverty in rural areas. The main reasons for non-adoption of clean technologies, including biogas, include limited awareness of off-grid technology options, high (up front) cost of installation and a limited quality awareness among the few providers.
Energy poverty is a serious issue in Zambia. Low access rates to energy are a constraint to economic growth and to improved quality of life for the majority of the Zambian population, especially the poor, women, youth and those living rurally. While nationally, 20% of the Zambian population has access to on-grid electricity services, in rural areas the figure is less than 2%. The majority of Zambians either cannot afford or do not have access to on-grid electricity. More than 80% of the population depends on charcoal and/or fuel wood as a source for cooking, heat and light. In urban and peri urban areas charcoal is utilised as the main source of domestic energy for cooking while in rural areas firewood use predominates. For charcoal, urban based demand has catalysed the emergence of a largely informal industry that employs up to 400,000 people and generates as much as 2.3% of GDP ( with an estimated value of US$5 billion in 2008). Most of this money flows into the informal economy.
About 65% of Zambians live in rural areas. The rural population tends to be dispersed and poor, making provision of on-grid electricity services both difficult and expensive. Nonetheless, sustainable energy is seen as critical to improving local development and stimulating local value addition. Given the size of the country, the dispersed nature of the population, the high agricultural potential, the availability of water and land, there is ample scope for development of decentralised energy solutions using alternative biomass energy sources such as biogas, biofuel, improved cook stoves, gasification, pelleting, briquetting etc. to address issues of access to sustainable energy for production and domestic use. Meeting basic needs such as cooking, heating and lighting; biodigesters fed with cattle dung as raw material and other biomass energies can play a vital role in the country. SIDA has supported SNV to implement a nationwide biodigester project named ‘Energy for Agriculture (E4A)’ which aims at developing the biogas market in Zambia to increase access of households, public services, and businesses to renewable energy technologies. To support the government’s initiative to harness renewable energy technologies especially the biomass technology, in the country to substitute the conventional fuel sources, E4A envisages to hire consultants to carry out a study entitled ‘Formulation of a Comprehensive Policy and Regulatory Framework for Strengthening Investment Climate for Biomass Technology in Zambia’.
This TOR describes the work of the consultants to set out a comprehensive framework that helps policy makers to take full account of the information available on costs and other aspects of Biomass Technologies to deliver policy, regulations, and guidelines for scaling up biomass technology development and supply in Zambia.
  1. Objectives and Scope of Study:
The objectives of this study are to: (i) set out a comprehensive framework that helps policy makers to take full account of the information available on costs and other aspects of biomass technologies to deliver coherent policy, regulations, and guidelines for scaling up biomass technology development and supply in Zambia; and (ii) provide recommendations for strengthening the investment climate for biomass technology by assessing the gaps in the current renewable energy sector policy and identifying areas for intervention and further strengthening through investments, policy, regulation, and market instruments.
The study will comprise of the following tasks:
Task-1: Development of an overarching comprehensive framework for assessing the economic basis for supporting investments in biomass technology in Zambia
(a) Early conceptualization of the framework
The consultants would identify various economic benefits of biomass technology over conventional energy sources including inter alia – increased availability of power, enhanced access in remote (rural) areas, local environmental benefits, global environmental benefits, energy security benefits, fuel diversification benefits and cross-sectoral benefits (such as disposal of municipal solid waste and health benefits from use of biogas). These economic benefits would be classified as value elements. The framework would map (i) key stakeholders/ beneficiaries/drivers of respective value elements (ii) present policies, regulations and market interventions to realize these economic benefits and (iii) gaps in approaches, instruments and institutional framework to integrate these economic benefits in a comprehensive framework, and provide recommendations for the same. The consultants would consult various sector stakeholders to evolve this early concept into a comprehensive framework. The framework should address each of the major biomass energy technologies (thermal applications/gasifiers/direct combustion/bio-diesel, biogas etc.). For this purpose, the consultants would organize a meeting with various stakeholders and seek comments / feedback on the early concept of the framework.
(b) Mapping Policy, Regulatory and Market Interventions
Consultants would bring out for various identified economic benefits (value elements) conduciveness to policy interventions, institutions best suited to address these value elements and the instruments available for addressing them. They would study various existing and proposed policy, regulatory and market interventions. In this process, the consultants would also identify the advantages and disadvantages of these interventions.
(c) International experience of realizing economic benefits of biomass technologies
The consultants would carry out desk review to document various policies, regulatory and market interventions prevailing in other countries to realize various economic benefits of biomass technology across various technology options. The approaches and methodologies adopted to integrate these economic benefits in a comprehensive framework to facilitate renewable energy development will also be presented.
(d) Documentation and Dissemination of Biomass Energy Framework
The framework would be documented into a report for dissemination to various sector stakeholders. The Report would be titled – “A Framework for assessing the economic basis for supporting investments in Biomass energy sector in Zambia”. A dissemination workshop would also be organized to present the final report to key stakeholders.

Task-2: Assessment of Investment Climate for Biomass Energy and Approaches to strengthen the same
(a) Assessment of the existing Investment Climate for each of the biomass energy technologies (thermal applications/gasifiers/direct combustion/ biodiesel): The consultants would identify the key issues and risks affecting investment climate in each of these areas, and also document the approaches suggested by various stakeholders for addressing them.
(b) Assessment of Biomass Energy Costs Using desk research and interviews with key stakeholders: Report on the costs of each of the key forms of biomass technology under consideration in Zambia. Benchmark these costs with conventional energy sources such as coal, gas, for power generation as well as use of liquid fuel for captive energy use (diesel water pumping for irrigation, use of diesel generators by commercial and residential users etc.)
(c) Assessment of biomass energy resources in Zambia:  The consultants would set out potential for incremental capacity of each technology in Zambia, based on research from secondary sources.
(d) Review of biomass energy targets and strategy: The consultants would review the biomass energy targets set by the Government of Zambia for the current planning period and also over the next 20 years. They would examine the existing strategy of the government and the key approaches being proposed for achieving the targets. The consultants would co-relate the findings of the investment climate assessment, renewable energy costs, potential for renewable energy and the economic basis for supporting renewable energy technologies, with the targets and strategy being envisaged by the Government.
(e) Assessment of Biomass Energy Policy Instruments and Initiatives: The consultants would assess the policy instruments and initiatives most useful in addressing the investment climate issues with the aim of achieving the biomass energy targets. They would also bring out the gaps in policy, regulation, institutions and financing that may affect the achievement of the biomass energy targets. In doing so, consultants should assess the policies used in Zambia and the reasons for their relative successes or otherwise.
  • What business models are working and has potential for scaling up?
  • What have been the sources of finance?
  • What are likely to be the major sources of finance going forward?
  • What has worked internationally – provide examples from other countries.
(f) Review of regulatory environment in the country to facilitate biomass energy development: This will entail a review of approaches adopted by various state regulators for feed-in tariffs, purchase obligations, other specific guidelines/ regulations to promote biomass energy, and impact of other regulatory guidelines (e.g. open access, trading, etc.) on biomass energy projects. Consultant will highlight good practices and areas where harmonization of regulatory interventions would be essential to achieve the biomass energy targets set for the current plan period.
(g) Documentation and Dissemination of Investment Climate Assessment for Biomass Energy in Zambia: The consultants would prepare a report on all the above aspects, which would be presented to stakeholders during the dissemination workshop. The report would be titled – “Assessment of Investment Climate for Biomass Energy in Zambia and Approaches for its Strengthening”.
  1. Deliverables and Schedule
Deliverable Elapsed time after project kick-off
  • Note on “Early conceptualization of the Biomass Energy Framework” and proposed methodology for conducting the assignment – 1st week
  • Renewable Energy Framework Report – “A Framework for assessing the economic basis for supporting investments in renewable energy sector in Zambia” – 4th week
  • Investment Climate Assessment Report – “Assessment of Investment Climate for Renewable Energy in Zambia and Approaches for its Strengthening ” – 7th  week
  • Dissemination Workshop 8th week
  • Final study report 10th week
  1. Team interactions within Country
It is expected that the consultant team will interact extensively with a number of the key policymaking bodies and stakeholders. These include:
  • Ministry of Energy
  • Ministry of Agriculture
  • Ministry of Fishery and Livestock
  • Energy Regulation Board
  • Zambia Bureau of Standards
  • IPPs
  1. Team composition
It is expected that the winning bidder will have extensive experience of Zambia energy sector policy and regulatory context (including that for renewable energy). The consultants should have a good understanding of policy making to increase incentives for investment in biomass energy in a number of African countries. The team will be led by an experienced and well regarded expert in power sector economic regulation and policy. The work will require extensive interaction with and understanding of stakeholders and their relationships and activities. It is therefore important that bidders adhere to the guidance on team composition, particularly in relation to experience in Zambia energy sector. The ideal team will combine an experienced and effective Zambia-based team with highly experienced international expert(s) in renewable energy policy. Key members of the team should be: (i) Project Team Leader/Renewable Technology Expert – at least 15 years of substantive international experience of regulation in the power sector, including experience in regulatory/policy treatment of renewable energy. He/she should have experience of at least 8 years on renewable energy technology applications and practical challenges in implementation and operation of projects. Will preferably have experience of working in Zambia energy sector. (ii) Regulatory Economist – experience in power sector regulation internationally and in Zambia, with at least 10 years of overall experience. The bidding firms may choose to strengthen their proposal further by assigning additional roles as they deem fit for the assignment.
The lead consultant for the assignment should have a minimum of a degree or higher in fields such as Energy Economics, Energy Planning, Renewable Energy Technologies, or other relevant field from a recognised institution. The consultant should have at least 10 years of experience in conducting energy related studies or implementing energy related projects.
Knowledge and Experience
The consultant or consulting firm should have demonstrable knowledge of the key issues related to the energy sector in Zambia.
The consultant should demonstrate a good understanding of the Zambian Government’s current energy policy as well as future plans in the renewable energy sub-. Knowledge of the Government’s policy and targets in the renewable energy sector, particularly the biomass sub-sector, is required.
It is desirable for the consultant to have experience in the following areas:
  • Policy and programme appraisal and analysis;
  • Organizational and/or institutional development;
  • Organisational capacity development, and process facilitation;
  • Formulation of energy policies, guidelines and frameworks.
  1. Budget and Resources
The consultant(s) should clearly indicate in his/her/their financial proposal the total costs of conducting the study including remuneration, DSA, travel and transportation fees and any other sundry expenses that may be needed to conduct the study. The consultant should also mention about the supports and resources expected from SNV to successfully carry out the study.
  1. Evaluation Criteria
The proposals received will be evaluated using the following criteria and other relevant criteria as may be considered appropriate by evaluation / review committee:
  • Relevant qualifications and years of experience.
  • Relevant work experience
  • Depth of proposal in addressing the ToR
  • Research and Analytic ability
The technical proposals fulfilling the minimum required conditions (score more than 60 out of 100) will be considered for further action. Financial proposals of those who do not meet the minimum criteria will not be considered.
The firm/consultant achieving the highest combined technical and quality score will be invited for negotiations.
  1. Application Procedure
Interested consultants should submit technical proposal detailing the background, methodology, work-plan, and staff profile amongst others together with a separate financial proposal detailing item-wise costs of services to SNV Zambia within two (2) weeks from the date of the advertisement/issue of letters.
Submissions are to be made available to SNV no later than the 31st May, 2016 at 10:00.
  1. Further information is available from:
The Renewable Energy Sector Leader,
SNV Zambia
Proposals can be submitted to:
The Senior Procurement Officer,
SNV Zambia,


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