Introduction
Zambia stands at the centre of a renewed global race for critical minerals, with broader ambitions for industrial growth and climate resilience. Yet all these aspirations depend on reliable electricity. In a hydro-dominant system exposed to climatic variability, installed capacity does not always translate into dependable supply. Beyond megawatts, a critical concern is whether Zambia’s electricity market is structured to secure resilience and minimise systemic risk.

Increasingly, power trading is emerging as a key mechanism in this context. Across Africa, electricity trade is recognized as a structural tool to enhance energy security, integrate renewables and stabilise systems. Evidence from 21 African countries shows that a 1% increase in electricity trade flows corresponds to roughly a 0.05% increase in the share of renewable energy in total output (Adaji, et al…2025). This highlights how integrated markets smooth intermittency and lower system-wide costs. Therefore, this piece explores who power traders are, their role in the energy sector and the challenges they may encounter as they operate.

Who Are Power Traders and Why Do They Matter?
According to the Oxford Institute for Energy Studies, power trading refers to the commercial buying and selling of electricity in wholesale markets through bilateral contracts, spot transactions and organised trading platforms. In electricity market practice, a power trader is generally understood to be an entity that purchases electricity for resale, whether domestically or across borders and may do so without necessarily owning generation assets. By contrast, an Independent Power Producer (IPP) is an entity that generates electricity for sale, typically under power purchase agreements or into the market. It is important to note that in some markets, the distinction is not rigid and an IPP may also trade electricity.

Bringing this into the Zambian context, both regional trading entities operating within Zambia such as Africa GreenCo and emerging local trading initiatives including Kanona Power and Angie Energies, illustrate how this model is emerging. Their emergence reflects Zambia’s vulnerability to hydrological shocks and the growing need for diversification and regional exchange.

One of the key institutional frameworks enabling such linkages is the Southern African Power Pool (SAPP), which coordinates cross-border electricity trade among member states. Complementing this, is the Zambia-Tanzania Interconnector Project a high-voltage transmission initiative that is intended to link Zambia’s grid with that of Tanzania and enable connection between SAPP and the Eastern Africa Power Pool (EAPP). ZTI seeks to expand access to reliable electricity, strengthen energy security and promote regional trade thereby allowing Zambia to import when in need and export power when it has surplus capacity.

These linkages expand the frontier for electricity trade. In such an integrated environment, the economic function of trading arrangements becomes central to system resilience. Power traders operating within and between these frameworks help improve liquidity, facilitate price discovery and balance supply and demand across countries and time periods. Studies show that increased cross-border electricity exchange is associated with smoother integration of variable generation and lower system costs (Adaji, Vasilakos & Kebede, 2025). As transmission capacity expands, so too does the need for actors who can navigate these cross-jurisdictional flows.

The Realities of Power Trading: Finance, Regulation and Market Entry
Financing generation differs fundamentally from financing trading. Generation requires long-term capital and significant upfront investment (Prasad, A., et al. (2022). Conversely, Trading is credit-intensive, relying on working capital and collateral arrangements. Their risk exposure lies less in construction and more in price volatility, counterparty performance, transmission availability and regulatory certainty (G20/GIF/IMF (2024) and Prasad, A., et al. (2022)). In liberalised electricity markets, these instruments are supported by sophisticated financial and legal ecosystems. In emerging markets, they are still developing.

Traders must obtain licences, secure grid access and negotiate transmission arrangements, comply with cross-border regulatory approvals and meet collateral requirements imposed by market operators or utilities. Delays in licensing and limited data disclosure of systems can be cited as barriers to entry for non-utility participants. Participation often requires compliance with detailed rules and financial guarantees. The result is that electricity trading, while conceptually straightforward, can be procedurally complex.

For Zambia, the question is whether the emerging regulatory and market framework adequately recognises the role traders play and provides sufficient legal certainty for their operations. As regional interconnections expand and market participation diversifies, clarity around licensing, settlement mechanisms, grid access and financial guarantees becomes essential. In Part Two, we examine whether Zambia’s current framework is fit for this purpose and what reforms may be necessary to ensure the smooth and secure participation of energy traders in a modernised regional electricity market.

Authors:
Isaac Mwaipopo heads the Centre for Trade Policy and Development in Zambia, guiding trade policies, public finance, extractives, and legislative reviews. His extensive experience ensures the organization remains a key resource for developments in these areas.