Zambia’s pursuit for sustainable economic development relies on energy access, particularly in off-grid areas. Despite high solar energy potential, private-sector investments in the country remain low, raising questions about the status of institutional policy and deployment support mechanisms. This study investigates the suitability of financial, fiscal, and non-monetary incentive mechanisms for public and private solar institutions, and their influence on solar-sector investments. Anchored on the Technological Innovation Systems (TIS) perspective, the study addresses a gap between resource potential and investment outcomes by evaluating existing incentive structures in the context of policy, markets, and deployment.
A quantitative, correlational approach was employed to examine relationships between institutional investment incentives and private-sector solar investment performance. Low electronic response rates in the pilot stage prompted face-to-face administration of structured questionnaires to participants across solar related public and private organisations including donor and intermediary institutions in the solar sector value chain. Probability sampling from a purposively defined sampling frame was applied. Data analysis was through the use of IBM SPSS statistical tool to establish relationships and effects of incentives on outcome variables, namely private-sector investment rates (PSIR) and return on investment (ROI).
Findings revealed that financial incentives such as loans and grants, exhibited weak to non-significant effects on investment outcomes, suggesting limited standalone influence. Fiscal incentives demonstrated varied, mostly weak relationships with investment performance, indicating partial effectiveness of incentives thus requiring complementary approach with other incentives. Non-monetary incentives showed the most varied results where measures aimed at lowering initial costs and improving affordability, positively correlated with investment, while location, value or type based measures exhibited negligible effects. Overall, incentive effectiveness was modest and uneven, highlighting the need for integrated, context-specific, and scale-appropriate frameworks supported by stable regulatory, institutional, and market environments.
The study’s implications underscore the necessity for inclusive policy designs, streamlined working processes, and capacity-building initiatives to strengthen private-sector participation. Additionally longitudinal, comparative, and contextual research to evaluate incentive performance over time is recommended. Empirical evidence on incentive effectiveness, from this research contributes to theory, informs policy and practice, and offers actionable guidance to policymakers, investors, and development partners in Zambia’s solar energy sector.