Tanzania Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in tanzania, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Energy
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The energy sector in Tanzania is experiencing expansion underpinned by a mix of hydropower and natural gas, and a promising yet nascent renewable energy sub-sector. The government is actively seeking investment to bolster energy output, provide electricity countrywide, and meet the country’s growing demand for power. The country’s current generation mix consists of hydropower at 54%, natural gas at 42%, while diesel and heavy fuel oil contribute 3.2%, and 0.49% from biomass.

Tanzania continues to make significant progress in connecting citizens to electricity. Household access and connectivity rates for the Tanzania mainland is 45%, of which 73% accounts for urban areas. As of January 2025, overall electricity access on the mainland is 79%, of which 99.6% accounts for urban areas and 69.6% for rural areas. Nevertheless, more than half the population remains without electricity. The Tanzania Electric Supply Company (TANESCO) projects that electricity demand will grow at an annual average of 11.7%, resulting in a demand of 2,700MW by the end of 2025, to 4,870MW in 2030 and up to 8,500MW by 2035.

The Tanzanian government aims to harness its significant renewable energy potential, incorporating large hydro, CCGT, solar PV, wind, and geothermal applications. Given its geographic position, the country plays a crucial role in connecting the Southern African Power Pool (SAPP) and the Eastern Africa Power Pool (EAPP), with connections existing with Kenya, Burundi, and Rwanda. Future plans include the integration of Zambia, Uganda, Mozambique, DRC, and Malawi.

Challenges

Overarching challenges facing the electricity sector in Tanzania (in both mainland and Zanzibar) include:

  • The services provided by TANESCO (Tanzania Electric Supply Company) and ZECO (Zanzibar Electricity Corporation) require substantial upgrades and improvements to comply with applicable standards for service and reliability. Both mainland and Zanzibar frequently experience power outages.
  • Connectivity is not countrywide, widely affecting economic development.
  • Current electricity tariffs are not sufficient to recover the cost of efficient service provision, resulting in very limited O&M (further deteriorating the network) and inability to undertake necessary investments to improve and expand service.
  • Private sector investment continues to be low across the value chain, limiting growth in the sector.

Opportunities

Tanzania presents strategic opportunities for American energy companies across generation, transmission, and distribution. The DFC (Development Finance Corp), USTDA (U.S. Trade Development Agency) and EXIM (Export-Import Bank of the U.S.) hold the potential to bolster private sector participation in infrastructure projects.

Tanzania’s energy sector development will drive demand for new technology, equipment, and expertise in areas such as gas turbines, grid infrastructure, renewable energy solutions, and battery storage.  

Leading Sub-Sectors

Natural Gas

Tanzania is estimated to have 45 billion m3 in natural gas reserves, enough to cover the country’s domestic needs and transform Tanzania into the next natural gas hub in Africa. Natural gas deposits in Tanzania are found at Songo Songo in Lindi region, Mnazi bay in Mtwara Region and Mkuranga in Coast Region. The reserves at Songo Songo and Mnazi Bay are estimated at 30 and 15 billion m³, respectively. A 232 km gas pipeline from Songo Songo Island to Dar es Salaam has been constructed and is supplying natural gas for power generation and other industrial thermal processes.
Dar es Salaam-based industries utilizing natural gas for thermal applications include cement factories, textiles manufacturing, breweries, the glass and aluminum industry.

Hydropower

Tanzania hydropower capacity stands at 1,540 MW and estimates of potential capacity are as high as 4.7 GW. Tanzanian rivers are the main source. There are large, planned hydro projects at Ruhudji (360 MW), Rumakali (22 MW), and a small hydro power (under 10 MW) planned by Tanzania Electric Supply Company Limited (TANESCO) and private developers.

Solar 

Tanzania has between 2,800 and 3,500 hours of sunlight a year, creating a solar energy potential ranging from solar irradiation levels of 1800 to 2400 kWh per square meter per year. It is estimated that between 25 and 30 MW of solar PV have been installed in Tanzania, mostly in off-grid areas and mini-grids. The Government supports solar development within the country by removing VAT and import taxes on the main solar components such as panels, batteries, inverters and regulators. The President of Tanzania’s goal is to produce 6,000MW of renewable energy by 2030.

Wind

Tanzania has wind energy potential areas with average speeds of over eight m/s. The variable renewable energy analysis conducted in 2023 shows that the central and western regions have reliable wind resources, with some areas experiencing wind speeds over ten m/s.

Liquified Petroleum Gas (LPG)

Currently, five major suppliers of gas share the market namely BP Gas, Oryx Gas, Alpha, Mohan Gas and Pan African/TPDC, which is piloting bottling and distribution of natural gas. About 90 percent of all households in Tanzania use LPG for home cooking. LPG has replaced charcoal and firewood.

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