Executive Summary
Tanzania is endowed with diverse renewable energy resources, ranging from biomass and mini-hydro to geothermal, solar and wind. Tanzania’s power sector is dominated by state-owned TANESCO (Tanzania Electricity Supply Company Limited). TANESCO owns most of the country’s transmission and distribution network, and more than half of its generating capacity. Currently, Tanzania’s total power installed capacity is 1,602 MW. From this total, 244 MW were added in the past four years.
Installed Capacity: 1,602 MW
- Â Hydroelectric: 568 MW
- Â Thermal: 951.6 MW
- Â Other Renewables: 82.4 MW
Tanzania’s electricity generation comes mostly from natural gas (48%), followed by hydro (31%), petrol (18%), solar (1%), and biofuels (1%).The traditional dependence on hydropower combined with the droughts that are affecting the country, often result in power supply shortages. To bridge the electricity supply gap in the country, TANESCO contracted Emergency Power Producers (EPP).
The average electricity consumption per capita in Tanzania is 108kWh per year, compared to Sub-Saharan Africa’s average consumption of 550kWh per year, and the 2,500kWh average world consumption per year. In 2019/2020, 37.7% of all households in Tanzania Mainland are connected to electricity, compared to 32.8% in 2016/17.
According to the National Census of 2012, about 70% of Tanzanians reside in rural areas whereas 69.8% had access to electricity. In rural areas, households connected to electricity accounted for 24.5% in 2019/20 compared to 16.9% in 2016/17. Therefore, the Government of Tanzania plans to increase rural connection levels to 50% by 2025 and at least 75% by 2033.
The Rural Energy Board (REB), the Rural Energy Agency (REA), and the Rural Energy Fund (REF) were established to promote, stimulate and facilitate access to modern energy services in rural areas of Tanzania.
Current Market Trends
Tanzania Solar Power
Tanzania’s sunshine hours per year range between 2,800 and 3,500 with global horizontal radiation of 4–7kWh per m2 per day. Given that, the Tanzanian Government supports solar development within the country by removing VAT and import taxes on the main solar components (panels, batteries, inverters, and regulators). Solar resources in Tanzania are especially present in the central region, and they are being exploited for both off-grid and grid-connected solutions. Solar Home System (SHS), well developed, most regions covered equivalent to 16 MW; Solar minigrid development in Lake Victoria (2MW) & others in Arusha, Shinyanga, Tabora, Rukwa etc.
Feasibility studies, Land acquisitions and other preliminaries works – Shinyanga Solar Project (150 MW), Zuzu, Dodoma (60 MW), Same (50 MW) & Next Gen-Kigoma (5MW).
Tanzania Off-Grid Solar PV
Off-grid solar PV has been installed in Tanzania for various applications in schools, hospitals, health centers, police posts, small telecommunications enterprises and households, as well as for street lighting. More than half of this capacity is utilized by households in peri-urban and rural areas.
In 2019, the World Bank (WB) signed a grant agreement with the Government of Tanzania amounting to USD 4.5 million to finance the access to a sustainable water supply through improved solar pumping systems in 165 rural Tanzanian villages.
Tanzania Grid-Connected Solar PV
In central Tanzania, 1 MWp of solar PV generates about 1,800 MWh per year and requires about 1 hectare of land. Theoretically, solar PV could generate large shares of electricity.
Tanzania Wind Resources
Tanzania’s wind resource assessments indicate that the Kititimo and Makambako areas have adequate wind speed for grid-scale electricity generation. At Kititimo wind speeds average 9.9 miles per second and at Makambako they averaged 8.9 miles per second at a height of 30 meters.
In June 2020, Tanzania’s first-ever wind farm in Mwenga in the Mufindi district of Tanzania’s Iringa region started generating electricity as part of its startup testing procedures. Construction of the 2.4MW power plant was completed in May 2020. It was made possible thanks to a loan from the Renewable Energy Performance Platform (REPP) and is operated by the Rift Valley Energy Group.
Tanzania Biomass Sources
Biomass is Tanzania’s largest energy source, although much of it is produced in traditional and unsustainable ways. It is estimated that more than 95% of households in Tanzania use firewood and charcoal as their source of energy for cooking. In urban areas, about 71% of all urban households consume charcoal and about 19% consume firewood. Biomass in Tanzania is presently used for grid generation (around 18 MW) and by the agro-industry to generate its own electricity (about 58 MW estimated).
Tanzania Geothermal Sources
Tanzania has geothermal potential in most parts of the East African Rift Valley System. Estimates indicate a potential exceeding 650 MW, with most prospects located in the East African Rift System. Most of Tanzania’s geothermal prospects have been identified by their on-surface manifestations, mainly hot springs. Surface assessments started in 1976 and, to date, there are over 50 clusters of hot springs identified in the country. Tanzania’s government established the Tanzania Geothermal Development Company (TGDC) to specifically deal with the overall development of geothermal resources in the country.
Tanzania Minihydro Sources
Tanzania minihydro assessments indicates there is potential of 480MW. Currently more than 50MW generated supplied to the grid and to the surrounding communities; mostly in Southern Higlands–Njombe, Ruvuma and Iringa-run by Private sector, Faith based organisations and NGos/CBOs;
Renewable Energy Financing
Most of Tanzania renewable energy projects are developed by private sector through equity, loans and others. Government support to private developers is through Rural Energy Fund (REF) administered by Rural Energy Agency (REA), Provides Funds to Rural Renewable Energy Projects through the Trust Agent (TA). REA is funded through government budgetary allocation, levy on electricity generation, Petroleum products special levy and contribution from Development Partners (Currently World Bank, European Union, African Development Bank, USAID, AFD, UNDP; Governments of Sweden, Norway, United Kingdom).
Eligible developers are:
- Public and Private Institutions;
- NGOs;
- CBOs;
- Cooperatives;
- Individuals Operating in Tanzania registered as Legal Entity
Procurement & Tenders
The following projects are supported by the Renewable Energy Fund REF:
- Grid Extension mainly through TANESCO using EPC Contracts,
- Off-grid small projects < 10MW ( Small hydropower; Mini grid; Solar, Wind + hybrid; Biomass, Biogas + hybrid; Cooking fuel (institution bio-digester, efficient cook stoves, briquetting, LPG
- Technical Assistance to project developers
- Short and long term financing through Tanzania Rural Electrification Expansion Program
- Provide matching grants/subsidies for pre-investment and performance grants to licensed distributors as per Electricity Act 2008 (e.g Mwenga Hydropower plant- 4 MW + Andoya – 1 MW+ Ikondo Community – 2 MW + Mawengi – 300kW)
Regulatory Environment
There is no independent Renewable energy Policy to guide development of the sub sector. Renewable energy issues are mostly addressed through the National Energy Policy, 2015. Other guidelines include:
- SPPs framework - aimed at accelerating electricity access and promote the development and operation of small power projects among local and foreign private investors
- Standardized Power Purchase Agreement and Standard Tariff Methodology, included in the SPPs framework and are applicable between the developer and the buyer
- Eligible Small Power Projects - defined by projects with a capacity ranging from 100 kW to 10 MW, and utilizing renewable energy source intended to supply commercial electricity to the National Grid or isolated.
Other guiding policies are:
- The EWURA Act, 2001
- The Public Private Partnership Act, 2010
- Mini grid rules 2017
- The Electricity Act, 2008
- The Rural Energy Act, 2005
- Renewable Energy Fund (REF);
- Power System Master Plan (2016)
U.S. Commercial Service Information
If you wish to learn more about the sector in Tanzania, or are interested in any of the projects listed throughout this guide, please contact:
Mussa Mlindwa
Commercial Assistant
U.S. Foreign Commercial Service Dar Es Salaam, Tanzania.
U.S. Embassy, Dar es Salaam
Tel : +255-22-229-4341
Cell: +255 685 677 662
mussa.mlindwa@trade.gov
