Tanzania Energy Situation

Situation analysis and framework conditions

Tanzania has diverse energy resources including biomass, natural gas, hydro, coal, geothermal, solar and wind, uranium, which are mostly untapped. Total installed generation capacity is 1219 MW; hydropower accounts for 561 MW and thermal for 658 MW. The contribution of non-hydro renewable energy for power generation is less than 5%.

• Solar

The predominant parts of Tanzania have abundant solar resources throughout the whole year (in July it is the lowest). The lowest annual average is 15 MJ or 4.2 kWh/m2/day and the highest is 24 MJ or 6.7kWh?/m2/day.

• Hydro

At the moment about 45% of power generated in Tanzania comes from hydro. Small Hydro Power (smaller than 10 MW) so far has been only exploited up to 8 MW by TANESCO and private developers, whereas it potential is estimated at 315 MW. Studies also taking into account economic aspects highlight a variety of sites that could produce electricity at competitive cost to supply power to the national grid and through mini-grids to villages in the community.

• Biomass

Reports have identified Tanzania's capacity to install 200 MW of electricity generation from bagasse from four sugar factories. Moreover, 35 hectares of forest are exploited for firewood and charcoal. The wood products are also used for paper and timber which leaves after processing a waste stream that can also be used for energy generation.

• Biofuels

Plans exist to use Tanzania's land resources to cultivate jatropha and palm kernel for the use as biofuels.

• 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. In particular in cities the LPG sector is growing ; for instance in Kinondoni Municipality of Dar City, where mostly middle class families live, gas kiosks can be found less than a kilometer from each other. 

• Wind

Research detected wind potential in five key locations: Karatu (Arusha), Mkumbara (Tanga), Kititimo (Singida- 50-200MW), Mgagao (Kilimanjaro) and Makambako (Iringa).

• Other

Kiwira Coal 100MW Project has the capacity to produce 200 MW.

 

Energy situation especially in rural areas

Wood fuel still is the most important energy used in Tanzania, accounting for over 90 percent of total energy consumption. Due to lacking programmes promoting the sustainable supply of wood fuel, availability of biomass resources declined crucially. About 8 percent of the energy end-use comes from petroleum, whereas electricity, mostly coming from large hydropower, only accounts  for 2 percent. Out of Tanzania's 41.5 million inhabitants, so far only 12 percent of urban and 2 percent of rural areas are electrified, which means that less than 10  percent have access to grid-based electricity or other forms of commercial electricity. The national electricity connectivity is about 14%; though, it is expected that electricity demand will triple by 2020.

Primary fuels in urban areas

• Lighting

	Dar	other urban areas
Electricity for lighting	56 %	28 %
Fuel for lighting	40 %	70 %

• Cooking

	Dar	other urban areas
Firefood	5 %	34 %
Charchoal	70 %	55 %
Kerosene	12 %	7 %
Electricity	2 %	1 %

Primary fuels in rural areas

• Lighting

Electricity for lighting	1.4 %
Fuel for lighting	90.4 %

• Cooking

Firewood	91%
Charcoal	8%
Kerosene for cooking	1%

Source: Country Information Tanzania, 2010
 

Institutional set up and actors in the energy sector

Public institutions

• Rural Energy Agency (REA): manages the Renewable Energy Fund (REF)
• Energy and Water Utilities Regulatory Authority (EWURA): is responsible for technical and economic regulation of the electricity, petroleum, natural gas and water sectors
• Ministry of Energy and Minerals (MEM): is responsible for facilitating the development of energy and mineral resources through participation of various stakeholders including public, private, public-private partnerships, local communities, NGOs and civil society

Development Partners and stakeholders

Sida- Institutionala Support Program (ISP)

ADB- Rural Energy Master Plan 

World Bank- Energizing Rural Transformation

UNDP- Transformation of Rural PV Market

Electricity companies

Tanzania’s power sector is dominated by a single vertically integrated national utility, Tanzania Electricity Supply Company Ltd (TANESCO). The renewable energy commercial market is still quite small and has not sent adequate signals of the likely investment returns in the sector.

Equipment Suppliers: Several suppliers of energy equipment exist: M/s Tunakopesha Limited sells energy supplies such as PV on credit. The SERO Lease Financing (SELFINA)  leases equipment and is testing PV equipment market. The Chloride Exide Ltd is a long-serving company in the energy sector that supply solar batteries and other equipment. Furthermore, the firm ENSOL sells solar PV systems to off-grid households as well as to public and private institutions in rural Tanzania. The company imports the needed components and installs them according to customer needs. TaTEDO, based in Dar es Salaam, is an organisation composed of professionals, artisans, farmers, community based organizations and micro enterprises that promote renewable energy systems, namely improved cookstoves. Also Sahara and The Kisangani Smith Group are active in the efficient stoves market. In addition, Appropriate Rural Technology (ART) distributes Indian technology Moto Poa stoves.

 

Power Generation: Currently, several companies in advanced stages of investing in Wind Energy exist in Tanzania: Ms Wind EA that is planning to invest in Kititimo Singida with MW 50 to MW 200 potential and Power Pool East Africa and Sino-Tan Renewable Ltd, New Energy Group Ltd, Infranco and M/S Songas Ltd.

Transmission:

Distribution: 

Non governmental service providers for rural areas in the field of energy

Private companies:  

Projects implementing NGOs:

Micro-Finance Institutions:

ProBEC: works with a variety of private actors to disseminate the supported technologies: Individual farmers in Iringa (Tabora), M&R Appropriate Technology Engineering and Green Ceramic Products and Environment, Uniliver Tea Company, Mufindi Tea Company, Kibena Tea Company, Tanzania Wattle Company LTD, Association of Tanzania Tobacco Traders (ATTT, Tabora), Envotec Services Ltd.,  VICOBA Sustainable Development Agency (Songea), West Usambara Women Education, Marangu community Development Association

 

Policy framework

 

Energy policy

The Government of Tanzania (GOT) is the prior player in terms of policy and regulatory environment. In order to make renewable energy industry an integral part of  Tanzania's rural energy and power sector development strategies, Tanzania has pursued the following policies

(i) a rural electrification policy statement which signifies all lower cost technical options should be considered including renewable energy;
(ii) the Rural Energy Act of 2005 which established the Rural Energy Agency and Fund (REA/F) whose main task is to promote access to modern energy services and to provide performance based subsidies for rural energy including renewable energy systems;
(iii) the Energy and Water Utility Regulatory Authority Act established in 2001 which provides the regulator with the responsibility of tariff setting effecting also the independent renewable energy power producers.
The GOT has adopted the Power System Master Plan (PSMP), by this plan the GOT has both the short-term (2009-2012) and medium- and long-term (2013-2031) plan. The plan estimates an increasing demand for energy/electricity at an average rate of 8.5-15% per annum. In order to be able to ensure adequate energy supply, the Electricity Act of 2008 gives procedures for providing electricity from different sources. The Energy and Water Utility Regulatory Authority (EWURA) created a model for Standardized Small Power Purchase Agreement/Tariff (SSPPA/T) for private producers providing less than 10MW.

The Power Purchase Agreement (PPA) contain a standardized power purchase agreement and a non-negotiable purchase tariff based on avoided cost principles for electricity sales to TANESCO national grid and mini-grids. EWURA, which is the regulatory body, is currently working on issuing guidelines to help developers to develop their projects efficiently. Moreover, EWURA is developing procedures for formulating tariffs for mini-grid consumers.

The Rural Energy Agencyhas provided subsidies to TANESCO in order to extend grid electricity in areas where it seems not be economic to invest. In 2008/9 the REA plans to use TZS 18.0 billion (US$ 13.33 million) to subsidize the grid-rural electrification.