Tanzania Energy Situation

Situation analysis and framework conditions

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.

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%.The total electricity consumption was 4.156 MWh in 2008.  About 6.6 percent of primary energy needs to be imported.

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.

• 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. An Tanzania Renewable Energy Association exists.

• 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 kilometre from each other. 

• Wind

As of June 2009, there was no grid connecting wind systems in Tanzania and two known projects of over 50 MW in planning stages. Use of off-grid wind energy in Tanzania has been established for decades. At least 150 wind-pumping systems have been installed by missionary projects, communities and private individuals. There is a lack of comprehensive data about wind resources in Tanzania, and any developer of projects or seller of wind equipment will need to focus on gathering quality data. Available data is mostly from 10 m masts of Tanzania Meteorological Agency stations, and much of it is not suitable for predicting output of wind farms. Nevertheless, results are promising in a number of sites with average speeds exceeding 8 m/s in certain locations (e.g. Karatu (Arusha), Mkumbara (Tanga), Gomvu (Kigamboni), Litembe (Mtwara), Makambako, Singida).

• Other

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

 

Energy situation especially in rural areas

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): is responsible for boosting modern energy services in rural areas, simplification of projects, and technical assistance of project development. The REA is governed by the Rural Energy Board (REB) which is an assembly of representatives of the ministries of energy, finance etc., of the private market, development partners and NGOs. It is responsible for approval of projects financed by REF, the supervision of REA and REF and the affirmation of REA's operational plans
• 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 the most important political entity for energy questions and 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
• Renewable Energy Fund(REF): is responsible for the financing of the by the REB accounted and by the REA implemented activities. The funds are coming from Tanzania's budget, from foreign donors, levies from electricity production and other levies as well as interest rates and returns
  

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. 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: 

 

Nongovernmental service providers for rural areas in the field of energy

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 cook stoves. It implements projects in cooperation with the European Union, Norway, the Netherlands and the United Nations.

Private companies:  

Projects implementing NGOs:

Micro-Finance Institutions:

Non-governmental Organisations

Tanzania Renewable Energy Associations (TAREA): network of various stakeholders working in the renewable energy sector

Development Partners and stakeholders

German Firms

In March 2010 a German delegation of eight leading solar enterprises visited Tanzania (and Kenya) in order to become acquainted with the market and to establish contacts with local actors. The trip was organised by the GTZ Project Development Programme.

The following enterprises participated in the business travel: Asantys Systems GmbH, Centrosolar Group AG, Donauer Solartechnik Vertriebs GmbH, Energiebau Solarstromsysteme GmbH, Hoppecke Batterien GmbH & Co KG, Phocos AG, SMA Solar Technology AG, SUNSET Energietechnik GmbH.

Development Organisations

• Sida: implements a five-year project for developing the PV market in rural areas
• ADfB: Rural Energy Master Plan 
• World Bank: Energizing Rural Transformation
• UNDP: Transformation of Rural PV Market
• GVEP: approach to accelerate pace and scope of enery interventions to improve access to energy services
• ProBEC (Programme for Basic Energy and Conservation): ProBEC is a programme of the SADC and is implemented by GTZ. It focuses on networking and information exchane amongst some Southern African Development Community countries. ProBEC aims at thermal energy needs of rural and urban household and takes also into account small business and instiutions using biomass energy (woodfuel, agricultural residues) for thermal processes. The interventions consist of three components: efficient use of energy devices, providing policy advice to the secretariat of teh SADC on basic enery solutions and research on the viability of sustainable biofuel production. It 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

Poverty reduction strategy

Tanzania's official homepage on poverty monitoring www.povertymonitoring.go.tz/

Energy policy

The Government of Tanzania (GOT) is the prior player in terms of policy and regulatory environment.

In 2003 the 'National Energy Policy' was launched which aims at developing Tanzania by boosting an efficient and reliable energy production. The main elements of this policy consist of developing efficient domestic energy ressources, boosting of market-determining energy prices, improving the reliability and security of energy, commercialising and privatising the energy sector, reducing deforestation and developing of human ressources.

In order to achieve these goals Tanzania has introduced rural energy and power sector development strategies:

(i) the electricity act of 2008 whose main task is the privatisation of the electricity market and an improved framework for market introduction of renewable energy technologies in particular in rural areas;
(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 a 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 Agency has 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.

 

Electricity Prices

In Tanzania four different price levels exist:

• Domestic Low Usage Tariff (DI): applies to customers using on average less than 50 kWh per year, is subsidised and includes services
• General Usage Tariff (T1): applies to consumption above 283 kWh per year, voltage is 230V in monophase and 400V in triphase
• Low Voltage Usage Tariff (T2): applies to cunsumers with a consumption of 400V and a more than 7.500 kWh, but less than 500 KVA
• High Voltage Usage Tariff (T3): applies to consumers of

Subsidies on renewable energy technologies

Exemption of customs is given on imports of wind and solar products. Subsidies of PV systems exist:

In the case of SHS

• 0-14 Wp: 2.5 $/Wp
• 14-100 Wp: 1.5 $/Wp
• > 100 Wp: now subsidies

in the case of public institutions

• < 300 Wp: 1.5 $/Wp, but maximum 450 € per institution

The government supports Small Power Procuders (SPP); effecient concepts for regulation and pricing are developed in order to improve electricity supply in rural areas