Publication - Bioenergy for Sustainable Local Energy Services and Energy Access in Africa Demand Sector Report 3: Wood Processing Focus Country: Tanzania
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opportunities and constraints for bioenergy development in sub-Saharan Africa (SSA) across seven shortlisted industries, through five interlinked themes: biomass resources, technology, economic competitiveness, commercial viability and institutional, market and regulatory frameworks. This report, the third in the series, focuses on the bioenergy opportunities in the wood processing sector in Tanzania. Tanzania has East Africa’s most extensive forest resources and some of the region’s largest plantation management and wood processing companies. Only two of these currently use wood processing residues for CHP to meet their internal electricity and heat demands and sell excess electricity to the grid. Others use their residues only to generate heat for wood drying. Given the availability of suitable feedstock and the environmental benefits that adoption of bioenergy could offer for this sector, the landscape for residue-based CHP use in Tanzania’s wood processing industry was explored to identify the opportunities and barriers for wider adoption. Biomass resources and technological considerations were not found to be barriers to the adoption of wood-residue based CHP. There is significant underutilised biomass potential from wood processing residues, and supply is expected to increase as the industry continues to grow. With respect to technological considerations, biomass boilers and steam turbines are a proven combination at 1-5 MW scale, with several(mainly Asian) suppliers providing equipment of quality and cost that now out-compete European and North American manufacturers. Economic analysis suggests that combustion based CHP is cost-competitive if an enterprise has significant internal heat demand. But it is not necessarily attractive if electricity is the main requirement of the enterprise, unless surplus electricity can be valorised through external sale. Besides the two current adopters of CHP, other wood processing industries in Tanzania have therefore refrained from investing in CHP. A combination of low internal heat and power demand, relatively cheap and relatively reliable grid power, low feed-in-tariffs and a government focus on large-scale hydropower, discourage new investments in bioenergy technology. Except in South Africa, the policy and market environments in the other countries researched do not favour investment in wood residue-based bioenergy, beyond the direct production of heat for processing timber.In sum, electricity generation from wood residues has the potential to develop strong rural embedded generation, support sustainable local development and reduce demand for fossil fuels for electricity generation to meet climate change targets. However, replication in Tanzania under current political and economic circumstances is unlikely unless there is practical government support for bioenergy, particularly from more attractive feed-in tariffs and long-term power-purchase agreements.