Tanzania’s smallscale energy producers can reduce the rural electricity shortage in a cost-effective and environmentally sustainable way.
Photo: Sida

Tanzania’s smallscale energy producers can reduce the rural electricity shortage in a cost-effective and environmentally sustainable way. Photo: Sida

programmes and projects

Renewable energy helps rural development

Published: Friday, August 31, 2012

Changed: Friday, August 31, 2012

Several small scale power plants in Tanzania have improved access to electricity in rural areas, and another sixty projects are in the pipeline. These investments are the result of a recently approved regulatory framework that has facilitated development for small power producers. Sida is one of the donors in this World Bank project.

Tanzania has abundant but largely untapped renewable energy resources, including biomass, water resources for hydropower, wind as well as plentiful of sunlight. At the same time, the country is not doing well when it comes to generating electricity. The rates of electricity supply in rural areas are low – only two per cent of the rural population has access to electricity and the figure for the entire country is about 15 per cent. One of the key barriers to development of the country’s renewable energy resources has been the lack of a suitable regulatory framework that sets out clear rules and responsibilities for grid-connected and off-grid renewable energy developers.

─ Before the regulatory framework was created, there had been a very few energy producers in the country, and they had to negotiate the content of the contracts with the state-owned electricity company TANESCO on a case-by-case basis, says Samer al Fayadh, Energy administrator at the Swedish embassy in Dar es Salaam.

The new Small Power Producer (SPP) Framework that has been developed with the support of Sida therefore paves the way for an expansion of renewable electricity in Tanzania, by providing model power-purchase agreements, standardised tariffs, and streamlined interconnection- and licensing requirements. The regulations provide a legal basis for small renewable energy power developers to export excess electrical energy to the national utility (up to 10 megawatt (MW) power capacity). They also bring electricity to communities that have never had access to grid-based electricity.

─ Having a comprehensive policy and regulatory framework that supports small energy projects is crucial for the private sector to get involved in renewable energy, even in remote rural areas. The citizens of the country can make considerable savings by using energy instead of buying kerosene for lights and battery chargers, says Samer al Fayadh.

Tanzania is one of the first African countries to develop and adopt these types of rules through its Energy and Water Utilities Regulatory Authority (EWURA). One example of a new small power producer that has been helped by the framework is the renewable energy power plant at the TPC sugar factory in Moshi.  After sugar is extracted from the sugar cane, the dry residues are burnt in a large boiler, creating steam that drives a turbine of 17 MW. The turbine generator powers both the sugar plant and the irrigation system, as well as exports about 4 MW of electricity to the TANESCO grid in the Moshi area.

The LUMAMA hydropower project in the Mawengi district in the Iringa region is an example of a smaller SPP with a rural electrification focus. The project is managed by a locally elected cooperative and provides electricity for about 600 households and small business, in an area that is a day’s drive from the nearest TANESCO power-line.

An additional 60 projects in various stages are in the pipeline in Tanzania. Their cumulative capacity would be over 130 MW and is expected to electrify a dozen or more villages in the project vicinity. That would add a significant capacity to the national grid, which is presently at about 1000 MW. One of the planned projects is the Mwenge 4 MW hydropower and rural electrification project that will, in addition to selling electricity to the grid, electrify 16 villages in the Tanzanian south-western highlands.

These small power producers have a great potential to reduce Tanzania's electricity shortages in a cost-effective way while promoting electrification to rural households, businesses and public institutions.

Facts TEDAP project:

The regulatory framework for Small Power Producers (SPP) was developed by Tanzania’s Energy and Water Utilities Regulatory Authority (EWURA) with funding from Sida. The rules and guidelines are currently undergoing a "second generation" round of revisions, with a high level of community-based and private SPP developers participating.

The regulatory framework is a part of the technical assistance in the Tanzania Energy Development and Access Project (TEDAP), partly funded by Sida and administered by the World Bank's Africa Energy unit. The project aims at improving the quality and efficiency of electricity service provision in the three main growth centres of Dar es Salaam, Arusha, and Kilimanjaro, as well as promoting better energy access and renewable energy development in Tanzania.

Rural Energy Agency

Sweden supported the Government of Tanzania in the formulation of the National Energy Policy in 2003, which was followed by the establishment of the Rural Energy Agency (REA)  ¬¬–  that has been implementing these projects – and the Rural Energy Fund (REF). The objective of the agency is to ensure increased access to modern energy in rural Tanzania. Sweden is also providing support for capacity development of REA and the Rural Energy Fund.

Results that have been achieved:

  • Five project developers (SPP) have signed an agreement with TANESCO (21 MW) and partners in seven other project agreements (totalling 36.83 MW) have signed a letter of intent.
  • Two small-scale power producers (Tanwat and TPC sugar factory) are currently operating under the new SPP agreement with TANESCO, and another off-grid energy project (Mafia island) is under construction. (The Lumuma project has not signed an SPP with TANESCO since they are not connected to the main grid. But it has a license of direct sale of electricity to consumers, something that was not possible before.)
  • An additional 60 projects in different phases are underway in Tanzania. Together they could have a capacity of over 130 MW and provide electricity for more than a dozen villages situated in the project vicinity. That would make a significant contribution to today's national electricity grid, which is in total about 1000 MW.

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