Tanzania lays out big investments in power generation

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In a bid to satisfy growing demand for power, Tanzania has ramped up investment in alternative energy schemes, with a focus on smoothing regional disparities.

A spate of recent agreements is expected to raise access to electricity to 75% of the population by 2035 as part of the government’s Power System Master Plan. According to official estimates, about 40% of the country’s 47m people had access to electricity in 2016.

To achieve these aims in the medium term will require an increase in installed capacity from 1.6 GW in 2014 to 10 GW by 2025, as well as an expansion of transmission and distribution systems.

Powering up the private sector

With demand for power growing by 15% every year, the government has increasingly looked to the private sector to help fill the generation gap.

As of 2015 there were six independent power producer projects active in the country, responsible for 40% of electricity. Three of these are operated by US-based Symbion, and three by Tanzanian firms Independent Power Tanzania and Songas.

The national utility company, Tanzania Electric Supply Company (Tanesco), provides the remaining 60% of generation.

Wind’s up

A key component of added grid capacity will come from renewables, and with good reason: Tanzania’s renewable resources are abundant. The country’s solar irradiation levels range between 1.8 MWh and 2.2 MWh per sq metre, equivalent to Spain, while its high wind power potential covers 10% of the country, rivalling California.

As a result, a number of new initiatives are looking to boost output from renewable sources. In December, for example, the government announced that Tanesco had reached an agreement with an international consortium to develop the country’s first wind farm.

The $300m Singida wind power project, to be located in central Tanzania, is expected to generate 100 MW of power. Upon completion, the facility will be sold to Tanesco and integrated into the national grid.

The project is backed by the World Bank’s investment arm, the International Finance Corporation, along with local telecoms player Six Telecoms and Aldwych International – a UK-based firm involved in several renewable energy projects in East Africa. Construction is due to commence in May 2017 and be completed within 22 months.

Other development finance institutions are looking to expand funding for the renewables sector. In November the Bank of Africa Tanzania signed a credit facility agreement worth $11.8m with the French Development Agency to provide loans for renewable energy projects.

The emphasis on renewables is not new. For years Tanzania has been heavily dependent on large-scale hydropower projects to provide sustainable energy. However, frequent droughts and ageing infrastructure have led to a serious decline in hydro output. In recent years hydropower’s share of total capacity has dropped from 98% in 2002 to 20% in 2015; a number of plants shut down in October that year due to a lack of rainfall.

Rural electrification

Among the top challenges in Tanzania’s electricity distribution is the disparity in electrification rates between urban and rural areas. Though rapid economic growth has driven increased urbanisation – GDP has grown by an average of 7% since 2002 – some 73% of the population still reside in rural areas, and of these only 11% have access to electricity.

In a bid to bring more of the country onto the grid, in June 2016 the government launched a six-year Tanzania Rural Electrification Expansion Programme, aided by a $200m loan from the World Bank on top of its own $500m allocation in FY 2016/17.

The hope is that new access to capital will enable small power producers to provide some 33 MW in renewable energy. As part of the scheme, private companies will be tasked with bringing power to rural towns, receiving subsidies in return. The government had set a target to connect 176 remote villages by the end of 2016.

According to the African Development Bank, rural areas will be better served by mini-grid and off-grid options, most of which will be served by renewable options such as solar, wind and geothermal.

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