Tanzania’s energy demand for heating, electricity and transportation has been increasing with improved standards of living. To meet these growing demands, Tanzania has had to import a growing share of electricity from Zambia and Uganda. However, its domestic electricity supply is still vulnerable: delivery from these partners has been inconsistent, mainly because they both also depend on hydropower – and the country continues to suffer from frequent power outages. Tanzania suffered drought-related power crises in the 1990’s and then in 2006, 2007, 2009 and 2011. In 2011, the national utility company TANESCO had to institute rolling blackouts of up to 12 hours, forcing about 50 factories to close down and retrench their employees.
In an effort to increase access to electricity, the government is promoting Small Power Projects of up to 10 MW, through the introduction of a simplified implementation framework. The framework will include a Standardised Power Purchase Agreement, Standard Power Tariff Methodology and a Standardised Power Tariff.
The National Energy Policy was adopted in 2003 with the objective of addressing national energy needs. Secondary objectives included developing domestic cost-effective energy resources; improving energy reliability, efficiency and security and reducing forest depletion. Tanzania has had a feed-in tariff scheme in place since 2008 for small power producers. Feed-in tariffs for small power producers are adjusted annually by the Energy and Water Utilities Regulatory Authority and are based on the avoided cost of the electricity. That means that they are differentiated by renewable energy technologies and that there is no guaranteed price over the long term even if a power purchase agreement is signed for a 15-year period. For balancing the higher generation cost in dry seasons, when the availability of hydropower is lower than in wet seasons and thermal power plants have to generate more expensive power, the standardised feed-in tariff is differentiated according to the season.
Short and medium term projects have been identified in the Power System Master Plan 2007-2031 to replace the short term emergency generation plants. A number of major projects have been proposed to develop the power sector of the country, and provide a solution to the current Southern African energy deficit. In 2008, the Energy Development and Access Expansion Project a multi-million international development association credit and global environment facility grant was approved by the World Bank. This project is primarily focused on the improvement of TANESCO’s transmission and distribution grid. The project also supports renewable energy options, namely, mini-hydropower generation, biomass co-generation, and solar energy.
The mean solar energy density is about 4.5kW per square metre per day, which indicates its potential use as an energy source. Some solar developers are seeking to set up large solar PV projects. Hydroelectricity is the most important indigenous source of commercial energy, with a recognised potential of 4.7 GW of installed capacity and 3.2 GW of firm capacity. Only 15% of the potential installed capacity has been developed and several projects are currently seeking funding.
Geographically, the hydro power potentials Tanzania are located in the Rift Valley escarpments in the West, Southwest and Northeast regions of Tanzania. The planned large-scale hydropower generation sources include Ruhudji (360 MW), Rumakali (220 MW) and Stieglers Gorge (2100 MW). Stieglers Gorge may have the potential to produce enough electricity to justify investments in extending the national grid and has been under construction for decades due to a number of environmental and social issues.
There is a high potential for geothermal power generation in Tanzania, with temperatures of up to 255 ˚ C. At least 15 thermal areas with hot spring activity could be justifiable development projects. The total potential geothermal power in 50 identified sites is 650 MW. The Songwe site in Mbeya region alone has an estimated potential of 100 MW of electricity. Geothermal exploitation involves changing the flows of underground water, which in some cases have led to draining of nearby lakes.
The Ministry of Energy and Minerals frames its strategy and priorities for renewable energy development as part of the overall efforts to achieve economic growth and poverty reduction. It foresees a need for great improvements within the energy sector as a whole, both on the demand and supply sides.
The Time to Go Green is Now!
ABOUT THE AUTHOR: Ralph M Ertner, born in 1965, is the founder and current CEO of the INTO SA Group. His career started at Deutsche Bank Berlin, where he was trained in and later responsible for asset and portfolio management. He went on to study law at the Free University of Berlin. After gaining experience at the law firms of Neuendorff & Partner (Berlin), Heussen Braun von Kessel (Munich) and Jan S De Villiers (Cape Town) as well as Van der Spuy (Cape Town) he decided in 1995 to stay in South Africa permanently. Two years later he obtained the degree of Master of Laws at the University of Cape Town (UCT). With his specialist knowledge in commercial law, financial and international tax matters, Ralph Ertner specialises in Immigration and Black Empowerment Law and contributes his energy and expertise to the benefit of INTO SA’s corporate clients in sub-Saharan Africa.
Ralph Ertner is author of eight books on legal investment conditions in South Africa, among them Tax Law: A Guideline for Investors and Investing in South Africa Opportunities and Risks in the 21st Century. Furthermore is he the author of several articles in the national and international media. He is a past member of the Regional Council of the South African German Chamber of Commerce in Cape Town and currently Director of the Austrian Business Chamber and the Spanish Chamber of Commerce in Johannesburg as well as the Founder and Past President of various Rotary Clubs.