Target Market Study Tanzania
Solar PV & Wind Power
German Energy Desk
Nairobi, July 2013
Table of Contents
Executive Summary
3
1.
8
Overview about the power sector in Tanzania
1.1. Energy mix
1.2. Development of electric power supply and demand
1.3. Role of renewable energies
1.4. Power tariffs
1.5. Power sector structure
2.
8
9
10
10
11
Regulatory framework for solar PV & wind
12
2.1. Feed-in-tariff-Scheme (FIT)
2.2. Power Purchase Agreement
3.
4.
12
14
Status of the solar and wind energy sector
15
3.1. Overview about solar and wind Sector
3.2. Status of solar PV
3.3. Status of wind power
3.4. International cooperation projects
15
17
25
26
Market potential and planned projects
28
4.1. Overall sector outlook
4.2. Planned projects
4.3. Undeveloped market opportunities
4.3.1. Real estate/ Construction
4.3.2. Telecommunications
4.3.3. Mining
4.3.4. Agriculture
4.3.5. Tourism
4.3.6. Manufacturing sector
28
30
34
35
36
39
44
45
46
5.
Engagement and positioning of German companies
50
6.
Key market players
56
7.
Annexes
58
2
Executive Summary
The United Republic of Tanzania is an East African country formed following the union of
Zanzibar and Tanganyika in the early 1960‟s. It has made significant progress over the
past two decades to achieve and maintain macroeconomic stability, becoming one of the
best economic performers in Sub-Saharan Africa.
With a peak grid capacity of 1438 MW, the country‟s main grid electric supply is limited to
main towns such as Dar, Mwanza, Arusha and Morogoro. Only about 18.4 per cent of the
population has access to grid electricity. A growing portion of the off-grid population
obtains access through stand-alone solar photovoltaics and mini-grids, and this is
encouraged by Government policy. Although Tanesco electricity prices are currently too
low (<USD 0.13) to encourage investment in on-grid PV, the Government has developed
Standardized Power Purchase Agreements to encourage renewables on-grid and in
isolated mini-grids.
Favourable policy developments, support schemes and rapid reduction of costs are
creating a healthy market for solar PV in off-grid locations. Cumulative installed capacity
of solar PV in Tanzania is estimated to have increased from 100kWp in 2005 to over 5
MWp in 2012. Most of the solar PV capacity is in rural electrification and donor-funded
projects (SHS, institutional, etc.). As well, MW-scale projects are either under discussion
or in the development pipeline that could dramatically change the market profile. The
market sectors can be divided into 4 groups as explained in the table below:
Table 1: Overview about market segments
Segment
Off-grid Pico & SHS
Off-grid
Professional &
Project Market
Grid connect (small
& medium scale)
Utility-scale power
generation (>100
kW)
Brief description
Sales of kit-type products
(usually below 100Wp),
“over-the-counter”,
unregulated.
Systems designed according
specific needs of off-grid
facilities or off-grid
electrification programs. It
can include “clustered” SHS
programmes or larger
systems (solar PV and
hybrid systems).
Systems designed for the
specific needs of gridconnected facilities. It can
include power generation for
direct consumption
(embedded generation) or
grid-interactive systems (e.g.
under net-metering or energy
banking arrangements).
Power generation sold to
main utility or other
decentralized utilities. It
includes Small Power
Projects under the SPPA or
larger projects with Tanesco
negotiated tariffs.
Current status
Largest portion of
market. REA subsidy
offered.
Comments
Competitive. Dominated
by Chinese products.
Estimated to be over 1
MWp p.a.
Active market. Driven
by donors, NGOs or
government
procurement. Small
applications in
commercial and
industrial sector (e.g.
tourism, telecoms, etc.)
± 1 MWp of installations
in 2012.
Potential to develop
based on policy
environment. Highly
sensitive to Tanesco
electricity tariffs.
Pilot projects likely to
occur in 2014.
Several projects in MoE
pipeline, all of them to
connect to mini-grids
under the SPPA.
Risky investment climate
(creditworthiness of
Tanesco)
Solar home systems and pico PV markets are essentially “over-the-counter” with a
prevailing low-price, low-quality and un-designed environment. The “professional” market
offers numerous opportunities for players with good connections with NGOs, Government
and donor organizations. The grid-connect market is in extremely early stages but bears
watching as it will follow Kenya and South Africa and grow rapidly at some point in the next
10 years.
3
Wind
Wind regimes are roughly similar to Kenya, with high wind resources focused in the Rift
Valley and along the coast. However, there are fewer companies and NGOs involved in
off-grid small-scale developments (and local manufacturing). Large-scale utility scale
projects (150MW) are in planning stages but have been slow to move forward primarily
because of a lack of confidence by investors in long-term payment from the utility.
The wind sector in Tanzania is in extremely early stages of development. It is likely to
follow the solar PV sector and follow Kenya‟s wind market trajectory. Large scale
generation projects suffer from a low credit rating of the overall electricity sector. Off-grid
wind projects suffer from a lack of competent companies, extremely high project costs, and
a lack of available equipment.
Solar PV Potential Markets
Tanzania‟s low electrification rates, high electricity costs and poor utility performance will
support continued development of off-grid solar segments. The pico and solar home
system market will continue to grow, but be exploited by Asian low quality suppliers.
Professional markets will grow with investment by telecom, tourism and off-grid business
increasingly looking to solar to reduce diesel generator costs as well as Government and
NGO stand-alone PV system projects that continue to be offered on a project by project
basis. Isolated grids will provide an increasingly interesting entry point for a wide range
of grid-connect systems (i.e. 100 kWp to 10 MW). On-Grid markets will grow in the
medium to long term with mining, commercial manufacture and the “green building” sector
as prime movers.
Recommendations for German RE enterprises
Although Kenya is seen as a “hub” of business in East Africa, Tanzania has some
advantages that make it an attractive long-term location for the development of business.
First, it has a stable political climate and has enjoyed continued economic growth for over
a decade. Secondly, it has had long traditional ties with Germany. Thirdly, the large offgrid areas make solar PV attractive in more economically-active areas than in Kenya --both in stand-alone systems and as part of mini- and micro-grids. Finally, the PV market in
Tanzania is much less congested than the Kenya market; it would be easier for a company
to gain part of the market than in the competitive Kenya market.
1. The professional off-grid sector will grow considerably in the foreseeable future, with
Government/NGO/done procurements and commercial systems for the private sector
in the telecom, tourism, agriculture and off-grid productive sectors as drivers. German
players with strengths in off-grid PV, inverter, battery and BOS equipment delivery --and designers, consultants, program managers --- should position themselves to
collaborate with local providers or NGOs in this market.
2. The grid connect sector will grow along three lines: a) Development of off-grid
isolated mini-grids stimulated by multi-lateral and bilateral projects (and strong
incentives for these), b) small and medium scale household, building-integrated,
commercial and agricultural sector grid connect projects that are based on netmetering, embedded power, and aspirational desire for green power and c) Longerterm Government-driven initiatives to build large (>10 MW) solar farms in strategic
areas based on feed-in tariffs and other incentives. German players should identify
partners (developers, consultants, architects, financiers) who can help them position
themselves to gain entry to these markets.
4
List of Acronyms
DFID
Department for International Development (British)
EAC
East African Community
EWURA
Energy Water Utility Regulatory Authority
FIT
Feed in Tariff
GDP
Gross Domestic Product
GSMA
Global Association of Mobile Phone Operators
HFO
Heavy Fuel Oil
LED
Light Emitting Diode
MNOs
Mobile Network Operators
MW
Megawatt
PSMP
Power Sector Master Plan
REA
Rural Energy Agency
REMP
Rural Electrification Master Plan
REFIT
Renewable Energy Feed-In Tariff
RETAP
Renewable Energy Technical Assistance Program (Kenya Association of
Manufacturers)
SHS
Solar Home System
SSMP
Sustainable Solar Market Package
SPPA
Standardized Power Purchase Agreements
SREP
Scaling Renewable Energy Program
TANESCO Tanzania Electric Company
TAREA
Tanzania Renewable Energy Association
TATEDO
Tanzania Traditional Energy Organization
TEDAP
Tanzania Energy Development and Access Project
USAID
United States Agency for International Development
Currency
Tanzania Shilling Exchange Rates June 2013
TShs 1638 = 1 US$
5
List of Tables
Table 1: Overview about market segments
Table 2: Energy mix
Table 3: Power capacity
Table 4: Power tariffs
Table 5: Independent power producers
Table 6: Calculations for feed-in-tariffs (FIT), main-grid
Table 7: Seasonal standardized FIT (main-grid)
Table 8: Calculation for FIT, mini-grids
Table 9: Application process for the Feed-in Tariff
Table 10: Main market segments of the solar PV market in Tanzania
Table 11: Selected professional off-grid Projects, completed or underway
Table 12: Selected players and distribution channels for the off-grid professional/project
market
Table 13: Mini-grid projects
Table 14: Obstacles and constraints in the solar PV markets in Tanzania
Table 15: International cooperation projects
Table 16: Market development summary
Table 17: Summary of planned projects (PSMP, SREP and KAM)
Table 18: Dominant Mobile Network Operators (MNOs) in Tanzania
Table 19: Main players in the mining industry in Tanzania
Table 20: Selection of anticipated major loads in mining industry of Tanzania
Table 21: Tourism sector players and power supply
Table 22: Manufacturing sector players in Tanzania
Table 23: Summary of underdeveloped market opportunities
Table 24: German companies with engagement in Tanzania
Table 25: Sources for financing solar PV and wind projects
Table 26: Recommended procedure (export credit financing)
Table 27: German cover policy for Tanzania
6
List of Figures
Figure 1: Primary energy consumption
Figure 2: Electric power mix
Figure 3: Existing grid system and plants
Figure 4: Sectorial breakdown of GDP, 2011 provisional figures, Bank of Tanzania 2012
Figure 5: Sites by power solution deployed (on-grid)
Figure 6: Sites by power solution deployed (off-grid)
List of Boxes
Box 1: Energy enterprise TRC phone charging
Box 2: Business model MobiSol
Box 3: Scaling-up renewable Energy Programme
Box 4: KAM Regional Technical Assistance Programme (RTAP)
7
1.
Overview about the power sector in Tanzania
The United Republic of Tanzania is an East African country formed following the union of
Zanzibar and Tanganyika in the early 1960‟s. It is a member of both the Southern Africa
Development Community and the East African Community (the EAC maintains its
headquarters in Arusha).
Tanzania envisions transforming itself into a newly-industrializing, middle-income country
by 2025, with a globally competitive and prosperous economy and high quality of life in a
clean and secure environment.
Tanzania has made significant progress over the past two decades to achieve and
maintain macroeconomic stability, becoming one of the best economic performers in SubSaharan Africa. According to Bank of Tanzania, economic growth has been about 7 per
cent since 2000, and the annual GDP per capita was about- US$560 in 2011. Sound
macroeconomic policies, market-oriented reforms, and debt relief have ensured a positive
environment for Tanzania‟s steady economic growth.
1.1
Energy mix
The overall energy supply is mainly based on the use of biomass, which has a share of
76% at the primary energy consumption.
Figure 1: Primary energy
consumption, 2009
Oil;
Natural
Coal;
9,20%
Gas;
0,10%
0,40%
Figure 2: Electric Power Mix
(% of installed capacities), 2012
Electricit
y; 1,80%
Hydro
36%
Biomas
s
2%
Biomass,
waste;
88,60%
Imports
1%
Oil
29%
Gas
32%
The current electricity generation capacities amount to 1564 MW (03/2013), of which 61%
are thermal power plants, which includes rental/ emergency power plants of 205 MW,
running on diesel. Hydro power plays the second role (36%).
Table 2: Energy mix
Technology
Hydropower
Small Hydro
<10 MW
Oil (jet A-1, diesel)
Gas
Installed
capacity (in
MW), total
553,0
12,8
456,3
501,0
TANESCO
IPP
EPP
553,0
8,8
88,3
252,0
SPP
4,0
163,0
249,0
205,0
Biomass
27,0
8
Import
TOTAL
14,0
1564,1
14,0
916
412
205
31
Peak demand is around 828 MW (2011). The typical load pattern displays a fairly constant
load during day with an evening peak between
1.2. Development of electric power supply and demand
An energy demand forecast was conducted in the context of the Power Supply Master
Plan (update 2012). According to that plan, the electricity demand will grow by 11,9% p.a
(low growth scenario) up to 15,3% p.a. (high growth scenario) until 2030. This means,
that the current electricity production has to be increased from 5.653 GWh to 47.724 GWh
until 2035 (reference scenario, 6,6% p.a. over 14 years). In case of high economic growth
(7,8% p.a. over 14 years), the power production has to be around 53.000 GWh. For
meeting such a demand, generation capacities have to be expanded to more than 6.700
MW by 2035 (> 2780 MW by 2015/2016).
The drivers of the rising power demand are as follows:
 Economic growth: around 6,6% p.a. (over a period of 14 years)
 Additional major loads which will coming up between 2013 - 2019, e.g. nickel
mines with a load of 72 MW in total, new gold mines with a load of 90 MW (2 nickel
mines and 1 Uranium mine), an iron smelter with a load of 100 MW, a textile mill in
Shinyanga (39 MW), a fertilizer factory in Mtwara (30 MW) and the extension of
Hong Yu Steel (34 MW)
 Further rural electrification: total electrification rate of 24% by 2015 and 78% by
2035 (current level: 15%), involving connection of 250.000 new customers per
annum starting 2013 to 2017. Remaining 6 regions (Ruvuma Kigoma, Kagera,
Rukwa, Lindi and Mtwara) are expected to be connected to the main grid by 2019
The system losses currently amount ot 25%, i.e. 5,3% in the transmission grid and 19,7%
in the distribution net. The target for loss reduction is to achieve a level of 15,8% by 2035.
The suppressed demand, which is reflected by power cuts and load shedding, is estimated
to be around 2,1%, i.e. almost 100 GWh.
Additional 8990 MW shall be installed by 2035 (main grid connected) to meet the
increasing demand and to replace generation units that will be retired. The majority of
capacity additions are expected to be large hydropower and coal:
Table 3: Power capacity
Technology
Hydro
Gas-fired plants
Coal
Wind
Solar
Biomass/ Cogen
Total
Installed capacity (in MW)
3304
995
in %
36,8
3800
120
100
40
8990
9
1.3. Role of renewable energies
In consideration of the whole scope of renewable energies, they play a crucial role in the
energy mix in Tanzania. The high share of hydropower (nearly 40%) at the power mix
makes the energy supply very sensitive to the water availability in the seasons; in addition
to that the price for the diesel, with which the emergency power plants are run, for instance,
during dry seasons, increased a lot and makes the power generation more expensive.
According to a the SREP Investment Plan Tanzania (2013), large hydro-power, natural
gas and geothermal power plants have the lowest levelized electricity generation costs (46 UScent/ kWh). Coal is comparable. This explains, why hydro, natural gas and coal are
supposed to be the main pillars of the grid-connected power supply in future.
Presently about 4,9% of total generation capacity in Tanzania is from renewable energy,
including captive generation in sugar, tannin and sisal factories, solar, small hydro plants,
but excluding large hydro. The GoT has the goal to increase the share of renewable
energy (excluding large Hydro) in the electricity mix to 14% by 2015.
Solar PV and Wind do not (yet) play a big role despite huge potentials. The levelized costs
of wind and solar PV are around 11 UScent and 9-10 UScent, which is competitive
especially with regard to power generation from diesel (30-32 UScent/ kWh). These costs
are for larger-sized grid-connected facilities. According to the Power System Master Plan
(2012), 120 MW (2x60 MW) Solar PV and 100 MW Wind (2x50 MW) shall be installed
between 2016-1018.
In context of rural electrification, Solar PV and Wind can play a crucial role in areas where
connection to the main grid would is not economically viable. According to the latest SREP
report (04/2013), 14,9 Mio. people are far from the grid and, in addition, have a low
density (<125 habitants/km2). These are 33% of the overall Tanzanian population. The
number of households in such remote areas with low population density is estimated to be
3 Mio. They are best served through stand-alone systems, as mini-grids would imply too
high costs in consideration of the low density.
According to the Rural Electrification prospectus study, 52% of the overall population may
best be served using minigrids and off-grid solutions: 20% renewable minigrids and 32
stand-alone Solar PV.
If there is not the option of small hydropower or biomass power plants, Solar PV-BatteryDiesel hybrid solutions are the most cost-effective solution for minigrids. The economic
levelized costs of electricity amount to 0,53 UScent/ kWh, compared to 0,59 UScent/ kWh
for diesel generator and 0,71 USCent for a Solar PV system with battery.
1.4. Power tariffs
By principle, power tariffs shall be cost-reflective. But the current TANESCO electricity
prices are too low, being about 0.13 USD/kWh for residential and small commercial
sectors and as low as 0.07 USD/kWh for larger consumers:
Table 4: Power tariffs
Category of consumer
Domestic Low
Usage (D1)
Social tariff
General Usage
(T1)
Low Voltage
Max (T2)
High Voltage
Max (T3)
Residential,
small
commercial and
light industrial
3-phase,
demand below
500 kVA
Power metered
at 11 kV and
above
10
Low Energy
(0-50kWh)
per kWh
60
High energy
charge (above
50kWh)
per kWh
273
Service
Charge
per Month
3,841
Demand
Charge
per KVA
14,233
14,233
16,944
14,520
Energy Charge
per kWh
221
132
118
Energy Charge
per kWh
(in USD)
0.13
0.08
0.07
Tanesco tariffs are set for review 20131.
1.5. Power sector structure
The energy sector in Tanzania comprises of various stakeholders, including national
institutions, private sector operators, and non-governmental organization. One of the most
important features is, that the major part of power generation and the operation of the
transmission & distribution grid is not unbundled, the power supplier TANESCO is
vertically integrated. Following chart shows the landscape of players:
Ministry of Energy and Minerals (MEM): mandate to develop energy and mineral
resources and to manage the sector. It is responsible for formulation and articulation of
policies to create an enabling environment for stakeholders. Promoting renewable
energies is part of the MEM mandate.
Energy and Water Utilities Regulatory Authority (EWURA): Autonomous multi-sectoral
regulatory authority which is responsible for technical and economic regulation of
electricity, petroleum, natural gas and water sectors in Tanzania. Tasks of EWURA
comprise the regulation of power retail tariffs, awarding provisional and permanent
licenses as well as monitoring and enforcement activities.
Tanzania Electric Supply Company (TANESCO): principal electricity generator,
transmitter and distributor which provides nearly 60% of the effective generating capacity
of the national grid. TANESCO is a public company.
Rural Energy Agency (REA): Autonomous body under the MEM to promote and facilitate
improved access to modern energy services in rural areas of Mainland Tanzania. Through
the Rural Energy Fund (REF), which gets its financial resources from a surcharge on grid
electricity sales as well as from Development Partners, REA co-finances rural and
renewable energy electrification schemes, implemented by TANESCO and the private
1
Though there are political forces that work to prevent increases.
11
sector. REA is also preparing the Rural Electrification Investment Prospectus, which for
the first time is taking a least cost rural electrification planning approach that integrates
grid and off-grid electrification options as well as renewable energy sources.
Independent Power Producers (IPPs) and Emergency Power Producers (EPPs):
Private investors in the power sector contribute by 40% to the installed capacities. Current
players comprise Symbion-Ubongo, IPTL, Symbion Arusha, Songas, Aggreko and
Symbion Dadoma:
Table 5: Independent power producers
Plant
Installed capacity
(in MW), total
Songas 1
Songas 2
Songas 3
Tegeta IPTL
Symbion Ubongo
42
120
40
103
120
Aggreko Ubongo
Aggreko Tegeta
Symbion Dodoma
Symbion Arusha
50
50
55
50
Fuel
IPP
Gas
Gas
Gas
HFO
Gas/
Jet A1
Diesel
Diesel
HFO
HFO
EPP
x
x
x
x
X
X
X
X
X
Small Power Producers (SPP): A number of private companies are engaged in small
renewable power development under SSPA to sell power to TANESCO and/ or sell directly
to retail customers. Many of these firms are already in rural areas in other business such
as tea, sugar, sisal, tannin etc. 2 plants, TPC and TANWAT, are run on basis of biomass
and sell the power to the grid (19,7 MW in total). The 4 MW hydropower plant Mwanga is
supplying power to the nearby rural villages with excess being sold to TANESCO.
Within this year, a consultant will be appointed to review the power sector structure.
According to EWURA, private investors shall play a crucial role, but there will probably be
a shift from single IPPs towards more PPP, e.g. concessions. That means, that private
investors shall be mobilized through tenders, so that the Feed-in tariff will be set on basis
of a competitive bidding. EWURA expects to have benchmarks by this way and to find
proper price levels for certain technologies. Despite this shift, there will be room for IPPs.
2. Regulatory framework for solar PV & wind power
2.1. Feed-in tariff-scheme (FIT)
Since 2008, there is a feed-in-tariff scheme in place for small power producers (100 KW up
to 10 MW). Above that size, the FIT is negotiable.
The Feed-in-tariffs for small power producers are adjusted annually by EWURA and are
based on the avoided cost of the electricity. That means that they are undifferentiated by
renewable energy technologies and that there is no guaranteed price over the long
term even if a PPA is signed for 15 years period.
Within the standardized FIT scheme, there are tariffs for feeding in the main grid and in
isolated mini-grids.
The tariffs for feeding in the main grid are calculated as follows:
12
Table 6: Calculations for feed-in-tariffs (FIT), main grid
Cost Position
Long-Run Marginal Costs (LRMC), as defined by the Power system
A
B
C
D
E
Master Plan 2009,
+ average tax for generation investments
+ average tax on fuel
Converting into TZS (based on average selling price of USD for 1 year)
Sub-Total
Average Generation Costs of the existing generation system
Forecast Thermal Generation to TANESCO Grid
x forecast costs of thermal generation on grid (capacity charges of
TANESCO own capacities and of IPP & EPP charges + fuel and variable
O&M for all plants)
Sub-Total
Average generation costs/ avoided cost of generation
(average of A and B)
Adjustment for avoided transmission losses (5,2%)
Standardised Small Power Purchase Tariff 2012
Average of 3 years (2012, 2011, 2011)
In 2012
7,90 USCent
Ca. 30%
Ca. 19%
150,18 TZS/ kWh
214,54 TZS/ kWh
182,36 TZS/ kWh
192,37 TZS/ kWh
152,54 TZS/
kWh
(9,3 USCent)
Source: based on EWURA, Detailed Tariff Calculations for Year 2012 for the Sale of Electricity to the Main grid
in Tanzania under Standardized Small Power Purchase Agreement, February 2012
For balancing the higher generation costs in dry seasons, when hydropower is not so
much available as in wet seasons and thermal power plants (in particular EPPs) have to
generate more expensive power, the standardized FIE is differentiated according to the
season:
Table 7: Seasonal standardised FIT (main grid)
Standardised Small Power Purchase Tariff
In 2012, TZS/ kWh
Average tariff
Dry season (August – November)
Wet season (January – July, December)
152,54 (9,3 UScent)
183,05
137,29
For the next 10 years, the avoided cost of the interconnected system will be driven by
thermal plants. The planned development of thermal power plants using natural gas priced
at extraction cost plus fee and not at the international price makes uncertain that the
avoided cost of the grid and, thus, the feed-in-tariff will remain above the levelised
generation cost of renewable energy technologies such as Solar PV and wind. However,
to mitigate this risk, there is a floor price which limits downwards variation of the FIT.
For instance, for all SPPs executed in 2012, the floor price shall be 152,54 TZS (183,05 in
dry season; 137,29 TZH wet season). If the avoided costs fall below that price, the floor
tariff shall be paid to the small power producer.
The Feed-in-tariffs for mini-grids are higher. They are also calculated on basis of the
avoided costs, i.e. the average of LRMC (as defined in the PSMP 2009) and the
incremental costs in mini-grids:
13
Table 8: Calculation for FIT, mini-grids
Cost Position
Long-Run Marginal Costs (LRMC), as defined by the Power system
A
Master Plan 2009,
+ average tax for generation investments
+ average tax on fuel
Converting into TZS (based on average selling price of USD for 1 year)
Sub-Total
+ Adjustment for avoided transmission losses (5,2%)
Average incremental costs in mini-grids
Incremental capacity cost of mini-grids
+ Incremental costs for fuel, lubrication and maintenance
Sub-Total
B
C
E
Standardised Small Power Purchase Tariff 2012
Average of B and C
In 2012
7,90 USCent
Ca. 30%
Ca. 19%
150,18 TZS/ kWh
192,37 TZS/ kWh
42,11 TZS/ kWh
726,53 TZS/ kWh
768,64 TZS/ kWh
480,50 TZS/
kWh
(29,4 UScent)
Source: based on EWURA, Detailed Tariff Calculations for Year 2012 for the Sale of Electricity to Mini-grids in
Tanzania under Standardized Small Power Purchase Agreement, February 2012
The table shows, that the tariff for mini-grids is more than triple. While the tariff for maingrid should by not be enough for promoting Solar PV, the tariff for mini-grids is attractive
enough, even for Solar PV.
Actually the FIT scheme is under review. In this context, the key features such as size
threshold of 10 MW, the tariff calculation methodology (on basis of avoided costs), the
technology-neutrality and others are discussed. According to the MEM feed-in tariffs will
probably be differentiated according to technologies, as many stakeholders push into that
direction.
2.2. Power purchase agreement
For reducing the transaction costs associated with negotiating and signing a PPA, a
standardized PPA has been introduced for projects up to 10 MW. This standardized PPA
is technology-neutral.
It incorporates the following features:







“must-take” contract: All energy supplied by the SPP developer to the Distribution
Network Operator (DNO) will be purchased by the DNO subject only to such
necessary directions and protocols as may be issued by the DNO for the protection
of its electric system
The Standardized power Purchase tariff, announced each year, is based on the
DNO‟s avoided costs
The floor tariff over the term is 100% of the tariff in the year in which the SPPA is
signed
The tariff is capped at 150% of the tariff in the year in which the SPPA is signed
The SPP shall design, purchase, construct, operate and maintain the seller-owned
interconnection facilities (including upgrading of metering at the grid substation to
monitor bi-directional real and reactive power)
Step-in rights
The SPPA has a term of 15 years
14
What is missing in the SPPA, is a take-or-pay clause that provides a compensation to the
Small Power Producer, should the grid experience a situation that prevents the off-taking
of the generated power. This affects, of course, significantly the bankability of SPPAs,
especially as the grid suffers a lot from outages.
Following table shows the application process for the Feed-in Tariff:
Table 9: Application process for the feed-in-tariff
Milestone
Securing land and RE resource access
Application for Letter of Intent
Issuing letter of Intent
Business registration
Performing feasibility study
Approving technical assistance grant
Applying for permit of construction, environmental and social
clearance
Generation license application
Issuing the generation license
Application for interconnection & sale of electricity
SPPA contract
Responsibility
Project sponsor
Project sponsor
Grid operator
Project sponsor
Project sponsor
REA
Project sponsor
Project sponsor
EWURA
Project sponsor
Project sponsor/ Grid
operator
Closure of project financing
Project sponsor/ Partner
Bank (REA/ Worldbank)
Source: EWURA, Guidelines for Development of Small power Projects, March 2011
3. Status of the solar and wind energy sectors
3.1.Brief solar and wind sector overview
Favourable policy developments, support schemes and rapid reduction of costs are
creating a healthy market for solar PV in off-grid locations.
Cumulative installed capacity of solar PV installed in Tanzania is estimated to have
increased from 100kWp in 2005 to over 5 MWp in 20122. Sales of solar energy were
estimated at 2MWp in 2011 (Camco). Sales in 2012 and 2013 are thought to be higher
due to large project initiatives and continued solar home system demand. TAREA is
currently updating market research to determine the size of the market3.
Most of the solar PV capacity installed is in rural electrification and donor-funded projects
(SHS, institutional, etc.). This market is likely to continue to increase because (unlike
Kenya), there are large economically-active and heavily populated parts of the country that
will not be connected to the grid in the near future. This also provides opportunities for
mini-grids, based on renewable energies.
As well, MW-scale projects are either under discussion or in the development pipeline that
could dramatically change the market profile for solar energy in Tanzania.
A number of investors and solar entrepreneurs are seeking to develop solar farms that
take advantage of Tanzania‟s Feed In Tariffs and stable political climate. However, there
2
No agency has kept close track of solar sales, but rapid increases in the off-grid and NGO market have been
observed.
3
Leading solar energy companies were unwilling to provide full sales data to team
15
are significant investment hurdles. Potential investors want to sell PV electricity generated
at 20 USDc/kWh; TANESCO currently sells electricity at below 13 USDc/kWh. Investors
prefer to negotiate terms in US dollars (as opposed to the current Tanzania shillings
offered). A final challenge is that of competition with grid extension4. Investors would also
need guarantees to ensure long-term payment for electricity as TANESCO is seen as a
credit risk.
The wind market has not had the same level of interest or development as Kenya has had
in either off-grid or on-grid developments. Wind regimes are roughly similar to Kenya, with
high wind resources focused in the Rift Valley and along the coast. However, there are
fewer companies and NGOs involved in off-grid small-scale developments (and local
manufacturing). Large-scale utility scale projects (150MW) are in planning stages but have
been slow to move forward primarily because of a lack of confidence by investors in longterm payment from the utility. Pipeline utility scale projects are above 30MW so do not fall
under Standardized Power Purchase Agreements but rather negotiate PPA‟s directly with
Tanesco. (See section 1.2.2).
As shown in the table below, the Tanzanian market can be divided into 4 major segments:
Table 10: Main market segments of the solar PV market in Tanzania
Segment
Brief description
Current status
Comments
Off-grid Pico &
SHS
Off-grid
Professional &
Project Market
Grid connect
(small & medium
scale)
Utility-scale power
generation (IPP
and SPP)
Sales of kit-type products
(usually below 100Wp),
“over-the-counter”,
unregulated.
Systems designed according
specific needs of off-grid
facilities or off-grid
electrification programs. It
can include “clustered” SHS
programmes or larger
systems (solar PV and
hybrid systems).
Systems designed for the
specific needs of gridconnected facilities. It can
include power generation for
direct consumption
(embedded generation) or
grid-interactive systems (e.g.
under net-metering or energy
banking arrangements).
Power generation sold to
main utility or other
decentralized utilities. It
includes Small Power
Projects under the SPPA or
larger projects with Tanesco
negotiated tariffs.
Largest portion of
market. REA subsidy
offered.
Active market. Driven
by donors, NGOs or
government
procurement. Small
applications in
commercial and
industrial sector (e.g.
tourism, telecoms, etc.)
Potential to develop
based on policy
environment. Highly
sensitive to Tanesco
electricity tariffs.
Several projects in MoE
pipeline, all of them to
connect to mini-grids
under the SPPA.
Competitive. Dominated
by Chinese products.
Estimated to be over 1
MWp p.a.
± 1 MWp of installations
in 2012 (solar PV).
Pilot projects likely to
occur in 2014.
Risky investment climate
(creditworthiness of
Tanesco)
The market for wind energy technology can be segmented along the same categories as
the solar PV market in 9. The more active segments are however the off-grid professional
and project market---with a few projects in the kW scale from local companies as
Windpower Serengeti and REDCOT---and utility-scale power generation from international
consortia, notably the windparks currently being developed in Singida by Geo Windpower
4
The Tanzanian Government cannot assure investors that isolated mini-grids will remain isolated during the
period of investment payback.
16
and Wind East Africa. More detailed information on the wind energy technology market is
provided in section 3.2.2.
3.2. Status of solar PV
The overall Tanzanian solar market is very similar to the Kenyan market. Since 2000,
growth in off-grid markets has been strong due to rapid increases in consumer awareness
and buying power, investments by suppliers as well as Government recognition of the role
of solar PV in pre-electrification of the large, economically-active areas of the country that
will not be immediately met by the grid. Grid-connect solar PV is actively discussed as a
replacement for thermal power in remote mini-grids, but thus far no investments have
occurred. Despite increasing levels of consumer and investor interest, small and large
projects involving connection to the main grid are still in early stages of discussion.
Off-grid pico & solar home systems
As occurred in Kenya between 1995 and 2005, the Tanzania market went through rapid
growth between 2008 and 2012. This was due to steady national economic growth, better
pricing for Tanzanian agricultural products (tea, coffee, cashew nuts, etc.), increased
awareness and continued slow electrification rates. As well, Government supported
initiatives such as the 2002-2006 National PV projects did much to increase awareness
about the potential of PV for off-grid household electrification and set up regional
distribution networks.
The market is largely an unregulated, competitive, “over-the-counter”, where equipment is
purchased on a component basis from hardware shops, electrical stores and agents which
have relatively strong supply chains. There is much complaint about sub-standard
products and the domination of the sector by a few high volume players that do not
conform to national regulations.
Several established PV companies such as Ensol and Rex Solar Energy stated that they
“got out of” the solar home system market and focused instead on the “project market”
because of the highly competitive nature of the solar home system market and because of
the lack of quality or margins in the sector.
The off-grid commercial SHS and pico-solar market likely to be about 1 MWp per annum5.
It has been increasing steadily since 2008. The major developments in recent years are a)
increased prevalence of low-cost product from the Far East b) wider use of inverter-based
system because of consumer demand for televisions and AC electrical goods and c) price
competition due to larger number of players in the market: As happened in Kenya in the
1990‟s, the last 10 years have seen a large increase in retail outlets in small towns
supplying solar equipment directly to consumers.
One established wholesale company for SHS is ZARA SOLAR Ltd. Funds from social
investors as well as the Government of Tanzania have allowed the company to build a
name and provide quality components and service. They offer a wide range of SHS (from
15 to 260 Wp), have two main offices in Dar es Salaam and Mwanza and a well-developed
network of trained technicians that can distribute and install products throughout the
country.
Pico-solar product demand has increased rapidly on several fronts, because of both
donor support and increased product availability:
5
This figure is however not based on accurate data but rather opinions of experts. No accurate reports
regarding sales of solar PV products exist to date.
17


Donor-supported initiatives that have supported quality products and subsidized
social entrepreneurs in marketing of products6.
Over-the-counter supply of low quality, low priced LED/PV kits from Asia with deep
penetration into rural markets
A success story worth mentioning is the case of SolarAid / SunnyMoney in Tanzania. This
NGO transitioning to private company has sold over 150,000 in East Africa. More than
50,000 units were sold in 2012 in Tanzania alone through its on-going „Students Lights‟
campaign. The “Students Lights” campaign is an innovative distribution model that uses
rural schools as distribution channels in rural Tanzania.
Box 1: Energy enterprise TRC phone
charging
Only 30% of rural Africans are phone users,
partly because of the problem to charge the
phones. Very often they need to travel long
distances.
The entrepreneur Ruth Musenye invested in
small solar panel systems for phone
charging and lighting, obtaining 14 Watt
panels from Zara solar in Mwanza at a cost
of 300 USD.
With help of the DEEP-Programme and
respective training as well as coaching on
developing the business plan, she
diversified by adding 2 barber shops which
operate with solar energy. In addition she
scaled-up her mobile-phone charging
business: Now she is serving more than 30
customers compared to 5-10/ day before.
The Programme helped her to submit her
application to SIDO (Small Industries
development Organization), a government
operated micro finance institution.
Source: GVEP International, developing Energy
Enterprises in East Africa, booklet 2012
The target group of this market segment
are mainly people in remote areas, which
are difficult to be reached. Thus, an
important part of the supply chain are the
so-called “energy entrepreneurs” who are
trained and supported though several
donor-funded proprammes. A prominent
example is the programme “Developing
energy enterprises in East Africa” (2008 2012), which was funded by the EU and
the Danish Government. In framework of
this programme, over 1000 micro and
small energy enterprises (MSEE) have
been supported to develop their business.
328 of them deliver Solar PV products
and services, such as solar lighting and
solar mobile phone charging. Many of
them are in Tanzania.
The small entrepreneurs got trainings on
technologies,
book-keeping,
quality
assurance and marketing. In addition,
they were coached by a mentor on the
development of their business plan. As a
crucial component of the programme, a
Loan Guarantee Fund was established,
which made it possible for most of the
entrepreneurs, who do not have suitable
surety such as a land title and therefore
cannot get credits, to get access to finance.
Few German companies are active in this pico & SHS segment. They succeed especially
because they do not only come with a product or solution, but also with a business model,
such as the pay-as-you-use model of MobiSol.
6
Lighting Africa and the Rural Energy Agency supported over USD 1 million for small scale lighting projects in
the Lighting Rural Tanzania project. SolarAid sold tens of thousands of pico-solar systems through its program
that reached out to schools and subsidized the marketing of products.
18
Box 2: Business model MobiSol

19 employees, of which 4 are in the EA region, e.g. Arusha.

Product: Smart system (20 Wp – 200 Wp), linked up to mobile net (in
Tanzania Vodacom and Airtel)

Business model:
 Customer pays via M-PESA a monthly fee, the system will be opened
automatically for power supply to the customer;
 the systems are financed through micro-credits and can be paid back over
a period of 3 years (12 USD/ month for 20 Wp; 40 USD for largest system);
 warranty is given for 3 years (for this period service for free)

Partners: Kakute (Tanzania)

In a test phase (2010-2012) around 300 units were installed in Nakuru region
(Kenya) and in Aruha (Tanzania); the target for 2013 is to install 10.000
systems in Tanzania, Kenya and Ghana)
Off-grid professional and project market
Systems in this category are designed according to specific requirements of off-grid
electrification programs or based on the specific needs of off-grid facilities (e.g. schools,
hospitals or even tourism resorts). The key difference between this market and the “over
the counter” SHS market is that companies in this field require higher engineering and
project management skills. The market is not as price-sensitive as the SHS one and more
importance is given to quality, performance and sustainability.
This market is largely driven by donors, NGOs or Government procurement. There are
however applications in the off-grid commercial and industrial sector (e.g. tourism,
telecoms, etc.) where solar PV is usually combined with diesel generators (hybrid
systems) to reduce the overall cost of energy.
To date about 6 MWp of solar PV electricity has been installed countrywide for various
applications in schools, hospitals, health centres, police posts, street lighting,
telecommunication, small enterprises and households
The Government of Tanzania provides 100% subsidies for the electrification of remote
public facilities through Solar PV. In the first tranche of the so-called Sustainable Solar
Market Package (SSMP) 300 public facilities have been electrified, around 300 kW in total.
The second round is under preparation.
The SSMP is a contracting mechanism that provides for the supply and installation of PV
systems, along with a maintenance and repair contract in a defined area. PV systems,
which are supposed to meet electricity needs in schools, clinics and other community
facilities are bundled with requirements and incentives for commercial sale to households,
businesses and other non-governmental customers. In addition to the 100% funding of the
PV systems for the public facilities, grants are used to help household consumers defray
the costs of SHS: They either obtain a loan from a partner microfinance institution or use
pay-as-you-go technology to tie usage to payment, or they pay cash for the balance of the
SHS payment.
19
1 SSMP is currently under implementation (status 04/2013) in Rukwa region to benefit 80
villages with electricity services to schools, dormitories, dispensaries, health clinics, police
posts and street lighting as well as to 8000 households and other private customers.
New packages are being prepared for 5 more regions: Beneficiary will be the population in
455 villages (with around 70.000 households). In addition, Millennium Challenge
Corporation has financed an SSMP project in Kigoma Region to benefit the population of
25 villages.
Besides the SSMP, the Lighting Rural Tanzania Grant Competition Programme
(LRTCP) also aims at improving the access to modern energy services of households,
businesses and public facilities. The Programme has been launched in 2010 and since
them 2 competition rounds have been realized: The core instrument is to give awards to
innovative proposals which have the objective to provide modern lighting systems to
remote consumers.
Within the 2012 competition, The Tanzanian Rural Energy Agency has selected 15
winners from altogether 102 proposals submitted. The focus is on providing energy lighting
services to rural schools and health facilities. Each of the winners received about $100,000
for a total of $1.5 million financed by the World Bank. The implementation of the winning
projects will be completed by mid of 2015. The project developers are, for instance, private
enterprises such as KAKUTE Ltd, Alternative Energy Tanzania, Masotricity Engineering
Company, RESCO Ltd., Southern Corridor Company as well as NGOs like The Tanzania
Traditional Energy Development Organization (TaTEDO). Most projects plan the
electrification on basis of Solar PV; in at least 2 projects, wind-solar hybrid systems shall
be installed (for rural secondary schools and dispensaries in Manyara Region).
The contest in 2010 (LRTC 2010) awarded $1 million to 10 winners in the country that
resulted in improved access to energy and lighting for over 125,000 individuals and for the
users of 52 public facilities.
Table provides a list of further selected Professional Off-Grid Projects that have either
been completed recently or are on-going. This table gives a good overview of the nature of
projects in this market segment.
Table 11: Selected professional off-grid projects, completed or underway
Project Name & Location
Donor,
Description
Year
Sustainable Solar Market
Package (SSMP), Kigoma
Solar energy for schools
Kigoma MCC
(US
Government),
2012
USAID, 2012
Solar energy systems for
health clinics
Tanzania National Parks
USAID
Lake Basin Clusters project
EU funded,
2012
Small solar energy minigrids
set up for rural electrification
REA, 2010
(Lighting
Rural
Tanzania
TANAPA
235 kWp of solar energy systems for public
facilities and solar home systems.
Investment: 4.7 million USD. Implemented by
Camco and Rex Energy.
Implemented by Solar Nexus International.
250 kWp in 900 school learning systems.
System size range 90-220 Wp.
21 rural clinics (6 kWp each), i.e. 126 kWp
total. Implemented by Ensol.
16 systems (3.5 kWp each), i.e. 56kWp total.
implemented by Ensol.
SHS procurement in bulks (30-60-100W),
totalling 1 million USD. Based on TEDAP
initiative and implemented by Camco.
10kWp in Serengeti, developed by Carbon X,
connections with load limiters at 50W
(12,000 TZS/mo), 100W and 200W.
20
Competition)
Various rural electrification
projects conducted by NGO
TaTEDO
TaTEDO
Telecoms: Airtel and TTCL
Commercial
Tourism: Tourvest and
AfrikaAfrika
Commercial
Social enterprise Devergy has implemented
a small solar energy grid in Matipwili as their
first pilot of a pay-as-you-use system.
NGO active in rural electrification project
market. Planning 2 village minigrids with feefor-service arrangements and solar kiosks for
productive use of energy.
Airtel currently greening sites worldwide with
3MWp capacity. Started greening sites in
Tanzania in 2012.
TTCL installed solar energy systems to
power several off-grid towers. Each of the
systems was ca. 6 kWp with batteries.
More information in section 2.3.2
Tourvest invested in a 15kWp system for one
of their tented camps in Tanzania (supplied
from South Africa) and AfrikaAfrika installed
solar energy systems in two of their facilities
(installed by local company Voltzon). More
information in section 2.3.5
Source: African Solar Designs
Interesting potential clients for German suppliers of off-grid solutions in the professional
market segment are religious centres. For instance, the German company Energiebau
Solarstromsysteme installed an off-grid solar hybrid system with vegetable oil generator
for the Convent of the Vincentian Sisters (already in the year 2006). The system comprises
of a 8,1 kWp solar and a 30 kW electricity generator. Project partner was the InWent,
nowadays part of GIZ.
The market size of the “professional” market in the order of 1 MWp p.a. and growing, with
sustained interest from donors and the private sector7. Installation costs for such projects
are relatively high at about 10-15 USD/kWp for installed off-grid systems, primarily due to
the logistical difficulties of reaching remote parts of the country.
The main players in the off-grid professional market are summarized in Error! Reference
source not found. More companies active in this market are provided in the annexed
database.
Table 12: Selected players and distribution channels for the off-grid
professional/project market
Company
Business focus
Rex
Investments
Leading solar energy
contractor.
Ensol
Clients in public sector
(education, health, rural
electrification) as well as
private (hotels, lodges).
System integrator and
installer. Mostly projects
in 1-10kWp range for
donors, NGOs and
government.
Origin of
technology
Europe, US,
China
Distribution
channels
Other
comments
Extensive
dealer network
throughout the
country
Recently
completed the
Kigoma MCC
project (the
largest PV project
in Tanzania, 275
kWp total )
European and
American
products
3 branches in
Tanzania and
network of
contractors
Sales in the
order of 200
kWp/year,
upward trend
7
Tanzania has a much higher level of donor-investment in rural energy access than Kenya because of the
more transparent and facilitative nature of its Government in rural energy.
21
Voltzon
System integrators and
installers.
Solar energy systems
for tourism, residential
sector and institutions.
Helvetic
Solar
Wholesale of Victron
inverters.
Wide range of solar
energy products, from
pico to kW scale.
Europe
Victron
inverters (the
Netherlands)
Voltzon is both
a wholesaler of
Victron inverters
in Tanzania and
a system
integrator for
projects.
Several projects
in the private
(residential,
tourism) and
public sectors
European and
American
products
Based in Arusha
to have access
to tourism
sector in
Northern Circuit
of Tanzania.
Awarded Fastest
Growing and
Number One in
the Top 100 Mid
Sized
Companies in
Tanzania 2012 2013 (The
Citizen,
Mwananchi
Communications,
NBC Bank and
KPMG).
Clients include private
sector, government and
donors. Retail sales,
wholesale supplier,
importer, distributor,
system integrators and
installers.
Source: African Solar Designs
Medium/small scale grid-connect
The comparatively low (and subsidized) Tanesco electricity price8 is unlikely to stimulate
rapid market for grid-connected systems. As well, the absence of net-metering or attractive
FiT‟s provides little stimulus for commercial market development.
Despite the fact that projects are not taking place, there is increased interest among “first
movers” to invest in solar including:


Green buildings: interest in both “green energy” aspects and back-up power
aspects.
Activist organizations: organizations want to be “first players” in sustainable energy
market
The market for small and medium scale grid-connected systems is currently negligible,
though (again has happened in Kenya), solar PV systems installed as part of power backup systems are not uncommon. Increasing consumer interests in “green power”, imminent
increases in electricity tariffs as well as favourable changes in renewable energy policy are
likely to create a market in the near future. It is likely that first pilots in the grid-connect field
will come online in 2014. A more detailed discussion of these developing markets can be
found in section 4.3.1.
Utility-scale power generation (IPP & SPP)
No utility-scale solar PV systems have been installed up to 2013 Q2. A few large scale PV
projects have been announced and are in different stages of development. Most activity in
utility-scale solar is in sales of power to diesel based mini-grids, hybridizing power supply
and reducing overall cost of energy, for which there is a significantly higher SPPT.
8
General user tariff (T1) of 221 TZS/kWh (0.13 USD/kWh). Tariffs are significantly lower for larger consumers
(T2 and T3 categories).
22
There are 9,1 Mio. people (1,8 Mio. households, 20% of overall population) which are
supposed to be best served through mini-grids
For promoting mini-grids the Small Power producer schemes was launched in 2008, at it
has been described in context of the regulatory framework.
Within this scheme, TANESCO already signed Small Power Purchase Agreements with 11
developers to supply 46 MW of power; three of them (14,4 MW) are already supplying
power to the main grid. In addition, Letters of Intent have been signed with another 6
developers for 31 MW:
Table 13: Mini-grid projects
SPP
Technology
Capacity
(in MW)
Grid
SPPA/LOI Commissioning
connection
date
SPPA Signed
TANWATT
TPC Moshi
Mwenga,
Mufindi
Ngombeni,
Mafia
Sao Hill,
Mufundi
Symbion-KMRI,
Tunduru
SymbionKigoma
St. Agnes
Chipole,
Songea
NextGen
Solawazi,
Kigoma
EA-Power,
Tukuyu
AHEPO, Mbinga
TOTAL SPPA
Biomass
Biomass
Hydro
1,5
9,0
4,0
Main
Main
Main
09/2009
10/2009
01/2010
06/2010
09/2010
09/2012
Biomass
1,5
Isolated
01/2010
03/2013
Biomass
6.0
Main
02/2010
06/2014
Biomass
0,3
Isolated
07/2012
07/2014
Biomass
3,3
Isolated
12/2012
03/2014
Hydro
7,5
Isolated
01/2013
07/2014
Solar
2,0
Isolated
01/2013
04/2013
Hydro
10,0
main
03/2013
Hydro
1,0
46,1
Isolated
03/2013
Letter of Intent (LOI) Signed
Mapembasi,
Njombe
Kikuletwa II,
Kilimanjaro
Darakuta,
Manyara
Mofajus,
Mpanda
Tangulf,
Nakatuta
Windpower,
Mpanda
GoOn Tosa,
Iringa
TOTAL LOI
Hydro
10,0
Main
06/2010
Hydro
7,0
main
10/2011
Hydro
0,9
Main
01/2012
Hydro
1,2
Isolated
04/2012
Hydro
10,0
Main
11/2012
Solar
1,0
Isolated
11/2012
Hydro
0,8
Main
Lease from
TANESCO
30.9
Source: SREP, April 2013
As the table shows, just 2 projects are on Solar PV. The developers are Next Generation
and Windpower.
23
- NextGen Solar is in the process of evaluating an investment opportunity to set up a 2
MWp solar power plant connected to the Tanesco minigrid in Kigoma. The company
has already signed an SPPA with Tanesco and EWURA has extended a provisional
license. The project will be built, owned and operated by NextGen Solawazi Ltd.
(NGSL). It is envisaged to increase the capacities up 5MWp at later stage. Based on
the successful implementation of the pilot in Kigoma, NextGen Solawazi will be
undertaking investments in several other isolated minigrids for a total capacity of
40MWp of electricity generation (approximate investment of USD 120 million).
- Windpower Serengeti is developing the 1 MWp solar energy plant to hybridize a 2.5
MW Tanesco minigrid in Mpanda (Rukwa region). They have completed their feasibility
studies and secured land rights and the EIA. They have a Letter of Intent (LOI) from
Tanesco. The project falls under the SPPA (off-grid tariff) and has obtained a
provisional license from EWURA. Windpower Serengeti is currently looking for investors
to move into implementation phase. If the Mpanda project succeeds, two other minigrid
sites have been identified and would follow in the pipeline.
Beyond the Feed-in-Tariffs and the standardized PPAs, the GoT promotes Small Power
Producers through following incentives:
 80% of costs for pre-investment works such as feasibility study, EIA etc. are
subsidized (up to 100.000 USD/ project) and paid to the project developer
 500 USD/ connection are given to the project sponsor for stimulating the
connection of many energy consumers
These incentives are given in framework of the “Tanzania Energy Development and
Access Project” (TEDAP), to large extent financed by the World Bank (including 44 Mio.
USD credit and 6,5 Mio. USD grant)
The hybridization of existing mini-grids would also be eligible, however, the project would
just get the subsidy for the pre-investment measures (e.g. feasibility study), not for the
connections.
Seventeen thermal isolated mini-grids operated by Tanesco could be hybridized with solar
energy, wind or other renewable energy technologies. Some of these sites include Mafia
Island, Liwale, Kibondo, Biharamulo, Kasulu, Loliondo. Local firms have shown interest in
developing solar energy projects for these locations but thus far not gone far.
The key constraint in the development of these projects is the low credit-worthiness of
Tanesco, the sole off-taker of energy produced under the SPPA framework. The fact that
standardized power purchase tariffs (SPPT) are in Tanzania shillings and updated
annually based on the avoided cost of electricity also adds to the high investment risk for
investors.
An on-going review of the Standardised Power Purchase Agreements (SPPA) is
addressing these issues. The Renewable Energy Feed-In Tariff (REFIT) is under review
by EWURA and is expected to be technology specific.
Obstacles and constraints in market segment
Table 14 below summarizes the main obstacles in the solar PV markets in Tanzania.
Opportunities in these market segments are explored in section 2 of this document.
Table 14: Obstacles and constraints in the solar PV markets in Tanzania
Segment
Obstacle/Entry Barrier
Off-grid small system market

Essentially an over-the-shelf market.
24
Professional market



Small scale grid connect
market






Utility-scale market

Low quality equipment from Asia.
Poor system design.
Lack of consumer faith & professional experience in
technology
Poor local installation capacity
Consumer finance
High costs
Battery end-of-life replacement issues
Low grid electricity tariffs
Lack of FiTs, net-metering or policy framework for grid
connection
High investment risk: low creditworthiness of Tanesco,
SPPA tariffs in TZS and reviewed annually
3.3. Status of wind energy sector
Tanzania is blessed with strong wind resources particularly in escarpment areas around
the Rift Valley (which divides the country from north to south) and along the coastal areas.
However, it has been much slower than Kenya to measure or develop the wind resources
and to attract investors to wind projects.
Currently, off-grid stand-alone wind systems below 50 kW are an interesting market
opportunity because of: a) the lack of grid power in large swaths of the country, b) the
sustained wind resources and c) increasing interest in isolated systems and mini-grids
(from the Government, donors and private sector).
There is no complete wind resource mapping for Tanzania, but measurements in certain
promising regions are available:


Wind measurements at 30m are available at Tanesco for certain regions (3 sites:
Makambako, Singida and Mwanga). The results were very promising for
Makambako and Singida, with average wind speeds of 10-11 m/s.
The REA has issued a tender for “Wind Resource Assessment and Preparation of
Concept Proposals for Wind Electricity Generation”. This was World Bank-funded
under the TEDAP program.
Stand-alone wind systems
There are only few technology suppliers offering small-scale wind turbines for stand-alone
electricity generation. Much of the investment is missionary or individual project based
and necessarily involved procurement from overseas suppliers on an ad-hoc basis.
According to the TAREA directory, there are no more than 5 companies dealing with the
technology. The most prominent are:


Windpower Serengeti: the company started operations in 2010, locally
manufacturing 1kW turbines. They have up to now installed 13 turbines, most
of them for donor-funded projects such as rural health clinics and dispensaries
(funded by the REA) and for rural computer and internet access programs
(NGO-funded). They have also installed a turbine for a private eco-lodge.
REDCOT (Renewable Energy Development Company Tanzania): new
company providing renewable energy solutions with a focus on small-scale
wind turbines.
25
Isolated mini-grids
To date no isolated mini-grids include wind energy as part of their make-up. According to
the SREP document, wind energy will be considered as an addition to mini-grids in order
to hybridize the diesel supply. There are no projects in the pipeline.
Large scale projects
There are two utility-scale wind projects currently under development in Singida. Power
generation is scheduled to start in 2013 and 2014 (the projects have been in development
for over 8 years and have already had numerous delays).

One of the companies, Geo Wind Power (originated from Power Pool East Africa,
PPEA), has entered a PPP with the National Development Cooperation (NDC) and
Tanesco to develop 50 MW of wind power in Singida. Geo Wind Power has
completed the feasibility study and design work is in the final stages. The project
will be financed by the Exim Bank of China. Geo Wind Power is owned by the
Tanzanian Government (Tanesco and NDC, 51%) and PPEA (49%).

The second project is being developed by Wind East Africa and is planning to
install 100MW and then increase to 200MW. Wind East Africa is an IPP resulting
from a joint venture of IFC, Six Telecoms and Aldwych International.
Obstacles and constraints in the market segment
The wind sector in Tanzania is in extremely early stages of development. It is likely to
follow the solar PV sector and follow Kenya‟s wind market trajectory.

Large scale generation projects suffer from a low credit rating of the overall
electricity sector. Wind developers active in Africa are focused on markets like
South Africa and Kenya, where there are more assured long-term power purchase
arrangements, where Government policy has a stronger focus (and demand for the
technology) and where there is a better understanding of wind technology.

Off-grid wind projects suffer from a lack of competent companies, extremely high
project costs, and a lack of available equipment. Once installed, consumers lack
faith in the long-term operation, maintenance and spare part supply for wind
systems.
3.4. International cooperation projects
Tanzania receives significant support from its Development Partners for the energy sector,
including renewable energy and rural electrification. The overall commitments of the DP
amount to about 1 billion USD, of which 350 Mio. USD are for the promotion of RE.
Table 15: international cooperation projects
Project/
Components/ Features
Donor
TEDAP
-
Financed by the World Bank
158 Mio. USD IDA credit and 6,5 Mio. USD grant from GEF.
o Of this, REA received 44,2 Mio. USD of the IDA credit and the GEF
grant for off-grid electrification
o 23 Mio. USD credit line to offer long-term financing through local
commercial banks for small RE projects (mini-grids and stand-alone
electrification)
26
SREP
-
Development of the regulatory framework for SPP
The project‟s closing date is 03/2015.
By detail:
o Support to SPP  grants for pre-investment works, 500 USD/
connection;
o promotion of stand-alone systems through SSMP ( 2,5 USD/ Wp up
to 30 W, 1,5 USD/ W for 31-100 Wp) and Lighting Rural Tanzania (
grant up to 100.000 USD/ winner)
-
Investment plan: 719 Mio. USD
Supposed to be an umbrella investment plan, which is going to funded by
various donors.
181 Mio. USD is supposed to be spent on off-grid electrification (150 Mio.
USD for mini- and micro-grids, 31 Mio. USD for stand-alone)
Sponsors: 50 Mio. WB, 30 Mio. Private sector, 28 Mio. Commercial banks, 47
Mio. Other Development Partners etc.
Priority is given especially to
o RE for rural electrification, with focus on RE mini-grids and Solar PV
stand-alone systems,
o Geothermal Power Development,
o Alternative Biomass supply options
Off-Grid electrification project targets: altogether 47,5 MW, benefit to 442.500
customers (households and others), 2,2 Mio. people:
o 45 MW (25 x 1,8 MW) RE mini-grids,
o 0,3 MW (50 x 6 kW) micro-grids,
o support to SSMP  0,8 MW (4400 public facilities à 180 W) and 1,4
MW (70.000 households à 20 W)
-
-
GIZ/ KfW
Millenniu
m
Challeng
e
Corporat
ion
DFID
upcoming
Most relevant Technical Cooperation Component (to be implemented by GIZ):
- Support on conducive framework conditions for renewable energy (RE)
development and investment promotion, e.g.
o review of contractual and licensing procedures for RE investments
o review of existing policies and regulations concerning private sector
participation in RE development
- Securing sustainability of RE implementation, e.g.
o quality monitoring of RE equipment,
o provision of technical best practices and development of guidelines for
RE
- 5-year (2008-2013) Compact programme (698 Mio. USD) to reduce poverty
and stimulate economic growth by increasing household incomes through
targeted investments in transportation, energy, and water
- Energy sector programme: 207 Mio. USD for
o Lay a submarine electric transmission cable from the mainland to
Unguja Island (Zanzibar), as well as extend the distribution network;
o Rehabilitate the existing distribution infrastructure and a number of
distribution line extensions to unserved areas in six regions (Mwanza,
Iringa, Mbeya, Dodoma, Tanga, Kigoma and Morogoro).
- financed an SSMP project in Kigoma Region to benefit the population of 25
villages, including 14 health centres, 116 dispensaries, 130 vaccine
refrigerators and 45 secondary schoools
- Approved a second MCC Compact for 400-500 Mio. USD
-
Minimum 50 Mio. British Pounds East Africa
International Green Mini-Grids Promotion Fund  support to feasibility studies
and preparatory work, support to evaluation
Multi-Country Loan and PGR Fund  providing long tenor senior debt + partial
risk guarantee on off-taker default
Country-specific Project Development and Impact Fund  Support to project
development, support to community mobilization, support to end-user finance
27
NORAD
SIDA
funding the preparation of the Rural Electrification Investment Prospectus
One of the main donors of TEDAP, which is implemented by World Bank
Provision of Business Development Services to solar companies in 16 regions:
e.g. technical and marketing training for solar retailers, technicians etc.
Source: German Energy Desk
4.
-
Market potential and planned projects
4.1. Overall sector outlook
Off-grid: Tanzania’s low electrification rates, high electricity costs and poor utility
performance will support continued development of off-grid solar segments.
 The pico and solar home system market will continue to grow, but be exploited by Asian
low quality suppliers. Government support for this sector has some potential to drive
quality standards up and create room for higher-standard players, but this will required
capacity building and private sector goodwill.
 Telecom, tourism and off-grid business markets will increasing look to solar to reduce
diesel generator costs. Quality equipment, design and after-service will be demanded.
 Government and NGO stand-alone PV system projects will continue to be offered on a
project by project basis. They may also but be competitive and difficult to win because
donor and Government projects tend to favour companies with close connections to
donor/Government agencies. The April 2013 SREP program being developed by the
Government may provide a large boost to this sector.
 Isolated grids will provide an increasingly interesting entry point for a wide range of gridconnect systems (i.e. 100 kWp to 10 MW). Many of these will be supported by donors
including the World Bank, BMZ, USAID and DFID. Mining, tourism, and rural
electrification may stimulate this market9.
On-Grid: In the medium term (3-10 years) there will be a gradual transition from off-grid to
on-grid market demand.
 The Green Building sector will be a prime mover in this sector as internationallyconnected groups will seek to incorporate solar into their buildings, and will lobby
Government to provide a facilitative environment for PV use.
 Increasing electricity costs, combined with intermittent supply, will raise interest in
inverter-PV solutions that can bridge black-outs and stabilize electricity costs. Simple
back-up systems that incorporate PV will begin to be demanded by urban commercial
and upper class10.
 South African and Kenyan solar projects will raise the profile of large scale solar among
Tanzanian policy makers and stimulate investment. Government mid-range projections
call for 120 MW of PV on-grid by 201711.
9
Rural Electrification Masterplan estimates that 20% of electrification will be from RE-powered mini-grids.
10
Promising Lithium ion battery solutions with generator sets
11
SREP and PSMP, April 2013
28
Table 16: Market development summary
General
Estimated
Policy
Market
Potential Size
Barriers
Segment
(MW/year)
Off-grid SHS
& Pico
Off-grid
Professional
Market
(including
micro-grids
and SSMP)
Small and
medium
scale Grid
Connect
Utility-scale
solar (MW
projects),
including
solar for
mining sites
>2 MW/year
reducing after
2015
>1MW per year
(SREP microgrids and SSMP
2.5 MWp by
2015)
Low
Low
Ease of Entry for
German Companies
Stiff price competition
from Asia
Low quality demand
Ease of entry dependent
on sector: tourism and
NGO: many players,
relatively easy entry.
Market Drivers
Donor programs
(see SREP)
Rural demand
Tourism, telecom,
NGOs
Government and
donor procurement
(see SREP)
Telecom sector and
government procurement
requires big well-financed
players
Difficult to
predict, since
highly dependent
on policy and
grid electricity
tariffs.
Market of 5
MW/year (after
2015?) easily
identifiable
>10 MW/year
(after 2015?)
High policy
barriers
and
low
electricity
tariffs
High quality, less price
sensitive.
Increasingly viable market
Requires intense
discussion with regulator
Low quality,
intermittent, high
cost of grid power
Green building
sector
Grid-connected
industry
Medium
policy
barriers
and slow
process
(SPPA
framework)

Long term developing
market




Hybridization
of isolated
mini-grids
Mining sector
Rising thermal
power prices
Solar price
declining
Future projections for the development of the four categories above are discussed in
sections 4.2 and 4.3 below.
Recommendations for German RE enterprises
The professional off-grid sector will grow considerably in the foreseeable future, with
two primary drivers:
-
Government/NGO procurements as part of bilateral and multilateral systems and
Commercial systems for the private sector in the telecom, tourism, agriculture and
off-grid productive sectors.
German players with strengths in off-grid PV, inverter, battery and BOS equipment delivery
and designers, consultants, program managers should position themselves to collaborate
with local providers or NGOs in this market.
The grid connect sector will grow along two lines:
 Development of off-grid isolated mini-grids stimulated by multi-lateral and bilateral
projects (and strong incentives for these)
29
 Small and medium scale household, building-integrated, commercial and
agricultural sector grid connect projects that are based on net-metering, embedded
power, and aspirational desire for green power.
 Longer-term Government-driven initiatives to build large (>10 MW) solar farms in
strategic areas based on feed-in tariffs and other incentives.
German players should identify partners (developers, consultants, architects, financiers)
who can help them position themselves to gain entry to these markets.
It is likely that some of the funding for the type of projects mentioned above will be sourced
from German bilateral sources. As an example, a private hospital in Tanzania, the
Comprehensive Community Based Rehabilitation in Tanzania (CCBRT), has secured
funding from German donors for a grid-connected solar PV system for its facilities in Dar
es Salaam.
Section 4.2 outlines planned projects, most of which are donor-led, while Section 4.3
outlines sectors that are likely to become active in the short to medium term.
4.2. Planned projects
In the short term, NGO, bilateral and World Bank projects will provide a constant source of
funding for new projects. However, most of the anticipated 2-3 MW/year of sales will be
quite competitive, and it will be difficult for commercial companies to enter the competitive
local market without strong local partners.
Professional, stand-alone Solar Home Systems and pico-solar
The Rural Electrification Masterplan estimates 32% of rural population will be electrified by
standalone PV or mini-grids in short and medium term. However, without considerable
financing support from outside sources, the Tanzanian Government will not be able to
carry this out.
Commercial markets for SHS and pico systems will continue to carry on at over 1
MW/year. There will be systematic support for programs (of the SSMP and “cluster” type
supported by EU and the WB).
In the short term, World Bank TEDAP, the REA and other bilateral programs will support
the execution of the institutional and SHS electrification objectives. TEDAP, USAID,
NORAD, SIDA, the EU and BMZ have provided indications that they will continue to
support the Government and REA in this work.
A second phase for the TEDAP Sustainable Solar Market Packages (SSMP) is to be
launched by the REA to provide solar power for public facilities in rural Tanzania. The REA
estimates that 80% of public institutions have no access to electricity. USD 30 million is the
indicative SREP budget for stand-alone solar investments in households and public sector
facilities12.
As well, NGOs (SolarAid, TaTeDo, Clinton Foundation, missionaries and others) will
continue to provide a steady flow of off-grid projects to well-connected players. For
example, TaTeDo has a pipeline of donor-funded projects including:

Productive use of solar (funded by the EU and AU)
12
Previous SSMP programs have been relatively slow to roll-out (and cumbersome). Whether the
REA/Government will be able to streamline the tenders in the future, and make them attractive for German
companies, is yet to be seen.
30



Solar PV for households and institutions (funded by EEP)
Minigrids for rural electrification supported by the REA: 2 minigrids of 35kWp in
Shinyanga and Mwanza. Funds have been released from TEDAP and TaTeDo
is the course of identifying towns with business to set up a fee for service
structure. The timeline of the project is however unclear.
Solar kiosks 700-800W each. TaTeDo will re-advertise the procurement
opportunity shortly.
In the medium term (after 2015) the Scaling Up Renewable Energy Programme is
Box 2: Scaling up renewable energy programme
SREP in Tanzania is a World Bank-led multi-lateral project valued at US$719M that contains
major large scale geothermal and off-grid solar mini-grid and stand-alone components. The goal
of the solar component is to “build an efficient and responsive project development
infrastructure, and demonstrate its effectiveness by supporting a time-slice of investments
towards achieving the 2025 national rural electricity access goal in areas delineated for mini-grid
and stand-alone electricity service in the Rural Electrification Master Plan…”
The project will offer transaction advisory services to prepare 25 renewable energy mini-grid
and 50 micro-grid investments to benefit an estimated 47,500 households in addition to 10
SSMP projects. These are indicative numbers as the types, sizes and locations of these off-grid
projects will emerge from the Rural Electrification Investment Prospectus exercise that is
underway. Mini-grid (25 units) elements of the project will include small hydro, solar, biomass,
biogas, and wind as well as hybrids solutions. Micro-grids (50 units) and SSMP stand-alone
systems (4400 public institutions and 70,000 hh) will primarily use solar PV. The estimated
budget for implementing the SREP investment plan is about US$ 182 million for off-grid
electrification components.
expected to grow the market for renewables in Tanzania (see 2).
The Kenya Association of Manufacturers RTAP program (see Box 3), expanding from its
Kenya base, is targeted specifically at private-sector based renewable energy and energy
efficiency activities.
Box 3: KAM Regional Technical Assistance Program (RTAP)
The Kenya Association of Manufacturers (KAM) Regional Technical Assistance Program
(RTAP) is expanding its €30M credit line into Tanzania starting in June 2013. It intends to
manage projects for a total of USD 12 million in year 1, with a total of 30 million EUR total over
the intended life. The project will be carried out through Bank of Africa Tanzania.
Due to TANESCO’s low credit rating, RTAP is not keen on projects selling power to the
utility. It is mostly focused on small and medium scale initiatives, with a special focus on
capacity building. The Confederation of Tanzanian Industries (CTI) is a partner in the project that
will be fundamental in capacity building.
Targeted sectors include agro-industry, manufacturing and tourism. RTAP is currently
building the project pipeline for the next 2-3 years. It is expected that funds will be drawn down
in 1.5 years. The largest project proposals received are in the order of 2-3 million USD in
agriculture and tourism sectors. A high share of the projects in the preliminary pipeline are
solar energy projects.
Interest rates for the KAM finance window are 20 to 28% on TZS loans and 12 to 15% on USD
for SMEs. Corporate rates are 16-19% in TZS and 10-12% in USD. Based on capacity building
and reduction of technical risk from the facility rates could be reduced to 15% for TSH and 910% for USD.
31
Mini-grids
As mentioned in the REMP document, mini-grids are estimated to provide
approximately 20% of the rural electrification coverage 13 . The SREP document
indicates that mini- and micro-grids will be a large part of REA-managed scaling initiative.
Significant funding from the World Bank, DFID and other donors is expected to support
private-sector led models for mini-grid development.
Thus far, most of the limited mini-grid experience in Tanzania has been thermal, hydro and
biomass-based. The REA is anxious to build up solar PV/hybrid mini-grid capacity in
advance of the SREP roll-out. As high rainfall and solar radiation are usually negatively
correlated (i.e. during the rainy season, solar radiation levels are typically low) there is a
high value in using solar and hydro conjunctively.
The Power System Master Plan (PSMP) envisages 120 MWp of solar in the short-term
power expansion plan by 2016/2017. Several private firms have expressed interest in
investing in 50-100 MWp of solar PV. NextGen Solawazi has signed a SPPA with
TANESCO to supply electricity from 2 MWp of PV to an isolated grid. TANESCO has also
signed a Letter of Intent for a 1 MWp isolated grid-tied PV project.
In the short term, PV generation projects are likely to be connected to existing off-grid
diesel mini-grids (see above), where SPPA tariffs are higher (currently 29,4 USCent).
SPPA tariff for grid-connect systems is too low to justify large scale solar investment.
Thus, for the Tanzanian Government, solar for isolated grids are a high priority in both


green field privately developed mini-grids and
Government isolated grids (there are 17 isolated grids managed by Tanesco with
potential for hybridization. See SREP/PSMP).
Such systems would receive the highest SPPA tariffs.
Projects below 1MW do not need a license from EWURA to operate. They however have
to request for exemption from the EWURA licensing process and tariffs need to be
approved based on an agreement between the energy provider and the customer.
3 presents the existing grid in Tanzania as well as the isolated thermal mini-grids that
present potential for hybridization with solar energy.
Figure 3: Existing grid system and plants
13
The consultants consider this target ambitious and estimate that isolated mini-grid initiatives will struggle to
reach 5-10% of the off-grid market.
32
Large-scale wind power
According to the PSMP, 100 MW wind is scheduled to be on-line by 2016/2017 (short term
expansion plan). Currently 150 MWp in the pipeline (Singida) as presented in section 1.2.2.
Wind projects in the pipeline will scale up if the first phase is successful. For example, Geo
Wind Power would scale up to 300 MW in Singida while Wind East Africa would scale up
to 200 MW in Singida.
Planned PV projects summary
Table 17 summarizes projects planned according to the PSMP and SREP targets and
under the upcoming KAM/RTAP facility.
Table 17: Summary of planned projects (PSMP, SREP and KAM)
Project
category
Estimated
potential size
Actors
Timeline
Comments
Renewable
Energy gridconnect and
mini-grids
The PSMP
indicates solar
energy projects
totalling 120
MWp in
2016/2017.
Government
(investments from
SREP and other)
2016/2017
according to
PSMP. The
SREP target of
45 MW of
renewable energy
mini-grids is for
2025.
SREP Off-grid
Electrification
Project includes
25 mini-grids
totalling 45 MW
of renewable
energy that would
be included in
this category.
Renewable
Energy Microgrids
0.3 MWp (SREP
Off-grid
Electrification
Project Targets)
Government
(investments from
SREP)
SREP targets are
for 2025.
50 micro-grids of
6 kWp each.
SSMP
Packages
2.2 MWp (SREP
Off-grid
Electrification
Project Targets)
Government
(investments from
SREP)
SREP targets are
for 2025.
4,400 public
facilities and
70,000 SHS
KAM/RTAP
facility
Up to 3 MWp
(based on
available funds)
KAM, Bank of
Africa Tanzania,
CTI and private
sector companies
2016/2017
Several projects
(>100) off-grid
and grid-connect
from the private
sector
Based on the previous summary, the planned projects would create a market for
solar energy of more than 20 MWp p.a. This figure is most influenced by the
Government‟s targets in the Power Sector Master Plan. It should be seen as optimistic
due to normal delays in project development. The market potential for planned projects in
this category can be deemed at 10-15 MWp p.a.
Donor-funding for PV is primarily directed at the connection of households and public
institutions for increased “access”. Little of the targeted donor aid is specifically targeted at
developing commercial components of the “professional” market (see Section 2.3 below).
Thus, this part of the market will require concerted efforts by German companies to
develop (unless different funding vehicles are developed).
33
4.3. Undeveloped market opportunities
Other than utility-scale projects, there is a large potential for solar energy in the private
sector, both for off-grid facilities displacing conventional fuel as well as gridconnected consumers seeking alternatives or a complement to grid power.
This section explores opportunities for renewable energy in different sectors of the
economy. The analysis commences with a sectorial breakdown of GDP (see fig. 4) to have
an overview of the importance of each sector in the national context and then the most
promising sectors are covered in detail.
Figure 4:
Sectorial breakdown of GDP, 2011 provisional figures, Bank of Tanzania 2012
Financial
intermediation
2.0%
Health Education
1.9%
1.5%
Other social &
personal
services
0.7%
Communication
s
2.4%
Trade and
repairs
13.5%
Hotels and
restaurants
2.5%
Transport
5.9%
Real estate and
business
services
9.1%
Public
administration
8.8%
Agriculture,
Hunting, Forestry
and Fishing
27%
Services
48%
Forestry and
hunting
2.6%
Fishing
1.6%
Livestock
4.0%
Crops
18.5%
Industry and
construction
25%
Electricity, gas
2.0%
Water supply
0.3%
Mining and
quarrying
3.6%
Manufacturing
10.3%
Construction
8.6%
34
The economy of Tanzania depends heavily on agriculture, the service sector and tourism.
Tourism accounts for nearly half the GDP. Agriculture accounts for 24.6 per cent of the
GDP and employs two thirds of the work force. Other key growth sectors are construction,
manufacturing and mining. The manufacturing, mining, and service sectors strongly
depend on a reliable, low cost and sustainable electricity supply. Tanzania also has
significant mineral reserves that are relatively underdeveloped. Planned development of
mining will contribute to economic growth and will demand increased energy sources.
Tanzania has am estimated 140 million tons (MT) of gold reserves, 536 MT of coal, 33
trillion cubic feet of gas reserves and abundant reserves of other minerals including
uranium, nickel and precious stones.
Agriculture is the largest sector of the economy in terms of GDP (18.9%). It is, however,
noted that half of this GDP is non-monetary (i.e. subsistence farming or informal trade).
The most promising sectors for the deployment of renewable energy (particularly solar PV)
are considered to be the following:





Tourism
Telecommunications
Real estate / Construction (Green buildings)
Manufacturing
Mining
Each of these is covered in detail in the following sections.
4.3.1 Real estate / construction (Green Building Sector)
The construction sector has been one of the major drivers of growth in Tanzania together
with mining, communications and the financial sector. The Tanzanian construction sector
enjoyed 12-15% growth in recent years, largely stemming from an increase in
infrastructure projects and new construction in residential areas due to huge unmet need
for housing.
The green building sector in Tanzania is at a formation stage, and mostly concentrated in
large cities such as Dar es Salaam and Arusha. The small group of architects and builders
interested in this market has noticed a growing commercial/consumer awareness of solar
viability. Cost of energy is not the primary consideration --- power back-ups supply to
counter frequent outages and interest in low carbon emissions are also drivers for
business and missions. Grid parity, especially when cost of diesel and generators are
included, is “on the horizon”.
Types of systems considered by clients include:



Grid-connected solar and power back-up solutions for the residential and small
commercial sectors
Development of larger commercial-based net-metering opportunities
Building integrated PV systems where design and green image is of relevance.
A low general use Tanesco tariff (T1) of 13 USDc/kWh mitigates against grid connect PV.
The subsidized price of electricity is too low to encourage small scale use of solar. The
prospect of increasing electricity tariffs (policy of cost reflective tariffs) should see a large
(>30%) increase in electricity tariffs that could be favourable for the grid-connect solar
energy market. Tanesco tariffs are set for review 201314.
Net-metering, which would greatly increase the attractiveness of solar PV in the built
environment, has not, thus far, been considered by the regulator. EWURA indicated an
14
Though there are political forces that work to prevent increases.
35
upcoming review of policy framework for renewables and the subject of net-metering could
be included.
Indicative discussions with green building advocates demonstrate that there is an appetite
for city-based PV systems in Dar es Salaam, Mwanza and Arusha that could develop into
a multi-megawatt market for grid connect PV over a 5 year period.
One green architect (Architectural Pioneering Consultants, APC, see list of contacts) is
developing a number of projects for clients with interest in solar energy solutions. Thus far,
there is much more interest in energy efficient buildings (natural ventilation, orientation,
minimizing heat gain, etc.) but limited interest in solar PV. This lack of interest may have
more to do with limited knowledge, and extremely high cost systems, rather than lack of
desire to install systems.
Clients that have discussed solar solutions in their locations include:
 International School of Kenya (green building design in process)
 CCBRT Hospital: Carried out a study and design for grid-tied solar PV system. Has
obtained funds for phase 1 of the project (one of the new buildings, 50-60 kWp).
Looking for funding for the 2nd new building (another 50-60 kWp). This solar energy
installation will be tendered out shortly.
 Tigo seeks to reduce energy consumption in offices and customer centres and achieve
30% reduction in energy expenditure. They are implementing green building concepts
in the Tigo HQ building in Dar es Salaam.
Market opportunities, challenges and recommendations
- Market size very difficult to predict since it will depend on future developments on policy
for grid-connection of renewables and evolution of grid electricity prices. Market of 2-3
MW/year (after 2015?) easily identifiable.
- Most project will fall under the category of Small and medium scale Grid Connect
- Main drivers are low quality, intermittent and high cost of grid power as well as green
power demand
- There is an extremely low capacity to conduct energy audits, evaluate HVAC and
lighting solutions and even to design solar PV solutions. Thus the architect must
source expertise to design specialized energy systems from abroad --- local clients are
still not willing to pay what they consider to be high energy auditing costs.
- Two leading architecture firms in the space of energy efficient buildings (APC and IPA)
can be contacted by German companies for partnering opportunities.
4.3.2 Telecommunications
The telecommunications market in Tanzania has seen an attractive growth rate over the
last few years and reaches an overall subscriber base of 26.8 million (this represents a
62% population coverage).
The size of the telecom network in Tanzania consists of almost 5,000 base stations and is
expected to grow rapidly during the next couple of years at a rate of 20-30%, i.e.
approximately 1,000 new towers a year.
Power supply is a major concern for mobile network operators given that:
-
More than 30% of existing base stations are off-grid and mostly powered by diesel
generators
36
-
Grid connected base stations are subject to load shedding and power outages.
Practically all sites have a back-up power solution (diesel generator in most cases)
and this is used for 8 hours a day in average. A critical 20% of grid-connected
towers do not have grid power for more than 12 hours a day.
The figures below from a GSMA regional research clearly show the dominance of diesel
generators in the overall energy supply of telecom towers.
Figure 5: Sites by power solution deployed (on-grid)
Source: GSMA 2012
Figure 6: Sites by power solution deployed (off-grid)
Source: GSMA 2012
The deployment of green power solutions has not been taken to scale due to its inherent
challenges in terms CAPEX and vendor support. The fraction of sites deployed with green
power solution stands at 4% of the total off-grid sites. Grid-connected base stations
have not at all green power; in Tanzania 65-70% of the grid-connected base stations have
diesel generators. The majority of the green power solutions deployed are solar and
hybrids.
37
The telecom infrastructure industry in Tanzania is represented by MNOs/Tower
Companies who own the tower assets and telecoms equipment vendors who supply
telecom as well as power equipment and solutions. The site operations and maintenance
is led by the services provider with support from sub-contractors at the field level.
Table provides information on the market leaders in the telecommunications field in
Tanzania. Leading operators are Vodacom, Airtel and Tigo. The Tanzania
Telecommunications Company Limited (TTCL) only has a 2% share of the market and
Zantel operates in Zanzibar with 7% of the total market share.
Table 18: Dominant mobile network operators (MNOs) in Tanzania
Mobile
Network
Operator
(MNO)
Nr. of
subscribers
Tower and
power
infrastructure
O&M services
Opportunities
Vodacom
>10 million
Owned, ca.
2000 towers
Outsourced
High interest in solar.
Recently launched
solar phone charging
program in Tanzania.
Airtel
ca. 10 million
Owned, ca.
2000 towers
Outsourced
Airtel currently greening
telecom towers in
Tanzania
Tigo
7 million
Outsourced
(Helios Towers).
1500-2000
towers.
Outsourced
(Sincro Site
Watch)
All sites (on and offgrid) with either diesel
back-up or diesel as
prime power.
MNOs currently still own the majority of towers and the transfer of tower assets to a Tower
Company has been a recent phenomenon which is gaining momentum. Helios Towers
(HTT) is pushing this model in Tanzania. Tigo is in the process completing handover of
their entire tower infrastructure and HTT is currently negotiating with other MNOs.
Market potential
Tanzania provides potential green power opportunities for 44% of the total installed base
of telecom sites; equivalent to 2,000 potential sites. Of these potential sites, 30% are
unreliable grid sites with power outages in excess of 12 hours a day while the remaining
70% of sites which are completely off-grid are powered by diesel generators and battery
hybrid power systems. These sites could be retrofitted to include renewables and
significantly reduce fuel expenditure.
In addition to existing sites, tower infrastructure is growing fast and it is estimated that ca.
1,000 new sites will be constructed per year for the next couple of years. Many of these
sites will face the same problems as existing sites regarding power supply. It could also be
assumed that 40% of new sites will either be off-grid or have a very unreliable power
supply. New sites can be provided with a hybrid source of power during the construction
phase.
The MNOs and tower companies are more inclined towards the CAPEX model for green
deployments, i.e. investing in and owning energy infrastructure with partners for operations
and maintenance of equipment. The OPEX model, based on outsourcing the production of
energy and paying for electricity consumed, is yet to gain relevance due to the lack of
vendors with proven business models and results.
38
Solar PV technology is the dominant choice for green power deployments in the region.
The technology is commercially available as opposed to wind power at the pilot stage.
Assuming investment per site of 6 to 10kWp of solar PV to hybridize sites, ca. 70% of fuel
consumption could be saved and a payback period of between 3-3.5 years on the
investment could be achieved.
Based on these assumptions, the market potential for retrofitting existing sites is of
16 MWp and the potential for new sites is of 3.5 MWp per annum. Interviews with
MNOs revealed that due to land issues and other administrative matters, it would be much
simpler to invest in solar in the new sites rather than retrofitting. Note that decisions with
regard to implementation of green power solutions are often made over-seas, with local
players having only peripheral roles in decision-making.
Opportunities and challenges for German companies:
-
-
-
-
Tigo targets 2.5 million USD in power savings, one of their main operating
expenses. They are handing towers over to Helios Towers Tanzania (HTT). With
new business models for tower sharing and vertical real estate, tower companies
can focus on power infrastructure. Helios Towers Tanzania is well placed to
consider the benefits of including renewable energy to hybridize sites dependent
on diesel.
Tigo is also looking but looking into energy efficiency options for their offices,
customer centres and warehouses throughout the country.
Airtel is greening their off-grid sites with solar PV. They have already invested in
3MWp of solar power to hybridize off-grid sites around the world and have
inaugurated first solar site in Tanzania in late 2012.
Tanzania Telecommunications Company (TTCL) has already installed solar PV in
many of their sites.
Opportunities for local companies in the telecom sector are limited due to telecom
technology companies such as Huawei which bring their own subcontractors for
solar. The situation is similar for Ericsson wind and gen solutions.
4.3.3 Mining
Mining represents 3% of Tanzania‟s GDP and generates one third of the country‟s foreign
exchange earnings. Minerals in Tanzania include gold, diamonds, gemstones, natural gas,
iron ore, coal, nickel, tin, phosphates, soda ash and salt. Investor-friendly mining laws and
favorable tax rules have enabled mining to become one of the fastest growing sectors in
Tanzania.
Gold mining has been prominent in Tanzania for more than a century and Tanzania is now
Africa's third largest gold producing country after South Africa and Ghana. Nonetheless,
the country remains under-explored in comparison with other gold producers of its size
and there is therefore a high probability of future discoveries.
Tanzania has been a significant diamond producer for several decades, with the bulk of
production coming from the Williamson Diamonds Mine at Mwadui where commercial
production began in 1925.
The mining sector is a large energy consumer. An estimated 30% of the country‟s energy
consumption goes to the mining sector. Several mines are connected to the grid but there
is a large suppressed demand (in the order of 100MW) that is met through private
generators, creating opportunities for renewable energy. The reliability of power supply is
39
critical in most mining operations (mills, agitators, crushing machines, etc.) and even gridconnected plants have to rely on private generators to compensate for grid failures.
Table presents a brief summary of the main mining developments in Tanzania as well as
their energy requirements, challenges and opportunities. In addition to this table, annex A3
provides a list of major loads expected to connect to the grid according to the latest
version of the PSMP. This list includes a number of mines that could also benefit from a
hybridized source of power before the grid connection is achieved.
40
Firm
African
Barrick Gold
(ABG)
Mineral
Gold
Sites
Tanzania‟s largest
gold producer.
4 operating mines
(Bulyanhulu,
Buzwagi, North Mara
and Tulawaka).
Tulawaka expected
to close mid-2013.
Production
Bulyanhulu, Buzwagi, and
North Mara have a total milling
capacity of 8 million tons of ore
a year and produce 600,000
ounces of gold per year. The
largest mine is Buzwagi (4
million tons of milled ore per
year).
Energy
Comments/Opportunities
Power consumption can be
estimated between 10 and 30MW
per site depending on milling
capacity.
All mines are grid-connected with
back-up generators.
Optimizing the power mix for Buzwagi, the
largest site, has been established as a
priority for ABG.
AGB has completed a detailed study on
solar power for Buzwagi, but not
progressing because capital investment is
to be kept low in the current low gold price
climate.
Lifetime of Bulyanhulu is of
25+ years and Buzwagi and
North Mara have resources for
ca. 10 years.
AngloGold
Ashanti
Gold
1 operating mine:
Geita in the Mwanza
region
5.2Mt per annum carbon-inleach processing plant.
Produces ca. 500,000 oz/year.
Capacity estimated at 40MW. Geita
generates its own power, the
operation of its power generating
facility is outsourced, and fuel is
delivered by road.
Renewable energy for fuel saving.
Expectation of grid-connection in 2015.
Shanta Gold
Gold
New Luika (Mbeya
region) commenced
gold production in
August 2012
New Luika crushes 360,000
tons of ore per year and
produces 70,000 oz gold/year.
New Luika is off-grid. Power
demand is 3MW steady load and
peaks of 3.7 MW. Power contracted
from Aggreko at 0.43 USD/kWh (8
month contract).
Shanta is looking into alternatives to
reduce operating expenses, such as grid
connection, heavy fuels, LPG, solar
energy, etc.
A second site
(Singida) is in
development stage,
tentatively starting
construction in 2014
and production in
2015.
The mine has 10 years
lifetime, but resource
assessment is being revised
(possibly 20 years lifetime).
The upcoming Singida site is 30km
away from a transmission line and is
expected to connect to the grid for
the production stage.
The grid is 5km from New Luika and
Tanesco claims 80% reliability. A dedicated
Tanesco line with 90% reliability and
energy price of 9 USD/kWh could be
available in 2 years.
Studies for a 1 MWp solar energy plant
have been conducted (fuel saver).
Shanta has also expressed interest in a
CSR project for village electrification 5km
from New Luika site.
41
Petra
Diamonds
Kabanga
Nickel
Mantra
Uranium
Diamonds
Nickel
Uranium
Williamson Diamond
Mine in Mwadui
(Shinyanga) is the
largest producer in
Tanzania
Production is expected to
reach 3.6 Mtpa (~216,000
carats) by FY 2016.
1 site in feasibility
stage (located in
north western
Tanzania, south of
Lake Victoria and
near the Burundi
border). Construction
to begin in 2015 after
relocation of
communities.
First phase of operation at
partial capacity of extraction
(600,000 tons p.a.) during 5 to
7 years. When in full capacity
extraction will be of 2Mt p.a.
Operations to begin
in 2015.
-
The site is grid-connected. 25 MW
additional capacity to come online
between 2013 and 2015.
-
Initial phase of operation will require
6 MW of base power (peaks of 8
MW). Power will be self-generated
for at least 7 years. Grid connection
is expected by the time the site
moves to full capacity, when 30MW
of base power (with 40MW peaks)
will be required.
Opportunities to reduce fuel cost and
reduce number of trucks on the road until
grid connection in 2020.
+50 years lifetime.
The lifetime of the mine is of
30+ years.
There is also an opportunity to electrify
staff camps (currently with 150 kVA
genset).
The site is 300-400km from the grid
and will be electrified according to
Rural Electrification Master Plan
within 7 years. The mine will
subcontract energy supply until grid
connection.
Power requirement will be ca. 21
MW. Grid connection is expected 2
years after start of operations. Until
then the mine will be running on
diesel (rental).
Table 19: Main players in the mining industry in Tanzania
42
Opportunity to save fuel before grid
connection.
Main Challenges
-
Power supply: Several mines such as Shanta Gold/ New Luika (5,2 MW) and
Geita (40 MW) are off-grid, with grid connections expected several years after
the start of operations. Grid-connected mines such as the mines of Barrick
Gold face unreliable supply of power from the utility (20-30% power outage)
and have to rely on back-up power. The cost of energy from fuel is very high,
at ca. 0.50 USD/kWh.
-
In addition to the cost of fuel, the transportation of fuel on the road (generally
no railroads available) and the risk of accidents have been reported as main
concerns.
-
In the particular case of gold, current low gold prices (1400USD/oz) are
pushing companies to drastically cut costs, which presents opportunities for
energy cost reductions but also causes delays in investment decisions that
are not a priority (e.g. solar energy installation).
-
Combining solar power and diesel-generators requires careful planning.
Conservative mining companies, with limited knowledge of solar solutions
prefer to utilize generator sets alone rather than to invest in up-front solar
solutions.
-
They often sub-contract companies such as Aggreko, which operates the
power supply systems. The contracts can, of course, not be terminated at any
time. But in case of Shanta Gold, for instance, the contract will terminate very
soon, so that the mining company thinks about less expensive (in terms of
OPEX) power supply options.
Table 20: Selection of anticipated major loads in mining industry of Tanzania
Load
Capacity
(MW)
location
Expected Online
Kabanga - Nickel
Ntaka Hill - Nickel
Dutwa - Nickel
Mibongo - Gold
Panda Hill – Gold
Buckreef – Gold
Geitga – Gold
Golden Ridge –
Gold
Bulyanhulu –
Gold
Williamson
Diamond
Williamson
Diamond
Williamson
Diamond
32
30
10
20
5
8
30
7
Kagera
Lindi
Shinyanga
Kigoma
Mbeya
Geita
Geita
Shinyanga
2016
2018
2015
2016
2016
2015
2015
2015
20
Shinyanga
2013
10
Shinyanga
2013
12
Shinyanga
2014
3
Shinyanga
2015
43
Market potential and recommendations for German companies
-
-
In case of late grid connections (after few years of operation start), solar PV
systems can work as fuel saver with fast payback. Based on opportunities
presented above, ca. 30MWp opportunity of solar for hybridization of
diesel power supply in off-grid locations.
Potential for electrification of nearby villages (CSR), proposed by Shanta
Gold.
Opportunities for electrification of staff camps
Opportunity for ESCOs selling power below diesel costs (ca. 0.50 USD/kWh),
this model is being considered by Sincronicity Power.
Opportunities to market mining company as a “green company”.
4.3.4 Agriculture
Tanzania‟s economic backbone is agricultural production. Approximately 80% of
Tanzanians are employed in the agriculture sector. Major traditional exports are
coffee, cotton, tea, cashew nuts, cloves, sisal, sugar and tobacco. Most of
agricultural areas are located off-grid, their economy is cash rich and people involved
in agriculture have good cooperative arrangements. These features make agriculture
and attractive sector for solar energy.
Opportunities in the agriculture can arise from:
-
The market for electrification of households in agricultural areas: this
market is being addressed by the EU-funded “cluster project”. Research prior
to the clusters project revealed a potential of ca. 2 MWp in SHS for smallholders in the agricultural sector (cashew, coffee, tea and sugar)
-
Irrigation with solar water pumps: German company Lorentz has
established a good distribution network in Tanzania through Davis & Shirtliff
and other local companies.
-
Basic processing of crops in small scale, such as milling, drying, etc: These
operations requiring mechanical or thermal power only offer limited potential
for solar PV. Other renewable energy technologies such as bio-energy or
solar dryers are better suited to serve this market.
-
Large-scale farming and agro-processing operations are generally better
served by bio-energy. There are for example cashew nut factories with
SPPAs for biomass generation (MW scale). And Tanga Fresh Milk has
installed a biogas plant for getting the heat for pasteurization. However, large
agricultural operations, such as those of Mohammed Enterprises Tanzania
Ltd (active in sisal, tea, cotton, cashew and palm oil) provide essential
infrastructure such as staff housing, labor camps, access roads,
schooling and dispensary facilities in their farms and this can provide
opportunities for solar PV electrification.
The Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) has about
20,000 members and groups a large number of small-holder farmers. This
organization can be approached to address the farmers group regarding the potential
of solar PV in small agricultural applications.
44
Large agriculture operations such as METL, Unilever tea plantations, etc. could be
approached to assess the potential of solar PV in providing energy for staff villages.
4.3.5 Tourism
Tourism is a significant contributor to the country‟s GDP estimated at 8.8% in 2009
growing to 10% by 2019. It is estimated that Tanzania has a hotel bed capacity of
65,000. According to the Tanzania Tourist Board, the licensed tourism operators for
2013 include 59 hotels, 49 lodges and 25 tented camps. Most hotels (>90%) are
located in urban areas (Dar es Salaam, Arusha, Moshi, Tanga, etc.) and are thus
assumed to have a connection to the grid. They however rely on diesel generators as
back-up. Most tented camps are located within or around nature reserves and
national parks and are off-grid. The same applies to about half of the lodges.
According to an internal database, there about 70 off-grid accommodation facilities
and their installed power capacity varies significantly depending on size, level of
service and location (air conditioning is a major factor). The size of diesel gensets
varies between 7 to 400 kVA, averaging 80 kVA per hotel.
Table 21: Tourism sector players and power supply
Number of Location, size
Power
Type of
facilities
supply
accommodation
Hotels
59 licensed
operators
Lodges
49 licensed
operators
Tented camps
25 tented
camps
licensed by
TTB.
Example of
tourism groups
Most hotels
(>90%) in urban
areas, except
for those
located in game
reserves
Located both in
off-grid areas
(>50%) and
grid-connected
urban areas.
Over 100 beds
in average.
Most gridconnected
with power
back-up
Protea, New Africa
Hotel, Serena,
Holiday Inn, Hyatt
Regency, Impala
hotel, etc.
Diesel
generator as
prime power in
off-grid areas.
Capacity
above 100150 kVA in
average.
Sopa lodges,
Elewana Afrika,
Foxes Safari
Camps, Coastal
Group, Serena,
Hotels and Lodges
Tanzania Ltd,
Moivaro, etc.
Most off-grid,
small
operations, 2030 beds in
average
Supplied by
diesel
gensets, 50
kVA installed
capacity in
average
Nomad, Grumeti
Reserves, Foxes
Safari Camps,
Coastal Group,
Serena, Elewana
Afrika, AfrikaAfrika,
Asilia, Tourvest
East Africa, etc.
The highest potential for solar energy is with off-grid tourism facilities, where
solar energy can displace diesel fuel. Solar energy systems can either be standalone with batteries for the smallest camps and lodges or can be coupled to the
existing power supply configuring hybrid systems. The market for grid-connected
hotels is now limited, as explained in section 2.3.1 on green buildings. Electricity tariff
increases or favourable changes in policy can however change this in the
short/medium term.
Several tourism groups have shown interest in solar energy. Off-grid solar energy
systems (including batteries) can reduce the overall cost of energy for the tourism
sector but a number of constraints have up to date kept the market small:
45




High investment cost and risky nature of tourism business. Short return on
investment is needed.
Lack of long term financing instruments for solar energy
Familiarity with gen-sets and lack of larger demonstrated PV systems, most
tourism players view solar as second class solution
Local system integration capacity; maintenance and back-up capabilities are
low, especially in comparison with companies distributing generators.
The solar PV market potential in the tourism sector can be estimated based upon
installed genset capacity in off-grid lodges. Stand-alone solar energy systems can be
a good solution for the smaller lodges (below 20 kVA) and hybrid systems will be
preferred by larger facilities, where solar PV capacity is usually sized to provide from
30 to 60% of the total load.
Based on these figures, the total market in the off-grid tourism sector can be
estimated at 2 MWp. The potential for grid-connected systems in the tourism sector
has been included in section 2.3.1 on Green buildings.
Examples of tourism groups that have already invested in solar energy or are
currently considering investment are Sopa Lodges, Elewana Afrika, Tourvest East
Africa and AfrikaAfrika among others. More information on tourism groups of interest
is provided in the annexed database. Additionally, the developing pipeline of the
RTAP facility in Tanzania is said to include several projects from the tourism sector.
Recommendations for German companies
-
Most of existing market will require retrofit. Best considered during planned
hotel rehabs/refurbishment projects.
-
Rapid uptake for good quality solar PV and hybrid systems is possible once a
“bold mover” can demonstrate proof of concept – this is demonstrated by
previous experience with battery-back up systems
-
Financing solutions will be a key determinant, especially in high capital cost
solar PV. The RTAP facility will play a major role in the dissemination of solar
PV in the tourism industry. As indicated by Eric Outtara from Bank of Africa
Tanzania, there already is high interest from the tourism sector in the
upcoming facility.
-
Penetrate the existing market by work with larger tourism groups that have
international partners and/or presence such as Serena, Sopa Lodges and
Hotels and Lodges Tanzania Ltd.
-
Market for new hotels and lodges will require marketing and engagement with
design teams (project managers, architects, consulting engineers) – currently
more inclined towards traditional forms of supplying energy
4.3.6 Manufacturing sector
The manufacturing sector represents 10.3% of Tanzania‟s GDP and includes a large
variety of companies and products, such as food products, breweries, soft drinks,
cement, steel, etc.
46
With 350 members, the Confederation of Tanzanian Industries (CTI) groups the
largest players in the manufacturing sector, from large industries to SMEs. It is
possibly the most relevant association to approach when looking for solar energy
opportunities in the manufacturing sector. The KAM/RTAP facility for renewable
energy is utilizing CTI as a leading partner in raising awareness and capacity building
for renewables in the Tanzania industry.
The main challenge in promoting renewable energies in the manufacturing sector is
the low price of electricity in Tanzania, as most companies are grid-connected in Dar
es Salaam, Arusha, Tanga, etc. (or connected to mini-grids managed by Tanesco).
Tanesco tariffs for T2 and T3 customers (see chapter 1.4.) are as low as 0.08 and
0.07 USD/kWh respectively and make renewable energies an unattractive option.
Potential tariff increases in the near future can uncap the potential for grid-connected
solar PV in the manufacturing sector.
The manufacturing industry is too varied in order to be thoroughly covered in this
report and it is recommended to contact the Confederation of Tanzania Industries
(CTI) to address the manufacturing sector as a whole. However, some players of
interest are presented in Table 22. These are large players in the manufacturing
business or industries that are known for being energy intensive. No analysis on
energy consumption per type of industry has been performed in Tanzania, so the
information in the table is based on estimates. The RTAP facility is expected to play
a vital role in the promotion of renewables in the manufacturing sector.
Table 22: Manufacturing sector players in Tanzania
Company or
group
Industry
Size
METL is a large group
in Tanzania with
investments across a
wide variety of sectors.
In the manufacturing
industry METL is active
in the production of
textiles, beverages,
agro-processing, edible
oils and soaps, food,
sweeteners, grain
milling and bicycles.
MeTL Group
contributes 2.5% of
Tanzania‟s GDP with
major investments and
successful operating
companies in all key
business sectors. It
employs over 20,000
people.
Bakhresa Group /
azam
Agro-processing, food
and beverages and
packaging.
Bakhresa Group is one
of the leading Industrial
Houses in Tanzania.
The Group has a
turnover of >600 million
USD and employs >
5,000 people.
Same as previous
Tanzania Portland
Cement Company
Limited (TPCC)
(Twiga cement)
Cement
The company remains
the market leader in the
cement industry in
Tanzania. 670,000 tons
p.a. (56% of market)
and seeking to expand.
Plant located 25km
from Dar es Salaam.
Grid-connected.
Mohammed
Enterprises
Tanzania (METL)
Energy
Most if not all
companies are gridconnected.
Agro-processing
businesses are better
suited to incorporate
bio-energy as clean
energy rather than solar
PV.
Solar PV could
however be
incorporated as a pilot
for grid-connect
applications in industry
or in their many CSR
projects.
Energy intensive,
>20MW electric
demand.
47
Other cement
companies
Tanzania Cigarette
Company
Cement
Tobacco
According to the PSMP
Dangote Cement and
Eagle Cement are to
open new plants in
Tanzania.
Dangote Cement in
Mtwara, 40MW, could
connect to Mtwara
minigrid in 2015
Largest cigarette
manufacturer.
Produces for domestic
markets and exports to
neighbouring countries.
Factory is gridconnected; however it
has 1.3 MW selfgeneration capacity
with gensets. Solar PV
proposed as fuel saver.
Eagle cement, 20MW,
Coastal region, in 2015
Very few companies obviously are interested in Solar PV, despite the non-exiting
net-metering and the quite lower power tariffs. An example is Twiga cement: They
plan to install a 5 MW solar PV system in addition to 3 MW diesel generators.
GIZ provides Technical assistance to that project; the engineering company, which is
in charge to design the system and to accompany the whole project, is NEO
Energies GmbH, with an office in Tanzania. The procurement process will
probably start in Autumn 2013.
Another company, which is open to consider Solar PV solutions, is Tanga cement./
Simba Cement According to th annual report, production expenses increased by
59%, to which the power tariff increase of 40% in April 2012 significantly contributed.
The unreliable supply of electricity throughout the year forced the company to
make extensive use of its own power generating capacity in order to safeguard
production, again significantly increasing production costs. Furthermore, Simba
Cement implements a comprehensive Corporate Social Investment Programme for
uplifting local communities, e.g. through improvement of infrastructure.
Market opportunities, challenges and recommendations
-
Market size very difficult to predict since it will depend on future
developments on policy for grid-connection of renewables and evolution of
grid electricity prices. Market of 2-3 MW/year (after 2015?) easily identifiable.
-
Most projects will fall under the category of Small and medium scale Grid
Connect, although some of the largest players could invest in the MW scale.
-
Main drivers are low quality, intermittent and high cost of grid power as well
as Green power demand
-
Companies with comprehensive Corporate Social Investment Programms
also provide windows of opportunities
-
There is an extremely low capacity to conduct energy audits - local clients are
still not willing to pay what they consider to be high energy auditing costs. The
RTAP facility will address this issue and promote the use of renewables.
48
4.3.7 Summary of underdeveloped market opportunities
Table 23: Summary of underdeveloped market opportunities
Sector
Mining
Market
opportunity
Several mines are offgrid, with grid
connections expected
several years after
the start of
operations. High cost
of diesel at ca. 0.50
USD/kWh.
Estimated
market size
ca. 30MWp
opportunity of
solar for
hybridization of
diesel power
supply in off-grid
locations.
Opportunities in staff
camps and CSR
projects as well.
Telecoms
Hybridizing off-grid
telecom towers to
offset fuel cost.
Green energy for
offices, customer
centres and
warehouses.
Manufacturing
Most industry is
grid-connected.
Main driver is low
quality of grid power
as well as green
power demand.
Electricity price
increase in the near
future can spark
demand.
Construction
(Green
buildings)
Demand for green
energy in urban
grid-connected
areas. Main driver is
Opportunities in SHS
or mini-grid power
infrastructure for
small-holder farmers
and large farming
operations with
employee villages.
Potential for solar PV
More than a
dozen mines
which could
benefit from
energy cost
reductions
using solar
hybrid
systems.
Challenges
Competing with
promised grid
connections with
very low cost of
electricity (0.07
USD/kWh)
Very high
investment cost
Gold mines
minimizing
investment in
current low gold
price situation
The market
potential for
retrofitting existing
sites is of 16 MWp
and the potential
for new sites is of
3.5 MWp per
annum
Few players in
the market (3
mobile
network
operators),
one tower
company and
a few service
providers.
Large and well
financed players
needed given the
large infrastructure
of telecom sector.
Market of 2-3
MW/year (after
2015?) easily
identifiable.
Several
players in the
industrial
sector
Policy barriers and
low cost of grid
electricity
Several
players in the
residential,
commercial
and industrial
sectors.
Policy barriers and
low cost of grid
electricity
Several large
farming groups
or associations
of smallholding
farmers.
Competition with
market of cheap
and low quality
“over the counter”
SHS.
Market of 2-3
MW/year (after
2015?) easily
identifiable.
low quality of grid
power as well as
green power demand.
Electricity price
increase in the near
future can spark
demand.
Agriculture
Number of
opportuniti
es
Market >2MWp
for household
energy
49
in water pumping.
Other productive use
of solar PV (milling,
drying, etc.) is limited.
5. Engagement and positioning of German companies
Although Kenya is seen as a “hub” of business in East Africa, Tanzania has some
advantages that make it an attractive long-term location for the development of
business. First, it has a stable political climate and has enjoyed continued economic
growth for over a decade. Secondly, it has had long traditional ties with Germany.
Thirdly, the large off-grid areas make solar PV attractive in more economically active
areas than in Kenya --- both in stand-alone systems and as part of mini- and microgrids. Finally, the PV market in Tanzania is much less congested than the Kenya
market; it would be easier for a company to gain part of the market than in the
competitive Kenya market.
There is ample room the Tanzania market --- however, there is a need to create the
space for quality and there is a need to educate Governments and key consumers
that solar is not only for the poor.
The wind energy sector in Tanzania is developing in the utility-scale segment, with
150 MW in the pipeline (Singida). The investors in the Singida projects (Geo Wind
Power and Wind East Africa) are planning on future expansions (to 300 MW and 200
MW respectively) if the first phase succeeds. The on-going wind resource
assessments in Tanzania should create opportunities for the development of wind in
other regions, both in the utility-scale segment as well as off-grid installations.
The engagement of German companies in the solar Pv and wind power market in
Tanzania is not yet so strong as in Kenya. A part of the firms, which do business in
Kenya, is also active in Tanzania:
Table 26: German companies with engagement in Tanzania
Company
Engagement
Energiebau
Solarstromsysteme
Energiebau plans and installs grid-connected and off-grid Solar PV
systems as well as Solar PV-hybrid ones, turnkey provider of offgrid system for 30 years,
Local cooperation partner Solar works Kenya
Solar PV-hybrid system for electrification of the Convent of
Vincentian Sisters, Mbinga/Tansania (Roy Family Award der
Harvard University, 2007)
Donauer
Solartechnik
Distribution, project development, engineering, installation, O&M
services, consulting
Represented in Kenya/ East Africa by Harmonic Systems Ltd.
(http://www.harmonicafrica.com/) , since 2012
Juwi
Juwi is a project developer and an EPC, also in the field of off-grid
solar power supply systems
e.g. Tanzania, Village electrification:11 kWp system and Mini-grid
for 100 households. Extension to 33 kWp and 400 households
foreseen
50
MobiSol
Markets, monitors and finances SHS through use of mobile money
platforms (Tanzania, Kenya, Rwanda)
SolarKiosk
This sells products and services in rural areas (e.g. charging mobile
phones, batteries, lamps; services such as cooling, internet and
communication). Products such as pico-systems and SHS are sold
as well.
At least 1 SolarKiosk has been in Tanzania.
Source: German Energy Desk
German solar companies need to do in Africa what they did in Germany: bring solar
to the center of energy discussions. Currently, solar energy is seen as a power
source for the off-grid poor. This perception hinders the solar industry development
because a) it has put a ceiling on the development of PV power as a source for
commercial, household and urban markets and b) the low-cost requirements of the
“access”-markets have driven out German players and created room for lower quality
suppliers from Asia.
There is room for everyone in the markets --- however, there is a need to create the
space for quality and there is a need to educate Governments and key consumers,
that solar are not only for the poor.
Key strategy points for German companies include the following:
 Develop products that meet the unique needs of the East African
market: German grid-connect products do not adequately address the demand
for products that can both supply power and survive frequent power cuts. They
have not been adequately marketed to consumers that need long-life and flexible
off-grid solutions.
The adaptation of products and business concepts is promoted by German funds
such as the CLIENT Programme of the BMBF, but also by broader funds such as
the ZIM (Zentrales Innovationsprogramm Mittelstand) of the BMWi.
 “Make the difference”, create a special value-added to the customers:
o Benefit from the “made-in-Germany” reputation and sell the benefits of
quality: Many German products are high cost but worth the high cost. There
is a need to match German quality capabilities with existing demand for quality
among consumers. Especially in the solar PV market, the reputation of solar
energy has been affected to some extent by many bad quality products. For
that reason, quality assurance initiative such as Lighting Africa are very
important. German companies bring also in their expertise in these quality
initiatives.
o Contributing to the trainings on solar PV. German companies can bring in
their expertise in the existing and upcoming training infrastructure on Solar PV
and Wind. They can also initiate further trainings, in cooperation with local
institutions as well as German vocational training institutions.
51
o Coming not only with the product and the solution, but also with a
business model: One of the crucial challenges in Tanzania is the financing of
the upfront investment costs. Leasing models or the pay-as-you-use model,
which MobiSol runs, helps to reduce these costs.
Of course, ESCO-models are also attractive for the clients because they just
face running costs, while the investments are done by the energy service
provider.
Maintenance is also the challenge very often, which can be addressed by
proper business models: In case of the installation of a solar PV and/ or wind
system for a health centre/ dispensary for instance, the facility could be used
as load centre, which also offers mobile charging against a fee. Thus, the
dispensary gets revenues to finance the maintenance of the system.
German companies could use the CSR (Corporate Social Responsibility )
programmes of some companies for developing a proper business model:The
largest companies in the mining, telecom, tourism and manufacturing sector
have active CSR programs that can include the provision of energy to off-grid
communities in the areas where they operate. E.g. GSMA is pushing forward
the development of energy and water services through the mobile telecom
infrastructure. In the mining sector, Shanta Gold has expressed interest in
developing solar energy for a nearby community.
o Supporting the client to get access to finance: This is the most important
key to do business in the market. German companies should inform about
available funds, linking the client up to these ones and even support him in the
communication and acquisition of funds. Following table summarizes some of
the relevant funds:
Table 25: Sources for financing solar PV and wind projects
Agency/Project Type of
Description of Project Activities
Project or
Company
African
Enterprise
Challenge Fund
Project-based
interventions
AFD/KAM
RTAP
Credit line
Responsibility
DFID
Green Energy
Equity Fund
East Africa
(upcoming)
Donor project
Regional private sector program supports private
companies to invest in innovative renewable-based
solutions that help to increase energy access. Project
receives support from a variety of donors and holds
regular regional competitions for private companies.
$30M AFD Private sector program to support commercial
energy efficiency and renewable investments through lowinterest loans
Credits are finally provided by the partner banks Stanbic
and Coop.
- Target 40 – 50 Mio. USD; investment of energy
entrepreneurs and of Renewable Energy projects.
- First closure: expected for autumn 2013
- Equity contribution by average 2 – 4 Mio. USD/
project, around 25% of overall project volume
- Up to now, no solar PV projects among the projects
with completed feasibility study,
- But fund is open for Solar PV projects, e.g.
contributing equity to ESCO who is investing in Solar
PV system and supplies the power
Developing major regional investment project to support
renewable energy powered mini-grid investments:
-
Minimum 50 Mio. British Pounds East Africa
52
-
-
-
International Green Mini-Grids Promotion Fund
 support to feasibility studies and preparatory
work, support to evaluation
Multi-Country Loan and PGR Fund  providing
long tenor senior debt + partial risk guarantee on
off-taker default
Country-specific Project Development and
Impact Fund  Support to project development,
support to community mobilization, support to
end-user finance
o The export credit scheme (including a cover) is one of the most important
financing instruments, German companies and especially the responsible of
business development and sales should know very well. The cover offers
protection against borrower‟s failure to make payment within 1 month after due
time, other commercial risks (e.g. insolvency) as well as political risks (e.g.
warlike events). The lending bank acts as policyholder. Euler Hermes
Deutschland AG and PricewaterhouseCoopers manage the official export
credit guarantee scheme on behalf of the Federal Government. Euler Hermes
acts as leading partner in this consortium.
In contrast to a supplier‟s credit, the export credit has the advantage that the
lending bank negotiates the terms and conditions with the borrower (foreign
buyer or bank). Know. The German suppliers should ask already quite
early a lending bank (e.g. house bank) to prepare a preliminary financial
proposal, which the German supplier can take along with his technical
proposal to meetings with the (potential) buyer. This saves time and increases
the interest of the clients significantly. Import-Export Banks like the American
one or the Chinese one are very fast and usually the client follows the FirstComes-First-Serves-Approach. The following table shows the recommended
procedure:
Table 26: Recommended procedure
Activity
Responsible
Gathering rough information about the project, e.g. :
Supplier
-
Overall order volume
Potential client (private or public; if private
maybe already balance sheet/ annual report)
…
Check with potential lending bank the eligibility of the
project/ order for export credit financing (and
respective cover)
(maybe supported by local
partner or German
Chamber of Commerce)
Supplier with lending bank;
lending bank with Euler
Hermes (for the cover)
Rough estimation of terms and conditions (loan
duration, interest rate, premium rate for cover etc.)
First visit/ meeting with the potential client, technical
presentations (together with the preliminary information
about financing opportunity)
Supplier/ Buyer
Request for detailed project description and other
information needed for detailed technical and financial
Supplier
(if needed with support of
53
proposal
German
Chamber
of
Commerce
in
target
country)
Submitting the detailed technical and financial proposal
to client
Supplier
Follow-up
Supplier
Negotiation and loan agreement between lending bank
and buyer
Lending bank
Closing export contract
Supplier/ Buyer
Applying for credit cover
Lending Bank
Source: German Energy Desk
The cover policy (premium rate for cover included) differs from country to
country and depends on the risk category of the respective country. Tanzania
is in category 6. The cover Policy is as follows:
Table 27: German cover policy for Tanzania
Parameter/
Category
Description
Short-Term
credits
There are no formal restrictions on cover
Medium-/ long
term
Cover facilities are available for smaller transactions on a caseby-case basis, in particular foreign exchange-generating
projects of private buyers.
Collateral
If the foreign buyer‟s creditworthiness is inadequate, bank
security is required.
Country risk
category
6
Source: http://www.agaportal.de/en/aga/deckungspolitik.html
There is no clear definition of “smaller” transaction (from experience estimated
to be < 10 Mio. €). That does not mean, that transactions of higher volume are
not possible to be covered. But it becomes probably more complicated and
requires more argumentation. The basic issues of the cover policy is decided
by an Interministerial Committee (IMC) and in case of higher volume
transactions, maybe it can be of help to contact the Federal Ministry of
Economics (BMWi), which has the lead function.
The premium risk for the cover is calculated in consideration of the risk
category of the country and the repayment term of credit, i.e. that it has to be
calculated from case-to-case. The interest rate of the credit is fixed according
to the XXX. Important requirement of a German export credit and credit cover
is, that usually 70% of the order volume has to come originally from
Germany (German content). Components manufactured by subsidiaries of a
German company abroad, are not considered as part of the German content.
 Engage the Government and international donors: Actively support and
participate in the policy dialogue with local partners. The Government of Tanzania
54
(e.g. ewura as regulatory commission and the Rural Energy Agency) has been
seeking international partners and allows private approaches from investing
companies.
GIZ as well as DFID intend to strongly promote the involvement of the private
sector in the investment and operation of RE systems. German companies should
keep an eye on opportunities which may result from these development
cooperation programmes: Concerns and ideas of German suppliers e.g. about
licensing procedures, quality assurance, technical best practices etc. can be fed in
the existing and upcoming policy advisory mechanism.
 Approach government and administration on local level: With regard to public
facilities it is difficult for German companies to get contracts through public
tenders; however, it is advisable to contact directly for instance district officers (e.g.
district medical officers for local health stations): They have the power to decide
about the allocation of financial means. Experiences show, that they are willing to
spend money, if they are convinced about the advantages of a Solar PV system
e.g. for health stations.

“Shaping the demand”: Some market segments such as the small/ medium
grid-connect one are still “sleeping”, which requires a pro-active approach. For
example, grid connect, though not active yet, will be an important market in the
long term. Those players that get the first projects are likely to continue to enjoy
a strong position in the developing sector. German companies have to approach
potential clients, especially from private sectors such as mining, tourism,
telecoms and construction sector and offer them to calculate the case. They
should help local partners to “educate” potential clients on the technical and
financial benefits of solar PV and wind systems.
Besides that, German companies can generate the demand through contributing
to policy advice: they can actively support and participate in the policy
dialogue with local partners. Another channel which has already been
mentioned is the training of stakeholders in the public and private sector. In
this context, they can cooperate with strategic partners such as TAREA
(Tanzania Renewable Energy Association).
TAREA is an extremely well-run members association which actively promotes
its members interests and holds regular sector-building events.

Selecting very carefully local partners (e.g. for installation and
service as well as for business development): Seek high-end partners as
suppliers (often these are new entrants to the market). Old players are often no
adapt to the rapidly changing new PV environment and continue to follow the old
off-the-shelf/Government procurement routes which do not favour high quality
products. In addition, it can be useful to look not only for those companies which
already have solar PV and wind products and solutions in their portfolio; there
are suppliers of electrical equipment (e.g. of diesel generators, electric drives
etc.) which are maybe interested in diversifying and have a good network to
clients, which are also of relevance for solar PV and wind.

Recognize that African markets take time to develop. If you cannot
participate over the long term, this may not be a market that is of interest. For
taking the necessary time to develop the business, it is advisable to look for
possibilities to limit the requirements at profits. This can be done for instance
55
through the approach to establish a foundation. The SOLidarity of Energiebau
Solarstromsysteme is one example.

Stick to the sector you have targeted. Do not try to do everything.
6. Key market players
The attached database contains information on the main players in the solar PV and
wind energy sectors. Other players in the decentralized power supply market (such
as genset distributors) are also included in the analysis since they can provide
valuable access to the market.
Solar PV
There are about 30 companies in the Solar PV sector that have been recommended
by the Tanzania Renewable Energy Association (TAREA). These include projects
developers, wholesalers and distributors.
There is consensus that the largest companies in terms of sales of solar PV
equipment are Rex Energy (awarded the Kigoma MCC project in 2012, the largest
PV project in Tanzania up to the time of writing) and Ensol. These two companies
work as project developers and started operations 12 years ago. Most of their
projects are funded by donors, NGOs or the government. Zara Solar is an active
wholesaler with a strong presence in the Mwanza/Lake Victoria Basin.
Other companies with a strong presence in the professional solar PV market include
Voltzon and Helvetic Solar. These companies are younger and smaller than the
previous. Most of their projects are in the private sector, having completed
installations in the tourism and residential sectors among others.
With regards to the companies active in the wholesale market for SHS and picosystems, the most prominent examples are Zara Solar, SHS-wholesaler with a
strong presence in the Mwanza/Lake Victoria Basin and Solar Aid/Sunny Money, a
distributor of solar portable lights
Utility-scale project developers were mentioned in section 1.2 and are NextGen
Solawazi and Windpower Serengeti, both developing MW-scale projects to connect
to existing Tanesco mnigrids under the SPPA framework.
The attached database provides information on the 10-15 most important players in
the solar PV field. Aside of these companies the sector is very fragmented with lots
of new entrants.
Wind energy
There are only a few players in the wind energy field. In the field of off-grid small
scale wind energy there are two active companies in Tanzania, Windpower
Serengeti and REDCOT. Both of these companies are however small players.
In the utility-scale wind power, two large projects totalling 150MW are currently in the
pipeline and were mentioned in section 1.2. They are Geo Windpower and Wind
East Africa.
The attached database provides additional information on these players.
56
Genset distributors
The three leading players in the distribution of generators are Mantrac Tanzania,
Merrywater and Plustronics. Mantrac Tanzania Ltd. is the sole authorized dealer
for Caterpillar products in Tanzania and has an extensive branch network that
includes a head office in Dar Es Salaam and branches in Mwanza, Moshi and Tanga.
Merrywater is the sole authorized distributor for Tanzania Mainland and Zanzibar of
FG Wilson Ltd of the United Kingdom, the largest manufacturer of generators in
Europe and a 100% subsidiary of Caterpillar Inc. Finally, Plustronics distributes AJ
Power (United Kingdom) generators. Plustronics recently partnered with Sollatek to
provide solar hybrid solutions.
Other than the three main players mentioned above, the distribution of generators is
fragmented with lots of new entrants from China, Turkey and South Africa.
In addition to the distribution of generators, companies such as Plustronics and
Sincronicity Power provide operational leases of generators as well as operation
and maintenance services. Sincronicity Power refuels and maintains the power
infrastructure of Helios Towers, which currently owns all towers used by telecom
company Tigo. They also supply prime and back-up power to hotels and other
private sector players.
More information and genset distributors can be found in the annexed database.
57
7. Annexes
Annex 1: List of Players
RET companies.
Company
Contact Person.
Contacts
Web Address
Business Focus
Company Strategy
Comments
Solar
Energy
Rex
Investments
Francis Khabisa
Managing Director
+255 713 607533
f.kibhisa@rexsolarenergy.com
www.rexsolarenergy.
com
Solar photovoltaic
(PV) systems and
electrical installation
works
Recently completed the
Kigoma MCC project, the
largest PV project in
Tanzania (275 kWp total
)
Hamisi Mkate
Managing Director
+255 754 694 413
http://www.ensol.co.t
z/
Solar PV, SWH and
Battery back-up
systems. Service
provider.
Leading solar energy
contractor. Clients in
public sector
(education, health,
rural electrification) as
well as private (hotels,
lodges).
System integrator and
installer. Mostly
projects in 1-10kWp for
donors, NGOs and
government
Voltzon
Pepijn Steemers
Commercial
Director
+255 752 904 043
psteemers@gmail.com
www.voltzon.com
Solar energy
systems for tourism,
residential sector
and institutions.
System integrators and
installers.
Several projects in the
private (residentail,
tourism) and public
sectors
Helvetic
Solar
Patrick Ngowi
CEO
patrick@helveticsolar.com
http://helveticsolar.co
m/
Wide range of solar
energy products.
From pico to kW
scale. Clients
include private
sector, government
and donors.
Retail sales, wholesale
supplier, importer,
distributor, system
integrators and
installers. Active in
Northern Circuit of
Tanzania.
Ensol
hmikate@ensol.co.tz
58
Sales in the order of 200
kWp/year, upward trend
Zara Solar
Eng. Parpia
Mohammed
+255 754229162
http://www.zarasolar.com
SHS and pico-SHS
zarasolar@yahoo.com
Wholesale, 2
branches, Dar es
Salaam and Mwanza
Zara Solar won the
Ashden Award for
renewable energies in
2007 and the World Bank
Lighting Africa Award in
2008. In 2010 Zara Solar
also won the Lighting
Rural Tanzania
competition.
Andrew Soper
General Manager
+255 787 737 463
www.sollatek.co.tz
Wholesale of power
control equipment and
project developer for
solar PV. Recently
partnered with diesel
genset distributor
Plustronics.
Recently completed a 30
kWp project for the UN
Carbon X
Naeem Mawji
CEO: +255 787 623 366
Chair:+255 754 770 780
info@carbonxenergy.com
www.carbonxenergy.
com
System integrator.
Solar Kits for SHS,
Solar Energy
Systems, Solar
Modules, Charge
Controllers, Solar
Lights, Different
range of high quality
Batteries.
Solar-PV and hybrid
mini-grid systems for
rural electrification
Davis &
Shirtliff
Ellison Malyi
+255 773 318 827
www.dayliff.com
Chloride
Exide
Mr. Gabriel Odongo
Sollatek
andrew.soper@sollatek.co.tz
Ellison@mwz.tzdayliff.com
+255 756 776493
gabriel@chlorideexide.co.tz
http://www.cekl.com
Rural electrification,
fee for service model.
Pilot stage. Winner of
Lighting Rural
Tanzania 2010.
Supply and
installation of Solar
PV, Solar Pumps
and Wind Pumps
Battery based
systems and SHS
59
Aqua solar
Mr. Mitha Naeem
+255 656 684551; +255
788303066
naeem@aquasolartz.com
Green
Energy for
Africa
Enterprise
Dr. Frank Boris
Thiesen
+491741707555, 0654878727,
+255 719004411
Power 4
Africa
Mr. Hooda Bob
Power
Providers
Co. Ltd.
Clive Jones
Managing Director
+255 787 847969
Renerg (T)
Ltd.
Mr. Ndunguru
Deodatus
+255 764 658634
info@renerg.de,deodatusndung
ur u@yahoo.com
frank@dr-thiesen.de
+255 754 394844
info@power4africa.de
http://www.aquasolart
z.com/
http://www.greenenergy-forafrica.com
http://www.power4afri
ca.de/
Solar Power
Contractors,
Importers and
Resellers. Products:
Solar Water
Pumping systems,
Solar Back-Up,
Solar Micro
Products, Solar Hot
Water Systems,
Solar Street Lights
Projecting with Solar
power, Wind Power,
Micro hydro power.
Installing solar power
for houses,
compounds, clinics,
businesses, NGO's,
and other institutions.
Completed solar water
pumping projects and a
5kWp system for a
private sector institution
in Dar es Salaam
Consultancy, Planning,
Installation and
Maintanance of
Renewable Energy
Systems. Partnership
in national and
international
Development
Programms.
Start-up in very early
stage of development.
Project developer
Developing a 1MWp
solar farm in Moshi
Distributor of Lorentz.
Active in the tourism
sector.
clive@powerproviders.co.tz
http://www.renergtanzania.de
Socially orientated
company, providing
installation and
maintenance of PV
solar systems in the
rural areas of
Tanzania.
Has completed several
off-grid installations in
public facilities
60
Wind
Energy
Windpower
Serengeti
Redcot
(Renewable
Energy
Development
Company
Tanzania)
Genset
Distributors
Mantrac
Tanzania
Merrywater
Arthur J. Karomba
Director
+255 784 688 094
arthurkaromba@yahoo.com
www.windpowerserengeti.com
Mr Julius Kilimo
+255 732 996 869
www.redcot.co.tz
info@redcot.co.tz
Small wind turbine
manufacturer and
developing a 1MWp
solar plant to
connect to Mpanda
minigrid
Supplier of
renewable energy
products, especially
wind turbines
James Serre
+255 0741 234 470
jserre@mantractanzania.com
www.mantractanzania.c
om
Mantrac Tanzania
Ltd. is the sole
authorized dealer for
Caterpillar Products
in Tanzania.
Henrik S. Nielsen
Resident Manager
& Power Division
henrik@merrywater.de
http://www.merrywater.c
o.tz/
Merrywater is the
sole authorized
distributor for
Tanzania Mainland
and Zanzibar of FG
Wilson Ltd of the
United Kingdom, the
largest manufacturer
of generators in
Europe and a 100%
subsidiary of
Caterpillar Inc.
61
Plustronics
Sincronicity
Power
Nagib Delaware
Technical Director
+255 784 877 770
Mark Foley
CEO
+255 716 500 902
nagib@plustronics.com
mark.foley@sincrositewatch.
com
http://www.plustronics.c
om/
Distribution of
generators and
power supply (18
kVA to 1 MW)
http://www.sincrosite
watch.com/
Power supply to
telecom industry
(Helios Towers) and
other private sector
clients (e.g. hotels)
Distribution to NGOs,
banks, hotels,
embassies, etc.
Recently partnered
with Sollatek to provide
solar hybrid solutions.
No major advances
though.
Sale of 100-200 units per
year, mostly in the 18-30
kVA range.
Developing business
plan for rural utilities
powered by solar energy
62
Projects
Company/
Organization
Contact Person
Contacts
Symbion & MultiEquipment Engineering
Services
Peter Gathercole
Symbion & MultiEquipment Engineering
Services
SWECO
Derek Phillips
+255 754785340
peter.gathercole@symbion-power.com
petergathercole@jaag.biz,
petergathercole@ymail.com
+25576630335
derek.philips@mees.co.tz
Camco
Jeff Felten
Managing Director
+255 763 821 315
michael.sulzer@sweco.se
+255 758 178 120
jeff.felten@camcoglobal.com
Confederation of
Tanzanian Industry
(CTI)
Mrs. Christine kilindu,
Executive Director
+255744404161
christineKilindu@cti.co.tz
Neema Mhondo
Director of Membership Development
and Communication
+255 714 498 523
neema@cti.co.tz
Web Address
Solar/
wind Business Focus
africa.camcoglobal.com
Consultant. Conduceted
feasibility study for
50MWp PV plant in
Shinyanga.
www.cti.co.tz
Industry association with
350 members. Partner in
the RTAP project to
promote renewables in
industry.
General Resource
Experts & Consulting
Tanzania Chamber of
Commerce, industry
and Agriculture
(TCCIA)
Michael Sulzer
Daniel Machemba,
Executive Director
Large Scale Power
Generation
63
Wind East Africa
Rashid Shamte
Founder and Head of Group Strategy
at Six Telecoms
Geo Wind Power
Mr. Gideon John Nasari (National
Development Corporation)
Managing Director and CEO at NDC
Mayank Bhargava
Managing Director
Mayank Bhargava
Managing Director
1-703-249-2381
bhargava@nextgensolar.net
1-703-249-2381
bhargava@nextgensolar.net
Windpower Serengeti
Arthur J. Karomba
Director
+255 784 688 094
arthurkaromba@yahoo.com
www.windpower-serengeti.com
Energio Verda Africa
Ltd.
Frederic Morel
Managing Director
+255 772 937895
frederic.morel@energioverda.com
www.energioverda.com
Project developer in wind
and solar
Camco
Jeff Felten
Managing Director
+255 758 178 120
jeff.felten@camcoglobal.com
africa.camcoglobal.com
Consultant. Conduceted
feasibility study for
50MWp PV plant in
Shinyanga.
Symbion Power (IPP)
Peter Gathercole
CEO
+255 689 118 731
peter.gathercole@symbion-power.com
www.symbion-power.com
Jacobsen Elektro AS
(IPP)
Wartsila Tanzania
(IPP)
Shaun Moore
Project Manager
Jaska Kaihua
Country Contract Manager
+255 689906239
Richard Kasesela, Chairman
Chairman
+255 767777151
rkasesela@gmail.com
NextGen Solar LLC
NextGen Solawazi
Developing 100MW wind
park in Singida with
Aldwych International, Six
Telecoms and IFC
+255-22-2112893
gnasari@ndc.go.tz
+255 754788113
jaakko.kaihua@wartsila.com
Mining Sector
Mining Advisory Board,
Ministry of Energy and
Minerals
64
Developing 50MW with
IFC, Adwych and Six
Telecoms
Setting up a 2 MWp solar
power plant connected to
the Tanesco minigrid in
Kigoma
Small wind turbine
manufacturer and
developing a 1MWp solar
plant to connect to
Mpanda minigrid
Chamber of Energy
and Mines
Emmanuel Jengo
+255 713 322 692
immaj@chamberofmines.org
www.chamberofmines-tz.com
Shanta Gold
Steve Quigley
Administration Manager
+255 767200462
steveq@shantagold.com
www.shantagold.com
1 site off-grid. Looking for
alternatives to reduce
energy cost by 30%.
Considering 1MWp solar.
African Barrick Gold
Shailendr Yadav
+255 767565672
Syadav@africanbarrickgold.com
www.africanbarrickgold.com
Completed study on solar
power for one Tanzania
mine (Buzwagi). Not
progressing due to the
priority ranking in the
current low gold price
climate.
African Barrick Gold
Deo Mwanyika
+255 757 279 708
dmwanyika@africanbarrickgold.com
www.africanbarrickgold.com
African Barrick Gold
Nic Schoeman
Director Operations Support
www.africanbarrickgold.com
AngloGold Ashanti
Gary Davies
Managing Director
+27 83 650 0994 (SA) +255 767 338
812 (Tnz)
nschoeman@africanbarrickgold.com
+254 754 210122
www.anglogold.com
1 off-grid gold mine in TZ
(Geita)
Kabanga Nickel
Kevin Olshefsky
General Manager
+255 767 566 602
kolshefsky@xstratanickel.ca
www.xstratanickel.com
1 site in feasibility stage,
potential for solar to
hybridize power
Williamson Diamonds
Ltd.
Charl Barnard
Country Manager and General
Manager
Dir: 028 2763850,0754 643596
028 2763849,0754 208614
028 2763853,0784 540166
255 22 2151609,2152170
www.petradiamonds.com
Williamson Mine is gridconnected
Mantra Uranium
ASA MWAIPOPO
Country Manager
Panafrican Group
Chris Hoppe
Group Technical Director
The site will commence
operations off-grid
+254 716431092
c.hoppe@panafricangroup.com
www.panafricangroup.com
65
Tourism
Baobob Selous
Nomad
Grumeti Reserves
Foxes Safari Camp
John Fox or Bruce
fox@tanzaniasafaris.info,
fox@safaricamps.info,
operations@safaricamps.info
Coastal Group
Conservation
Corporation Africa
Serena
Sopa Lodges
Mike Sanders
+255 782 333 555
www.sopalodges.com
msanders@elewana.com
Elewana Afrika
Mike Sanders
+255 782 333 555
http://elewanacollection.com/
msanders@elewana.com
Kirurumu
Hotels and Lodges
Tanzania Ltd
Moivaro
Asilia
Tanganyika Wilderness
Camps
Willy Chambulo
Managing Director
+255 784 281 170
wildwilly@tanganyikawildernesscamps.
com
Tourvest East Africa
Tom Yule
Regional Director
+254 716 511 324
tom@tourvesteastafrica.com
tanganyikawildernesscamps.com
66
AfrikaAfrika
http://www.afrikaafrikasafaris.co
m/
The Anasa Safari
Collection
www.anasasafaris.com
Green Buildings
Architectural
Pioneering Consultants
Ltd.
IPA Architects
Tanzania
Dark Gummich
CCBRT Hospital
Susan Boone
International School of
Tanzania
Martin Shaw
Tigo HQ
Kerion Barnes
Infrastructure manager
Twiga Cement
Heidelberger (D. Gummich's contact)
John Kelly
http://www.apc-tz.com/
Green buildings for private
sector
www.ipatanzania.com
Green buildings for
several sectors of
economy (government, biand milti-lateral agencies,
industry, residential, etc.
info@ipatanzania.com
+ 255 713 123 740
kerion.barnes@tigo.co.tz
Efficiency in HQ to reduce
energy consumption by
30%
Contractors
Registration Board
Tanzania
Keeps the construction
industry informed of new
developments in the
construction business in
Tanzania, the East African
region and the world at
large. Opportunity for
trainings in solar PV in
green buildings?
Telecom
67
Vodacom
Tigo
Kerion Barnes
Infrastructure manager
+ 255 713 123 740
kerion.barnes@tigo.co.tz
Solar energy for base
stations, sales points,
warehouses, etc.
Airtel
Jackson Mmbando
Public Relations Manager
Helios Towers
Tanzania (HTT)
Simon Payne
CTO
Helios Towers
Tanzania (HTT)
Martin Perks
CFO
mperks@heliostowersafrica.com
Helios Towers
Tanzania (HTT)
Yusuph Magessa
Operations Manager
+255 658 880 032
Ymagesa@httanzania.com
www.heliostowersafrica.com
Helios Towers
Tanzania (HTT)
Joseph Mgullo
Deputy Network Operations Director
+255 658 880 170
Jmgullo@httanzania.com
www.heliostowersafrica.com
Sincro Sitewatch
Mark Foley
CEO
+255 716 500 902
mark.foley@sincrositewatch.com
www.sincrositewatch.com
www.heliostowersafrica.com
www.heliostowersafrica.com
Manufacturing
Mohammed
Enterprises Tanzania
(METL)
http://www.metl.net/
Bakhresa Group
http://bakhresa.com/
68
Airtel is greening their
sites in Tanzania,
Inauguration of first solar
hybrid site in Sept 2012
Owner of towers of Tigo,
potential for hybridization
with solar.
Owner of towers of Tigo,
potential for hybridization
with solar.
Interested in developing
ESCO model for telecoms
and surrounding
communities incorporating
solar energy
Tanzania Portland
Cement Company
Limited (TPCC) (Twiga
cement)
Tanga cement
Mr.Onesmo Kitomari
Confederation of
Tanzanian Industries
(CTI)
Neema Mhondo
Director of Membership Development
and Communication
+255 714 498 523
neema@cti.co.tz
www.cti.co.tz
Agriculture
Mohammed
Enterprises Tanzania
(METL)
Tanzanian Horticulture
Association (TAHA)
http://www.metl.net/
Jacqueline Mkindi, Executive director
ed.taha@habari.co.tz
Flower and Coffee
grower
Greg Emmanuel (contact from Peter
Gathercole)
Tobacco Project
Morogoro
Peter Gathercole suggestion
Tanzania Chamber of
Commerce, industry
and Agriculture
(TCCIA)
Daniel Machemba, Exceutive Director
+255 787 439 282
Rural Electrification
(Government Led)
USAID Schools Project
MCC Kigoma
Clusters Project EU
Eric Youngrin (Solar Nexus)
Developer
Jeff Felten (Camco)
Developer
+255 758 178 120
jeff.felten@camcoglobal.com
Jeff Felten (Camco)
Developer
+255 758 178 120
jeff.felten@camcoglobal.com
69
Industry association with
350 members. Partner in
the RTAP project to
promote renewables in
industry.
Rural Electrification
(Commercial)
Carbon X
CEO: +255 787 623 366
Chair:+255 754 770 780
info@carbonxenergy.com
www.carbonxenergy.com
Solar-PV and hybrid minigrid systems for rural
electrification
Frederic Morel
Managing Director
+255 772 937895
frederic.morel@energioverda.com
www.energioverda.com
Project developer in wind
and solar
Agency
Contact Person
Contacts
Tatedo
Estomih Sawe
Executive Director
Cell: +255 787 289 868
edirector@tatedo.org
TAREA
Matthew Matimbwi
Executive Secretary
+255 715 993 755
matimbwi@tarea-tz.org,
matimbwi@gmail.com
www.tarea-tz.org
+44 (0)20 7278 0400
info@solar-aid.org
info@solar-aid.org
+44 (0)7917 046588
FMottakin@gsma.com
www.gsma.com/greenpower
Energio Verda Africa
Ltd.
NGOs
Solar Aid
GSMA
Ferdous Mottakin
Programme Manager, Green Power
for Mobile
Web Address
70
Solar Business Focus
Government
Agency
Contact Person
Contacts
Ministry of Energy and
Minerals (MEM)
Ministry of Energy and
Minerals (MEM)
Eleakim Maswi
Permanent Secretary
Edward Ishengoma
Assistant Commissioner,
Renewable Energies
ps@mem.go.tz
255 755 898679
e_leonardishe@yahoo.com,
edward.ishengoma@mem.go.tz
Mr. James Andilile
Assistant Commissioner for Energy
Development
Teil: + 255 22 2135159, Mob.:+255 759804559,
255 783937716
andilile@gmail.com
Sam Mgweno
+255 754 651364
Samuel.mgweno@gmail.com
Web Address
Hosea Mbise
TANESCO
Eng, Emmanual Manirabona,
Manager Projects T&D
Eng. Felchesmi J. Mramba, Deputy
Managing Director, Distribution &
Customer Services
Francis M. Maze, Manager Large
Power Users
Mob: +255 763511182
emmanuel.manirabona@tanesco.co.tz
Mob +255 767042009
felchesmi.mramba@tanesco.co.tz
Mob. +255 762450226
francis.maze@tanesco.co.tz
71
Eng. Sophia S. Mgonja, Senior
Manager Distribution
Rural Energy Agency
(REA)/ Rural Energy
Fund (REF)
EWURA, regulatory
body
Mwakahesya Lutengano
Director General
Mob +255 767902 312
sophia.mgonja@tanesco.co.tz
+255 784291801
lmwakahesya@rea.go.tz
Anastas Mbawala
mbawala@ewura.go.tz
Haruna Masebu
masebu@ewura.go.tz
National Environment
Management Council
Godfrey Chibulunje
Commercial Manager Electricity
Ephata Ole-Lolubo
Principal Economist
Cell: +255 688 255 707
chibulunje@ewura.go.tz
Cell: +255 784 256 124
lolubo@ewura.go.tz
Ng'anzi Kiboko
Principal Commercial Officer Electricity
James Ngeleja
Principle Environment
Management Officer
Cell: +255 784 204 730
kiboko@ewura.go.tz
Cell: +255 713 785 193
jlngeleja@gmail.com
Donor and Finance
NAME
Contact Person
John McIntire
GIZ
KfW
Dr. Regine Qualmann
Wolfgang Solzbacher
CONTACTS
Cell: 255 784 411137
255 754788225
regine.qualmann@giz.de
wolfgang.solzbacher@kfw.de
Office: +255 22 21 28 1-89 / 90
SIDA
UNDP
72
Donor
Coordination
Samer al-Fayadh
Chair of energy donors
samer.al-fayadh@gov.se
Botschaft
Claudia Imwolde-Kraemer
Counsellor - Development Cooperation
wz-2@dare.auswaertiges-amt.de
Phone: +255-22-2117409/15
Finance
Bank of
Africa
Tanzania
Eric Ouattara
Deputy
General
Manager
mob
+255783625222
eric.ouattara@boatanzania.com
Sikudhani Mayalla
Assistant
Manager,
Corporate
department
mob
+255756962022
sikudhani.mayalla@boatanzania.com
CRDB
National
Microfinance
Bank
73
Annex 2: Bibliography and Resources
A1 Bibliography
Bank of Tanzania, ECONOMIC BULLETIN FOR THE QUARTER ENDING
DECEMBER, 2012
Bertheau, Paul (paul.bertheau@rl-institut.de) “Geographic, technological and
economic analysis of isolated diesel grids to assess the upgrading potential with
renewable energies: A case study of Tanzania” Reiner-Lemoine-Institut, Berlin,
Germany 2013.
Energy Water Utilities Regulatory Authority (EWURA) Order: Standardized SPPT
Tariff , 2012, EWURA (website http://www.tanesco.co.tz electricity charges)
GSMA. “Powering Telecoms: East Africa Market Analysis. Sizing the Potential for
Green Telecoms in Kenya, Tanzania and Uganda”, GSMA 2012
Ministry of Energy and Minerals (2003). “The National Energy Policy.”Feb,2003.
Ministry of Energy and Minerals (2005). “The Rural Energy Act, 2005.”
Ministry of Energy and Minerals (2008). “The Electricity Act, 2008.”
Ministry of Energy and Minerals (2012). “Power Master Plan 2012 Update.”Feb.2013
Ministry of Energy and Minerals Scaling-Up Renewable Energy Programme (2012)
“Investment Plan for Tanzania.” 21st Apr.2013.
Tanzania Renewable Energy Association. Report on Tanzania Solar PV Market
Trends Study for Years 2008 and 2009: Status of Solar PV Dealers in Tanzania
Recruited by Sida/MEM Solar PV Project. (AUGUST, 2010)
Tanzania Renewable Energy Association (TAREA), member directory 2013-14.
Tanzania Tourist Board (http://www.tanzaniatouristboard.com/), THE LIST OF
LICENSED TOURISM OPERATORS FOR 2013
Interviews and websites of sector players. See database.
Websites/Press release
http://www.tanesco.co.tz/ electricity charges
http://www.gsma.com/.../wp.../GSM_Vendor_Landscape_EastAfrica_V5.pdf
http://www.gsma.com/.../wp-content/.../GPM-Market-Analysis-East-Africa-v3.pdf
74
A4. Selection of Anticipated Major Loads in Tanzania (from PSMP)
Load
Capacity (MW)
Location
Expected Online
Kabanga – Nickel
32
Kagera
2016
Mibongo – Gold
20
Kigoma
2016
Ntaka Hill – Nickel
30
Lindi
2018
Dangote Cement plant
40
Mtwara
2015
Panda Hill – Gold
5
Mbeya
2016
Buckreef – Gold
8
Geita
2015
Geita – Gold
30
Geita
2015
Mchuchuma – Iron
Smelter
100
Iringa
2018
Golden Ridge - Gold
7
Shinyanga
2015
Dutwa – Nickel
10
Shinyanga
2015
Bulyanhulu – Gold
20
Shinyanga
2013
Textile Mill
30
Shinyanga
2014
Williamson Diamond
10
Shinyanga
2013
Williamson Diamond
12
Shinyanga
2014
Williamson Diamond
3
Shinyanga
2015
Liquidified Natural Gas
Power plant(LNG)
100
Mtwara
2018
Expansion of Makonde
Plateau Water Supply
and Sanitation
Authority
6
Mtwara
2017
Ikwiriri Sugar factory
4
Lindi
2014
Mtwara Fertilizer
Factory
30
Mtwara
2017
75
Dawasa- Ruvu
pumping Expansion
12
Coast
2015
Hong Yu Steel (T) Ltd
– Expansion
34
Coast
2015
Eagle Cement Co. Ltd
20
Coast
2015
76