Dar es Salaam. Energy is central to human life and socio-economic development, which includes access to water, agricultural productivity, health care, education, job creation and environmental sustainability.
Tanzania, with about 75 per cent of the population in rural areas, has a rural electrification rate of about 6 per cent, which is very low compared to sub-Saharan Africa’s average of 10 per cent.
Given the country’s size and sparse distribution of its rural population, grid extension to most parts of the country, including isolated rural areas, appears to be unfeasible due to high investment costs.
Electrification by renewable energy mini-grids (MGs) in rural area seems to be an economical option for increasing access to electricity without undermining climate change mitigation efforts.
According to the Ministry of Energy and Minerals, about 85 per cent of the total primary energy supply in the country comes from biomass, while other energy sources include petroleum (9 per cent), electricity (4.5 per cent), and renewable energy sources (1 per cent).
Data also shows energy consumption in the country is composed of residential areas (72.5 per cent), industries (14.4 per cent), transport (5.8 per cent), agriculture (4.2 per cent) and others (3.1 per cent).
Until June last year, the total power installed capacity was 1,357.69MW of which 157.7MW is from mini-grids. According to the Tanzania National Census, the country’s population in 2012 was 44.9 million, with a growth rate of 2.9 per cent per annum (NBS 2012). The projected population for the country was 50 million in 2016. The national electrification target is to achieve access rate of 75 per cent by 2035.
According to the International Energy Agency, electricity demand in Tanzania could rise by an annual average of 6.6 per cent between 2012 and 2040.
Providing access to electricity has so far remained a big challenge. In 2016, only about 24 per cent with a dramatic difference between urban areas (43 per cent access) and rural areas (just 6 per cent) of the country’s population has gained access to electricity.
To address the problem, Tanzania Traditional Energy Development Organisation (Tatedo) and the World Resources Institute (WRI) conducted a midi-grid study, which has documented some lessons and challenges contributing to slow progress of the energy sector.
Explaining the study recently at a stakeholders meeting in Dar es Salaam, Tatedo midi-grid project coordinator Albina Minja said among the challenges was lack of awareness on existing supportive policies, a regulatory framework, subsidies and financing mechanisms for supporting and scaling up rural electric mini-grids in Tanzania.
“There’s inefficient use of energy, metering and payment systems and also existence of low quality renewable energy mini-grids equipment (solar panel and associated accessories).
“There’s also low capacity of local mini-grid project developers in terms of technical, business and managerial skills. This situation is jeopardising the sustainability of the sector due to over dependence on external experts,” she said.
She added that, since policies, the regulatory framework and financing mechanisms had contributed a lot to great strides in the development of mini-grids, only few stakeholders were aware of their existence.
“We need to increase awareness on rational use of energy, as well as legislation and the regulatory framework for energy efficiency and energy saving and to change the Tanzania market, which is flooded with counterfeit imports of solar panels and accessories by increasing awareness on the issue,” she said.
To address those challenges, Ms Minja said projects aimed at raising awareness on mini-grid development and demand of electricity nationwide and pilot districts being Chalinze, Simanjiro and Muheza.
“The project duration is 24 months (January 2017 to December 2018). The project will raise awareness for central and local government authorities, entrepreneurs, and beneficiaries on mini-grids from biomass gasification, solar, wind, micro-hydro and biofuel,” she said.
“The project also strives to change stakeholders’ attitude and behaviour through awareness creation on energy efficiency and energy saving. Implementation of this project will contribute to the efforts of scaling up access to electricity from renewable energy mini-grids in off-grids rural areas of Tanzania.”
Tatedo director Estomih Sawe said despite the enacted laws, regulations and policies, challenges remained lengthy planning procedures and feed in tariffs (FiTs) that were still too low in many cases to attract project sponsors.
“Tanesco retail tariffs, approved by Ewura, do not cover its costs, which affect its ability to pay for electricity supplied by Southwest Power Pools,” said Sawe.
He mentioned the policies, including the National Energy Policies 2003 & 2105, which stresses private sector participation in the electricity sector development in the country.
He also mentioned the Ewura Act of 2001, which introduced the regulator and relieved the government from the activity and the Rural Energy Act, 2005 established REF and REA to promote rural modern energy access and facilitate financing. The Electricity Act, 2008 introduced SPPA and SPPT/FITs regulations. Years 2008-April 2015, 1st generation, DNO avoided costs and technology neutral FITs. He encouraged small investors on financial demand saying it can be by equity, grants, subsidies and loans from commercial banks.
“Financing arrangements is in place whereby matching grants for feasibility and ESIA studies, performance grants for customer connections are administered by REF.”
“Credit facility and risk guarantee administered by TIB and disbursed by commercial banks as loans for construction,” He adds.
Speaking via phone, the Rural Electrification Agency (Rea) Managing Director, Engineer Gissima Nyamo-Hanga challenges the electric statistics saying about 70 percent of Tanzanians are now connected to the National grid.
“67.5 percent of the national population including rural and urban have been connected until December 2016, it may be increased so far. The rural population who have been connected so far is 49.3 percent,” he says.
He adds that, Rea work hand in hand with Tanesco to construct electric infrastructure so as reduce cost.
“Tanesco could not construct rural electric infrastructure, so the government introduced a rural electric fund and during construction they are involved to convene with their plan,” said Nyamo-Hanga.
Speaking on investors, who wished to construct mini-grid electric generation, Nyamo-Hanga said they were given subsidies to empower them.
“Recently, we have been encouraging investors that, in each customer you connect we offer $500. You construct your plant and then you connect customers, then we pay you $500 per customer. That’s how we operate and we have a special department, which deals with midi-grid plants,” he added.