Tanzania

Alongside Kenya, Tanzania played host to much of the early development of the mini-grid industry. This was facilitated by supportive policymaking, streamlined licensing for multiple projects and exemption from tariff review for projects below 1 MW. The Tanzanian government hosts a mini-grid portal online (at www.mini-grids.go.tz/en) for prospective developers to access resources such as GIS maps of existing grid infrastructure and details of how to apply for licences and financing. As of May 2020 this portal had not been updated in a few years.

Recently however, mini-grid operators are faced with a regulatory change impacting the agreed upon tariffs and threatening their financial viability. This introduces uncertainty into the mini-grid Tanzanian market.

By 2018 there were an estimated 109 installed mini-grids in the country serving 180,000 customers, most of which are presumed to be operational in 2020. The rate of development tapered off as political uncertainty reduced investor and developer confidence and as other countries, in particular Nigeria revealed their own sector support and stimulation policies. It does however continue to be an innovative market. 2019 saw the launch of the first project financing facility for mini-grids, with €14 million funding committed. A Special Purpose Vehicle has been set up to purchase existing and future mini-grids developed by PowerGen Renewable Energy, a private company. This puts the long term financing of these sites into the hands of suitable investors while freeing up capital for the developer to continue building sites.

A large number of organisations are active in the sector including ACRA, Andoya Hydroelectric Company, CEFA, Devergy, Ensol, Husk Power, INENSUS, Jumeme/RP Global, Merl1928, NextGen Solawazi, Nishati Associates, PowerCorner, PowerGen Renewable Energy, Redavia, Rift Valley Energy, Ruaha Energy (owned by Canadian Continental Energy), TATEDO, TramaTecno Ambiental, Village Industrial Power and Virunga Power.

The Electricity Act (No. 10 of 2008) requires that all power projects have an operating licence. Generation projects in rural areas smaller than 1 MW are exempt, as well as isolated distribution projects where demand is smaller than 1 MW. Applications for licences or registrations can be done on the online Licence and Order Information System (LOIS). The Electricity (Development of Small Projects) Rules of 2019 specifies the procurement processes of Standardised Power Purchase (SPPs), prerequisites for grid connection, necessary environmental and social clearances. It clarifies that projects exempted from licencing (smaller than 1 MW) are still required to register with EWURA. The rules also specify the criteria for the development of VSPPs. Once selected, SPP operators will sign the standardised PPA for SPPs with EWURA (if the SPP is grid connected). Standardised PPAs are applied to small power producers selling electricity to the grid, entitled Standardised Power Purchase Agreement for Purchase of Electric Energy from a Generation Facility Connected to the Main Grid. Applicable tariffs for grid connected SPPs are provided in the Electricity (Standardised Small Power Projects Tariff) Order of 2019. Retail tariffs for isolated SPPs (mini-grids) must be approved by EWURA - guidelines for calculations are presented in these rules.
The Electricity (Standardised Small Power Projects Tariff) Order of 2019 outlines the tariffs offered to SPPs (100 kW - 1 MW) selling electricity to the grid, differentiated between mini-hydro, solar, wind, biomass and bagasse, as well as four tiers of installed capacity. VSPP tariffs are not prescribed, but the rules do provide parameters that guide EWURA's tariff calculations for VSPPs on a case-by-case basis. The 2019 order revokes the 2017 order. The Environmental Management Act (No. 20 of 2004) states that developers or operators of off-grid projects are required to register with the National Environment Management Council and conduct environmental impact assessments. The Electricity (Electrical Installation Services) Rules of 2019 states that any person performing electrical installation or maintenance activities must have a licence. Licences are differentiated according to different classes (A, B, C, D, S, S1, S2, S3, S4, L, L1, L2 and W) that represent specific types of electrical installations. The Electricity (Procurement of Power Projects and Approval of Power Purchase Agreements) Rules of 2019 outlines procurement processes (competitive bidding) and conditions for approval of PPAs. These regulations do not apply to SPPs. It thus only applies to interconnected mini-grids larger than 10 MW. The Electricity (Supply Services) of 2019 outlines the licence application and approval process for all projects larger than 1 MW. It also specifies the operating and reporting requirements, such as compliance with the relevant technical codes and reporting of financial information. Relevant technical codes refer to the Tanzania Electricity Grid Code, which in turn includes the following relevant codes: Network code, system operation code, scheduling and dispatch code, metering code, information exchange code and governance code. The Electricity (Generation, Transmission and Distribution Activities) Rules of 2019 outlines the licencing application and approval process for generation, transmission and distribution infrastructure respectively. It also lists the requirements of licenced generation, transmission and distribution infrastructure operators. The Public Private Partnership (PPP) Amendment Act No 9 of 2018 is the third amendment to the PPP Act (No 19 of 2010). It follows the PPP amendment acts from 2013 and 2014. The PPP act specifies the obligations of the respective parties of a PPP contract as well as financial management requirements and dispute resolution procedures. However, indications are that only large energy projects to date have been procured on a PPP basis (mostly thermal projects).

The off-grid solar market in Tanzania has been growing steadily over the past two years, following volatile sales in previous years. GOGLA and Lighting Global affiliated sales in 2016 amounted to 372,767 products, followed by a decline to 172,442 in 2017. In 2018, sales increased again, to 205,733 units. 2019 saw another increase, to 263,927 units. In 2019, 32% of these products were sold on a PAYGO basis, down from 52% in 2018. The remaining share of products were sold as cash transfers. Operating companies include American Engineering Group, Azuri Technologies, d.light, Enda Solar, Greenlight Planet, Jaza Energy, Little Sun, M-Kopa, Mobisol, Sikubora Solar, Simusolar, Solaris Tanzania, Solar Sisters, Trend Solar, Rex Energy and ZOLA Electric. Products are mainly sold around the larger cities of Dar es Salaam, Arusha and Mwanza.

Regulation is relatively light-handed. Companies need only to inform the regulator of their activities, and solar home systems and pico-solar products are required by the Tanzania Bureau of Standards to meet the Lighting Global standards for small renewable energy and hybrid systems for rural electrification.

The Electricity (Electrical Installation Services) Rules of 2019 states that any person performing electrical installation or maintenance activities must have a licence. Licences are differentiated according to different classes (A, B, C, D, S, S1, S2, S3, S4, L, L1, L2 and W) that represent specific types of electrical installations.

Tanzania has a diversified landscape of captive power plants, spanning several sectors, multiple technologies and a range of facility sizes. The use of renewable energy sources is equally diversified.

Solar largely accounts for installations below 100kW, while facilities with installed capacity between 100 kW and 1 MW utilise mostly solar and hydro resources. As an example, SEVA has installed two 6 kW rooftop solar systems, at a school in Enduimet and on Bugisi health centre. Redavia installed a 1.4 MW solar pilot and expansion at the Shanta gold mine, a 87 kW facility at Sao Hill sawmill and a solar plant at Mbeya mine. Tanzania Breweries developed a 138 kW plant, with the option to expand to 700 kW.

The agro-manufacturing industry also relies on captive power plants to help manage waste and improve efficiency. These plants usually exceed 1 MW of installed capacity and typically utilise cogeneration integrated into their processes. Examples include the 13 MW Mtibwa Sugar Estate biomass plant and the 5 MW Kagera Sugar Company biomass plant, both fuelled by bagasse from their operations. Similarly, Kilombero Sugar owns two plants known as K1 and K2 with a combined capacity of 8.8 MW, in addition to a 500 kW biomass gasifier for their plantation operation. Safari lodges are yet another growing captive power market segment in Tanzania. Projects such as the SMA Sunbelt's solar arrays have been operating in the Serengeti.

In addition to installers listed, several other suppliers of captive power systems are operational in Tanzania. They include Baraka Solar Specialists, Energy1 W2E, Fengyu Corporation, Greenlink, GridX Africa, among others.

Regulation is generally favourable, where generators are able to sell excess to the grid or balance their use through net-metering. Smaller generators are exempt from some licencing requirements while operational cost savings makes sense for larger generators despite more rigorous licencing requirements.

The Electricity Act (No. 10 of 2008) requires that all projects have an operating licence. Rural captive power projects smaller than 1 MW are exempt. Applications for licences or registrations can be done on the online Licence and Order Information System (LOIS). The Environmental Management Act (No. 20 of 2004) states that developers or operators of off-grid projects are required to register with the National Environment Management Council and conduct environmental impact assessments. The Electricity (Standardised Small Power Projects Tariff) Order of 2019 outlines the tariffs offered to SPPs (100 kW - 1 MW) selling electricity to the grid, differentiated between mini-hydro, solar, wind, biomass and bagasse, as well as four tiers of installed capacity. VSPP tariffs are not prescribed, but the rules do provide parameters that guide EWURA's tariff calculations for VSPPs on a case-by-case basis. The 2019 order revokes the 2017 order.
The Electricity (Net Metering) Rules of 2018 set forth net metering provisions on mainland Tanzania. It applies to generating facilities of less than 1 MW. It stipulates requirements such as bi-directional metering. Eligibility for net metering is set on a first-come first served basis per distribution grid. It also provides a template for interconnection agreements. The 2018 rules revoke the 2017 rules. The cap on 1 MW would imply that grid connected systems larger than 1 MW must be treated on a PPA basis. The Electricity (Supply Services) of 2019 outline the licence application and approval process for projects larger than 1MW. It also specifies the operating and reporting requirements, such as compliance with the relevant technical codes and reporting of financial information. The Electricity (Electrical Installation Services) Rules of 2019 state that any person performing electrical installation or maintenance activities must have a licence. Licences are differentiated according to different classes (A, B, C, D, S, S1, S2, S3, S4, L, L1, L2 and W) that represent specific types of electrical installations. The Electricity (Generation, Transmission and Distribution Activities) Rules of 2019 outline the licencing application and approval process for generation, transmission and distribution infrastructure respectively. It also lists the requirements of licenced generation, transmission and distribution infrastructure operators.

Only 6% of the Tanzanian population have access to clean cooking. In urban areas, 85% of the population use solid fuels for cooking while in rural areas the figure rises to more than 95%. The primary fuel used for cooking is wood, being used by about 78% of the population. Other fuels used for cooking include charcoal (19% of the population, kerosene (2% of the population) and liquid petroleum gas (LPG) (0.2% of the population). Organisations like Envirofit International, Mama Cookstoves, Solar Sisters and Tanzania Traditional Energy Development Organisation (TATEDO) sell improved wood and charcoal cookstoves. Safi International AS manufactures and distributes ethanol stoves and bio-ethanol as an alternative source of household fuels. Circle Gas and KopaGas distribute LPG, with KopaGas aiming to switch 1 million people in Tanzania from charcoal to LPG.

The national government through its Development Vision 2025, plans to increase access to clean cooking to more than 75% of the population by 2025. This target has been supported by organisations such as EnDev, which has distributed 286,000 improved cookstoves by the end of 2017. Similarly, the Africa Biogas Partnership Programme (ABPP) installed 6,441 bio-digesters and established 7 marketing hubs by the end of 2017. The Tanzania Domestic Biogas Programme (TDBP) ran from 2009 until 2017 and implemented an estimated 12,000 bio-digesters, although the number could be as high as 22,000.