Tanzania mini grid sector doubles with bold policy approach, report
With more than 70 percent of Tanzania’s population lacking access to electricity, mini-grids – electrical generation and distribution systems of less than 10 megawatts (MW) – have enormous potential to electrify rural communities.
By 2040, an estimated 140 million rural Africans will get electricity from mini-grids, requiring more than 100,000 mini-grids to be built. Tanzania is a regional leader in mini-grid development and a new report from Tanzania Traditional Energy Development Organization (TaTEDO) and World Resources Institute (WRI) finds that rapid expansion of mini-grids in Tanzania has been possible because of bold and adaptive energy policies.
The report, Accelerating Mini-grid Deployment in Sub-Saharan Africa: Lessons from Tanzania, was released at a daylong event in Dar es Salaam featuring remarks from Eng. Edward L. Ishengoma, Assistant Commissioner for Renewable Energy for the Government of Tanzania.
The report finds that Tanzania now has 109 mini-grids, serving over 180,000 people. Tanzania mini-grids’ 157.7 MW of installed capacity includes hydro, biomass, hybrid, fossil fuel and solar systems.
By comparison, Tanzania’s central grid has installed generation capacity of approximately 1,500 MW, with mostly hydro and natural gas, serving around 9 million people.
Rural electrification is a key component of the government’s plan to make Tanzania a middle-income country by 2025. Given the country’s large size and low rural population density extension of the national grid to many isolated rural areas is not economically feasible.
Tanzania estimates that about half the rural population may be more cost-effectively served by decentralized options than by centralized grid expansion.
“We’ve long heard that Tanzania is a regional leader in mini-grid development. Our research establishes the fact,” said Estomih Sawe, executive director, TaTEDO, “As we collected data for this report, we saw how mini-grids can support schools, health clinics and small businesses in Tanzania’s rural communities. We need more information about how mini-grid development can help households across Tanzania.”
In 2008, Tanzania adopted a new regulatory framework to encourage low-cost investment in mini-grids, called the small power producers (SPP) framework, which caused the number of mini-grids to double.
The financial mechanism created – a feed-in tariff – was technology neutral, which favored biomass and hydro development. However, a 2015 revision to the policy encouraged solar and wind development. On June 29, 2017 Tanzania’s Energy and Water Utilities Regulatory Authority (EWURA), the national regulator, approved a third generation mini-grid framework.
The third generation rules provide several important improvements to create an enabling regulatory environment, including: allowing mini-grids at multiple locations to acquire a single license (above 1 MW) or registration for mini-grids using the same technology (below 1 MW); defining eligible customers that need not have their tariffs reviewed by EWURA; providing for provisional registrations for mini-grids; allowing grid-connected mini-grids to operate in islanded mode when power supply is not available from the main grid; and, providing additional clarity and credibility on the calculation of compensation for distribution assets when the main grid connects to a previously isolated mini-grid.
“The third generation SPP and mini-grid rules represent a significant next step in our continued efforts to create an enabling environment for mini grids in Tanzania,” said Eng. Godfrey H. Chibulunje, Director of Electricity, EWURA. “With explicit guidance on options for when the main grid arrives and a simplification of the licensing and registration requirements, among other important updates, we are confident that these new rules will encourage even more investment in mini-grids over the next several years.”
Mini-grids have several potential benefits to rural communities: extending business hours for merchants and services; improving access to information through radios and phones; increasing school hours and study time at home; helping hospitals reduce child and maternal mortality; and supporting new enterprises like mechanical workshops and fruit processors.
“For communities across the region, a consistent and affordable supply of electricity can open new possibilities for socioeconomic progress,” said Andrew Steer, president and CEO, WRI. “Mini-grids have the potential to be a transformative solution for sub-Saharan Africa as informed investors and ambitious government targets are aligning to make rapid growth possible. Now is the time to act.”
The report details the location, ownership model and technologies of Tanzania’s 109 mini grids. It finds that several entities have an ownership role: the national utility (TANESCO), private businesses, faith-based organizations, communities and (in the past) cooperatives.
"Meeting the goal of universal access to modern energy in sub-Saharan Africa remains a key challenge in coming decades. Nevertheless, a handful of African countries have begun to show steady progress and have largely embraced multiple supply solutions— from conventional grid systems to emerging technologies in mini-grids and solar home systems," said Sudeshna Ghosh Banerjee, practice manager, East Africa, Africa Energy and Extractives Practice, World Bank. "This report, prepared by TATEDO and WRI and supported by the World Bank and ESMAP, is an excellent source of information on the current state of the mini-grid sector in Tanzania, the factors contributing to its success to date, and the agenda that still lies ahead.”
“Mini-grids aren’t a new electrification approach in Tanzania - they’ve been in use since colonial times to power industry like mining in remote regions,” said Lily Odarno, lead author and associate, WRI. “What is new is the set of policy, regulatory, and financing mechanisms that Tanzania’s government has introduced to accelerate development of renewable energy mini-grids and their scale-up. Energy decision-makers across the region can look to Tanzania’s adaptive approach as a way to bring electricity for rural communities across sub-Saharan Africa, with benefits for schools, businesses and health clinics.”
Also launched is a new interactive tool, Tanzania Energy Access Maps, allows users to explore the mini-grid data alongside economic indicators in Tanzania’s regions and districts. Electricity planners in Tanzania can use the maps to identify areas best placed to benefit from mini-grid projects. Energy enterprises can use the maps to target regions with the most potential for a strong customer base.