Power and Renewable Energy sector in Tanzania

Tanzania’s rapidly expanding energy market is ripe for new investment, offering opportunities for UK companies in the supply chain.

Market overview

A range of renewable energy resources are available in Tanzania and these resources are expected to play a leading role in the supply of energy services in the country in the near future. This is largely due to their availability and suitability, but also to environment concerns and the need to make energy and energy services available to rural areas where these resources exist.

Total installed capacity in Tanzania is approx 1270 MW of which 561 MW hydro and 719 MW natural gas and thermal. However, only 850MW is functioning, usable capacity (due to infrastructure issues etc). There is an estimated individual installed capacity (small generators etc) of 300-400MW. The majority of population’s energy usage (approximately 90 percent) is fuelled by biomass.

Estimated figures state between 16 -17 % of the population have access to electricity and figure drops down to more than 2% in rural areas. With strong growth in commercial, industrial, agriculture and residential sectors, it is projected that the demand will triple by 2020.

There is considerable potential for large scale energy investments which would feed into the national grid; extractives (oil and gas) and renewable (wind, solar, hydro, and geothermal). There is also a huge market for small scale renewable projects, setting up micro grids, supply of materials, and so on, to reach the over 80% population currently without power. Renewable energy is gaining a lot more political attention now than it was in the past and though it is not a fully regulated sector, the government is looking into it seriously as the way forward in trying to address the lack of energy to majority of the population and the country as a whole.

Wind

Much of the wind resource in Tanzania is located along coastlines, the highland plateau regions of the Rift valley, on the plains and around the Great Lakes. Currently, wind energy is used to pump water for irrigation and to meet domestic and livestock water needs. There have been a very limited number of attempts to install wind turbines for electricity generation.

Wind resource assessments have been conducted in seven different sites within Tanzania i.e. Litembe (Mtwara), Mkumbara (Tanga), Gomvu (Dar es Salaam), Karatu (Manyara), Kititimo (Singida), and Makambako (Iringa). Kititimo and Makambako proved to be potential for large wind farm development. Currently, assessments are taking place in Mafia Island (Pwani region).

Geothermal

There are indications that Tanzania has a geothermal potential of more than 650MW, most of the prospects being located within the East African Rift System. Exploration of the resource is limited to surface assessment. Tanzania plans to diversify sources of energy in the power system by including geothermal energy in its near future energy mix.

Based on research results, in January 2010 the Tanzanian Government signed a Memorandum of Understanding (MoU) with BGR of Germany, Geological Survey of Tanzania and TANESCO for carrying out additional geothermal exploration in Songwe area.

The surface exploration of geothermal works in Songwe Mbeya comprising geological, geochemical geological, geochemical and geophysical studies were carried out in phases in 2006, 2007, and 2010 to access the geothermal potentiality of the area for power generation.

The government initiated a future plan to develop geothermal resources in the country by planning to do the following activities in the financial year 2012/13:

i.Development of Institutional arrangement Legal and Regulatory framework;

ii.To drill three shallow wells for measuring temperature gradient;

iii.Raise awareness to decision makers in order to win support for development of geothermal resources;

iv.Capacity building to geothermal experts in different disciplines regarding geothermal resources development.

There are substantial challenges to developing Tanzania’s geothermal resources.

Hydro

Tanzania’s total installed large hydropower capacity is 561 MW and potential stands at 4700MW. Most of the developed small hydro plant are privately owned and not connected to the grid. The Government is carrying out phased feasibility studies to establish the capacities as well as appraise the viability of various small hydro sites across the country, hitherto five regions already surveyed.

Solar

Tanzania is situated in the solar belt countries of the world thus have high levels of solar energy making it a naturally a suitable country for application of solar energy as a viable alternative to conventional energy sources if efficiently harnessed and utilized. Some efforts have been made to harness solar energy using modern technologies like solar photovoltaic (PV) systems and solar thermal.

The solar PV systems around the country are mainly for domestic installations with the private sector playing a major role. The private sector has also been instrumental in the PV application in telecommunication, cathode protection of pipelines, water pumping, and small commercial or non-commercial establishments. However, these efforts are mainly concentrated in areas where grid is within reach.

Biomass

Modern use of biomass is being encouraged. This includes combined-heat- and power generation from biomass residues or municipal wastes. In Tanzania Biomass come in two main groups: woody biomass and agro-forestry waste (that is, crop wastes, animal manure and forestry processing wastes). Potential candidates are TPC-Moshi, TANWAT, Sao Hill, Mtibwa, Kilombero and Kagera sugar factories. Presently more than 35 MW of electricity is being generated from biomass (baggasse and woody residues), and about 30% of this capacity is connected to the grid.

Key opportunities

Business Opportunities exist in:

  • Wind: Investment opportunities in wind farm developments; Kititimo and Makambako have been identified to have the potential for large wind farms developments.

  • Geothermal: Tanzania has a geothermal potential of more than 650MW. Preliminary studies indicate 50 potential sites. The geothermal task force has identified four potential geothermal sites for geothermal resource developments and investment opportunities, namely: North Rift Valley (Lake Natron and Lake Manyara), South West Zone (Songwe, Kasumulo and Mampulo – Mbeya), Coastal Zone (Kisaki – Morogoro region, Utete & Luhoi – Coast region) and other areas (Majimoto – Mara region, Mtajata – Kagera region, Mpanda – Rukwa region).

  • Solar: Tanzania has high levels of solar energy ranging between 2800 – 3500hours of sunshine per year and a global radiation of 4 -7kWh/m2day.

  • Other investment opportunities exist in hydro, bio-fuel, biomass, tidal resource developments

Opportunities in the supply chain

  • Consultancy services including conducting feasibility studies

  • Construction/Engineering works/opportunities

  • Training and development- Technical training

  • Supply of scientific chemicals & lab equipments

  • Generation as well as sale and supply to the renewable energy industry

  • Security services

  • Valuation Services

Latest export opportunities – Power

Latest export opportunities – Renewable Energy

Latest export opportunities – Tanzania

Getting into the market

There are several ways in which British companies can enter the Tanzanian Market:

  • Export direct;

  • Set up an agency;

  • Appoint a distributor;

  • Joint Venture

  • Selling to the government

The Tanzanian government encourages joint ventures between local firms and foreign investors and there are no specific regulatory requirements for establishment of these joint ventures, which are registered and licensed in the same manner as all other enterprises in Tanzania.

In the case of direct export to Tanzania, UK companies are advised to have a local agent on commission basis. Also an importer or distributor will be preferred. Tanzanian consumers have been able to buy products from non-store sources – particularly via the Internet – direct marketing remains limited. Appointing a local agent /distributor is the best way for initial entry in the Tanzania Market; however this will depend on the nature of the business itself. Sometimes personal relationships in the Tanzania market do dominate. Initially it might require a personal presence.

There is a need for product training for the agent’s workforce especially if your products are very technical. It may be required to regularly visit the market especially during the early stages of an interaction with an agent/distributor.

Important organizations for establishing contacts:

  • Tanzania Renewable Energy Association (TAREA) is an association of renewable energy professionals and has good links into the market.

  • Tanzania Geothermal Task Force at Ministry of Energy and Minerals (MEM)

  • Tanzania Petroleum Development Corporation (TPDC).

More about doing business in Tanzania

Contacts

Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.

Contact your local international trade team

UKTI Events

UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.

Latest events – Power

Latest events – Renewable Energy

Major events

  • EAPIC (East Africa Power Industry Convention)

  • Renewable Energy Day – June 2013 (Date to be confirmed) – Exhibition and Workshop

Useful links

More about OMIS and other UKTI services for exporters

Sectors: Energy, Energy, Environment & Water, and Renewable Energy
Countries: Tanzania
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