Over the last 5 years, how has the energy mix changed, and what have been the key drivers?

The United Republic of Tanzania is a union between Tanzania Mainland and Zanzibar Island. Zanzibar is semi-autonomous region of Tanzania, with its own energy policy separate from the Tanzania national energy policy, as set out since 2015.

The Zanzibar Energy Policy 2009 aspirations for the energy mix with renewable energy was narrow, with the focus being on strengthening sustainable energy security, reliability and power access for Zanzibar using renewable energy sources. The Zanzibar policy is now under review with the aim of harnessing the rich renewable energy resources surrounding the island creating a better energy mix from various sources such as waves, wind and solar.

The current Tanzania national energy policy was put in place originally in 1992 as a result of social economic reforms which took place in the 1990s. The policy was later updated in 2015. It has proposed a fair share of renewable energy diversification for Tanzania, by emphasizing the energy mix between utilizing hydro, solar, biomass, wind and geothermal energy sources. The upscaling of renewable energy has been adopted by the market, which already had an appetite for utilizing affordable and sustainable alternative energy.

What is the outlook for the energy and natural resources sector in the next 5 years? In particular:

Key policy decisions

Tanzania is currently implementing the National Rural Electrification Program (2013–2022), which intends to increase the overall power access of the population from 36% in 2014 to 50% by 2025 and to at least 75% by 2033. The program is committed to ensure the electrification of rural areas through off-grid sources as well as the development of distributed technologies, in particular off-grid solar and other renewable technologies.

Main policy challenges

There are no large-scale government incentives schemes in relation to renewable energy generation. Further there are no tradable green certificates issued by the Ministry of Energy. However, there is a scaling up renewable energy program that is implemented by the ministry, as an initiative to promote mini-grids and renewable energy generation.

Electricity is provided by the central grid which is owned by TANESCO (Tanzania Electric Supply Company Limited), the state utility. TANESCO is the primary source for electricity generation, distribution and transmission in Tanzania, with a current generation capacity of 1500 MW. The legal framework is set out in the Electricity Rules (Generation, Transmission and Distribution Activities) 2019 as well as the Electricity Rules (Development of Small Power Projects) 2020. The expansion of renewable energy to the transmission and distribution grid in tandem with its generation remains a challenge. The monopoly of the utility company affects efficiency and unbundling may bring the much-needed efficiency and profitability.

The Tanzania Power System Master Plan 2016, with detailed assumptions around demand growth and various supply options, suggests that Tanzania's goals will be primarily met by coal and gas. However recent advances in renewable energy for power generation, transmission and storage suggests that the plan needs to be revised. Although the policy intends to promote renewable energy, implementation remains divided based on governmental and sector-specific priorities.

The anticipated role that renewables and/or new technologies will play

The Tanzanian government is currently focused on the construction of a 2100 MW hydropower generation facility using the Rufiji Hydro Power Dam that is under construction. However solar power remains the preferred energy source until such time the Rufiji Hydro Power Dam is commissioned. Tanzania like other developing countries in Africa is striving to adopt various ways of ensuring that energy supply is accessible as well as affordable.

What are the key invesment opportunities in the energy and natural resources sectors over the next 5 to 10 years?

Demand is projected to increase sharply to 4700 MW by 2025 due to the development of industrial activities. Generation of electricity through renewable sources is slowly integrating with commercial electricity production. However, as renewable energy currently only provides electricity to mini-grids, wide-scale utilization has not been achieved.

Small Power Producers (SPP) account for 2% of total capacity. These are independent producers with a capacity of up to 10 MW that may sell electricity wholesale to TANESCO or to retail consumers. Key investment opportunities are also identified around providing power to large consumers such as universities and hospitals, apart from industry.

With particular focus on sustainability, and on reducing carbon emissions, how will the energy and natural resources landscape change over the next 5 to 10 years?

As part of the energy policy objectives, reducing and eliminating charcoal consumption in urban areas as well as in rural areas remains a focus for regulatory bodies. On the ground the authorities are keen to create awareness around the substitution of charcoal and wood in rural areas. Energy knowledge management and the promotion of the use of modern energy are key drivers in changing consumption of energy and natural resources.

Talking into account the social, environmental, and economic benefits of off-grid renewable energy vis a vis costly grid infrastructure, renewable energy will undoubtedly remain a dependable energy source for Tanzania in the near future.