In theory, Tanzania is in better shape than many of its neighbours to tackle its power issues Credit: Dreamstime

Tanzania is working to diversify its energy mix, until recently dominated by hydro but now including both coal and gas fired power assets. Could renewables be the next target?

Tanzania is one of the largest West African countries in terms of land mass and population.

Like many of the African nations, its economy is growing at a considerable rate: its GDP last year was $23.2 billion and by 2016 it is forecast to reach $34.2 billion, while its population is expected to grow from 42 million to 46 million in the same period.

All of which has left Tanzania’s power sector playing catch up. The country’s electricity access rate is 11 per cent, with 30 per cent of the urban population having access, but in rural areas the figure is as low as 2 per cent. Last month the government confirmed it is to spend $3 million on increasing supply to these rural regions.

Tanzania’s installed capacity was 1311 MW in 2011 and is expected to reach 2713 MW by 2020.

In theory, Tanzania is in better shape than many of its neighbours to tackle its power issues: its economy has been fairly resilient during the economic downturn and a stable political environment has resulted in an increase in foreign direct investment of 8.5 per cent, while the rest of Africa has seen an average decrease of 9 per cent.

Yet the development of the power sector has stalled, largely due to the country’s lack of transmission infrastructure. Transmission and distribution (T&D) is operated by state-owned Tanzania Electric Supply Company (Tanseco) and losses in the country stand at 26 per cent.

Investment barriers

As well as T&D infrastructure issues, Tanzania also suffers from low electricity tariffs. Strict government control over tariffs has kept electricity prices at market demand or operational cost levels, which has served to act as a barrier to potential investors. This year, Tanesco asked for a rate increase of 150 per cent – it got 42.29 per cent.

Tanesco’s state-ownership is the source of many of the bottlenecks in the power sector, as red tape has held up the expansion of generation, transmission and distribution.

Tanzania key upcoming power projects

Some power sector experts have called for the deregulation of the distribution sector to speed up the spread of power connections, with Tanesco remaining in charge of transmission.

Tanzania’s power mix is – by African standards – changing quite rapidly. In 2005, 65 per cent of its electricity was derived from hydro, while 21 per cent came from thermal oil and 13.9 per cent from thermal gas.

By last year, this had changed to hydro accounting for 42.9 per cent and thermal 57.1 per cent. And by 2020 these figures are expected to have shifted further, to hydro 44.7 per cent, thermal oil 9.2 per cent, thermal gas 38.6 per cent, and thermal coal 7.6 per cent.

The drop in hydropower is due to a decline in rainfall in the country since 2005, which forced the government to look at alternative forms of energy and propelled a rise of thermal, exploiting the country’s largely untapped reserves.

Tanzania’s coal reserves are estimated to total 1200 million tonnes, while its natural gas reserves are said to be 45 billion m3.

Last year, coal fired generation only accounted for 0.8 per cent of total installed thermal capacity, but this will change when the Kiwira power plant comes on line in 2013. Kiwira will use locally mined coal and its connection to the grid is expected to lift Tanzania’s thermal installed capacity from 749 MW to 1189 MW.

Thermal power growth

Tanzania currently has nine large-scale thermal power plants, six of them coal fired and three oil fired, which together contribute 700 MW of capacity. The largest in capacity terms is the 178 MW Ubungo power station, which came on line in 2004.

There are also ten major thermal projects either planned or already under construction. The biggest of the planned plants is Ngaka coal fired power station, which will feature steam turbines, and once on line in 2024 will have a total installed capacity of 400 MW.

Tanzania installed capacity and annual generation

Projects due to be operational a lot sooner include two more coal plants – Kiwira and Intra Energy – which are both expected on line next year, as is the 240 MW gas fired Kinyerezi plant.

As its thermal power capacity increases, Tanzania hopes to be able to transform into a power exporter, supplying electricity to Kenya and Ethiopia. On the import front, Tanzania buys in power from Uganda (10 MW), Zambia (3 MW) and Kenya (0.8 MW).

Despite the drive towards thermal power, Tanzania is still pushing ahead with new hydro projects.

In 2011, the country generated 562 MW from hydropower, which came from seven hydro plants. The largest is the 204 MW Kidatu power station, which came on line in 1980. The country’s oldest hydro plant is the 21 MW Hale, which has been in operation for nearly 50 years.

There is also strong potential for small-scale hydro capacity, with 85 sites with a projected 87 MW identified for exploration.

Tanzania currently has no renewable power generation, even though it has potential for solar, wind and biomass. Its potential wind capacity is put at 500 MW. The lack of renewable capacity can be put down to a lack of government feed-in tariffs, which deters any private investment.

Power players

The biggest generator of electricity in Tanzania is state-owned Tanesco, which also owns and runs all T&D operations in the country. Tanesco has an installed capacity of 755.7 MW, accounting for 54.8 per cent of the market.

Tanzania power mix as % of total installed capacity

Just over three quarters of this comes from hydropower, 20.5 per cent from natural gas and 1.2 per cent from diesel based generation. The remaining 45.2 per cent is made up of independent power producers, including Songas, Independent Power Tanzania and TPC.

Suppliers of power equipment to these companies comprise most of the usual suspects from around the world: GE, ABB, Wartsila, Voith Hydro, Dresser Rand and Caterpillar.

Tanzania faces the same power problem as most of its neighbours – an energy mix and grid infrastructure that is insufficient to meet the needs of a rapidly expanding population and economy.

Yet the country is well underway with efforts to diversify its energy mix, opening the door to more international firms, and this – combined with an eventual bid to harness some of its renewable energy potential – should also open the door to significant foreign investment.

Deputy minister for Energy and Minerals, George Simbachawene, said in July that Tanzania expects to spend over $3 million on supplying power to rural areas.

This, he added, was part of the government’s strategy to boost power use to 30 per cent by 2015.

He said the government intends to increase power generation from 1375 MW to 2500 MW by 2015, and this increase in capacity would be brought about by the inclusion of solar, wind and geothermal sources of energy.

And in August, the Ministry of Industry and Trade Gregory Teu pledged to improve electricity availability by further investing in coal fired power generation.