Tanzania has had a feed-in tariff scheme in place since 2008 for small power producers (100 kW to 10 MW). There are no feed-in tariffs or other clear incentives for renewable energy larger than 10 MW. However, developers of larger projects may approach the Government of Tanzania for bilateral negotiations outside the feed-in tariff scheme. In February 2014, EWURA commissioned a report on their proposed renewable energy feed-in tariff programme. The report proposes a methodology for achieving cost-reflective tariffs for microhydro, wind, solar and biomass projects up to 10MW. In solar and wind, the tariffs go up to 30MW and 20MW respectively for reference; however, it is recommended that all projects over 10MW are subject to competitive tendering.
Continuing with it initiative to reach a middle-income status by 2025, Tanzania announced its “Big Results Now” strategy in July 2014. Tanzania aims to phase out high cost emergency power plants, increase generation capacity to 2,780 MW, reform the public utility TANESCO’s operations, and meet new demand through low-cost solutions, such as developing new gas resources and mini and off-grid renewable opportunities, all in the near term.
Tanzania has 1,226 MW of grid installed generation capacity to serve its population of over 47 million, and an additional 82 MW in isolated mini-grids. High reliance on expensive thermal and emergency generation sources that utilise diesel, heavy fuel oil or jet fuel have made the sector financially unviable. Tanzania has no grid scale installed wind or solar photovoltaic capacity despite its great potential for both and, although several projects are in the pipeline, none have yet started construction.
In respect of the mini-grid, off-grid and rooftop solar market segment, there are various donor funded PV cluster projects and rural electrification projects which are been implemented by entities such as Camco Clean Energy and subsidised by the Rural Energy Agency (REA). This sector is therefore gathering momentum. Companies such as Off-Grid: Electric and M-KOPA Solar are rapidly expanding in Tanzania with the roll out of their solar home system lease programmes.