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Tanzanian Power Sector: Ambitious targets set for the coming decade [free access]

February 3, 2022

 

The East African country of Tanzania, with a population of around 62 million and an electrification rate of only 30 per cent, continues to struggle with providing electricity access to its population. However, the government is making concerted efforts to improve its electric infrastructure, which is critical to advance the country’s economic growth. It has set ambitious targets to reach a per capita electricity consumption of 490 kWh per annum and build an industrial-led economy to become a higher middle-income country by 2025. Tanzania has also set a target to ensure 100 per cent universal access to modern energy by 2030.

 

Currently, Tanzania generates electricity using a variety of energy sources, including thermal, hydro and some renewable. However, the country is now trying to shift from non-renewable to renewables sources of electricity generation as Tanzania has abundant and diverse indigenous energy resources that are not yet fully exploited mainly due to lack of planning, financial constraints and a poor transmission and distribution (T&D) network. Increasing the share of renewable energy is also in line with Tanzania’s strategy to create an energy mix that will ensure consistent availability of power.

 

According to the latest Power System Master Plan (PSMP) Update 2020, Tanzania’s electricity demand will expand at an annual rate of 13.82 per cent during 2022–2030, rising from 10,176 GWh in 2022 to 28,664 GWh in 2030. To meet this demand, around 6,200 MW of new generation capacity is planned be added to the grid, of which 71.5 per cent will be based on hydro and renewable energy sources.

 

In parallel, Tanzania is focusing on the development of its grid network to evacuate power from the planned generation facilities. Over 9,000 km of high voltage lines, 12,090 MVA of transformer capacity and 56 new substations are planned to be added to the network in the next decade.

 

In addition to expanding and strengthening its domestic grid, the country is also executing various cross-border interconnection projects with its neighbouring countries (Kenya, Mozambique, Malawi and Zambia) to undertake regional power exchange to boost industrial growth and improve energy security without overloading the existing transmission network.

 

The pace of development of its transmission network picked up in the past year, with tenders for various interconnections and major projects being issued, backed by some of the major multilateral donor agencies. If this pace continues, the country is expected to grow the transmission network at a greater rate in the coming years.

 

Electricity industry structure and key players 

 

Tanzania Electric Supply Company Limited (TANESCO), which is wholly owned by the government, owns majority of the country’s generation, and is the sole authority responsible for the development and operation of transmission, and distribution of electricity in the country. Independent power producers (IPPs) such as Independent Power Tanzania Limited, Songas, Symbion, and Aggreko also own and operate generation capacity. Except for Zanzibar and Pemba, which are served by the Zanzibar Electricity Corporation, TANESCO distributes electricity throughout Tanzania (ZECO).

 

The energy sector is regulated by the Energy and Water Utilities Regulatory Authority (EWURA) under the Ministry of Energy and Minerals (MEM). The Rural Energy Agency is responsible for expansion of the grid serving isolated communities. Tanzania has established the Rural Energy Board (REB), the Rural Energy Agency (REA), and the Rural Energy Fund (REF) to promote, stimulate and facilitate access to modern energy services in rural areas.

 

While the government adopted a regulation in 2016 to vertically unbundle TANESCO's generating, transmission and distribution activities to create a competitive electricity market, no progress has been made as yet. 

  

Power sector overview


As of 2021, Tanzania had an installed generation capacity of 1,608 MW. Of the total installed capacity, 60 per cent or 893 MW was based on natural gas, 39 per cent or 628 MW was hydro-based, and the remaining 1 per cent or 11 MW was based on renewable energy. In June 2020, Tanzania’s first-ever wind farm in Mwenga in the Mufindi district of Iringa region started generating electricity as part of its start-up testing procedures.

 

The net generation increased from 6,363 GWh in 2016 to 7,705 GWh in 2020 while net consumption increased from 6,891 GWh in 2016 to 10,967 GWh in 2020.

 

Figure 1: Tanzania’s installed electricity capacity, 2021 (MW)

Source: EWURA; Global Transmission Research 

 

By the end of 2021, the country’s transmission network comprised 5,353 km of high voltage transmission lines and 58 substations at 132 kV and above voltages. Of the total line length, 56 per cent was at 220 kV (3,011 km), 31 per cent was at 132 kV (1,672 km), and 13 per cent was at 400 kV (670 km).

 

Figure 2: Growth in Tanzania’s transmission network


Source: EWURA, TANESCO, Ministry of Energy and Mineral’s Power System Master Plan 2020

 

The Mbeya–Shinyanga line, also known as the Backbone Transmission Investment Project, became the country's first 400 kV line in 2017. Currently, the country has 132 kV interconnections with Uganda, 33 kV and 66 kV interconnections with Zambia, and 33 kV interconnections with Kenya.

 

In August 2020, TANESCO installed 27 transformers at the construction site of Tanzania’s largest hydropower plant to increase the transmission voltage of electricity from 15 kV to 400 kV. In late 2020, construction began on the Tanzania–Zambia Transmission Interconnector Project (TAZA).

 

Capacity expansion plans


According to Tanzania's PSMP Update 2020, electricity demand is expected to rise from 10,176 GWh in 2022 to 28,663 GWh in 2030, representing a 13.82 per cent compound annual growth rate (CAGR). To meet rising demand, the country intends to add approximately 9,000 MW of new generation capacity by 2030. The majority, or 56 per cent, of the total capacity addition is hydro-based, 28.5 per cent is thermal-based, and 14.5 per cent is renewable-based (mainly wind and solar).

 

Some of the major proposed projects include the 2,100 MW Julius Nyerere hydropower project (HPP), the 300 MW Mtwara gas-fired power plant, the 330 MW Somanga Fungu gas-fired power plant, the 87 MW Kakono HPP and the 2,100 MW Rufiji HPP.

 

 

Figure 2: Expected growth in electricity demand in Tanzania (GWh)

 

Source: Tanzania’s Power System Master Plan (PSMP), 2020 Update 

 

These planned generation facilities are to be backed by a robust grid network to evacuate the optimum level of power from the power plants. In addition, it is crucial to establish a strong transmission network in all regions of the country so as to maintain uniformity in electricity prices, which will further drive future investments.

 

As per the PSMP, an annual investment of USD342 million is needed by 2030. Of the total investment, 59 per cent will be spent on the construction of new transmission lines and the remaining 41 per cent on the construction of new substations and transformers, and compensation.

 

Several development agencies including the African Development Bank (AfDB), Agence Française de Développement (AFD), World Bank, KfW Entwicklungsbank (KfW Bank) and Japan International Cooperation Agency (JICA) have extended funds for the implementation of the utility’s expansion plans.

 

The table below lists some of the planned transmission line projects, which are at various stages of development.

 

Table 1: Planned transmission line projects

Name of project

Voltage (kV)

Length (km)

Estimated cost (USD million)

Scheduled completion

Rufiji–Chalinze–Dodoma line project

400

336

276

2022

Kinyerezi–Mkuranga line

220

105

43

2025

Madaba–Songea line

400

171

64

2023

Mnyera–Kisada line project

400

180

100

2028

Ngaka power station–Songea line

400

37

21

2023

Northwest grid project

400

1,100

1 billion

2022

Songea–Lindi line project

400

565

316

2023

Source: Tanzania’s Power System Master Plan (PSMP), 2020 Update 

 

 

 

 

Regional interconnections


Tanzania also plans to establish power interconnections with neighbouring countries to create new power corridors to support industrial development and improve energy security. To execute these projects, Tanzania has financial backing from some of the major multilateral donor agencies. Some of the key planned regional interconnectors are: 

 

Zambia–Tanzania–Kenya (ZTK) Interconnector

 

The project will connect Southern African Power Pool (SAPP) countries with Eastern Africa Power Pool (EAPP) countries. Overall, the ZTK project will involve the construction of 2,302 km of 400 kV double-circuit lines and 373 km of 330 kV single-circuit lines at an estimated cost of USD1.4 billion.

 

Particularly, it involves the construction of a 700-km-long, 400 kV double-circuit line from Serenje in Zambia to Mbeya in Tanzania; reinforcement of Tanzania’s transmission system through the construction of about 650 km of transmission lines; and construction of a 260-km-long, 400 kV transmission line between Singida, Arusha and Namanga in Tanzania and Isinya (near Nairobi) in Kenya. The last part is also known as Kenya–Tanzania Power Interconnector Project (KTPIP), which is under construction.  

 

In Zambia, the interconnector entails the implementation of TAZA project which involves the construction of the 298-km-long, 330 kV Kabwe–Pensulo line; the 200-km, 330 kV Pensulo–Mpika line; the 200-km, 330 kV Mpika–Kasama line; the 212-km, 330 kV Kasama–Nandoke line; and the 14-km, 400 kV Nakonde–Tuduma double-circuit line in Zambia. TAZA is estimated to cost USD605 million and is being jointly funded by the World Bank, AFD and the European Commission (EC).

 

The ZTK interconnector is being implemented under the Nile Basin Initiative’s (NBI) Nile Equatorial Lakes Subsidiary Action Programme (NELSAP).  

 

Malawi–Tanzania Interconnector

The project will enable the evacuation of power from the planned 360 MW HPP at Songwe border to the respective national grids via 400 kV and 220 kV transmission lines. The Tanzanian section of the project entails the construction of a 20-km, 220 kV line between the Songwe HPP and Kyela, and a 106-km, 220 kV line to link Kyela to Mbeya. In Malawi, a 586-km, 400 kV line will be constructed from Nkhoma to the Songwe power station via Kasungu/Mzimva and Bwengu.

 

Mozambique–Tanzania (MOTA) Interconnector

A 700-km-long, 400 kV link is planned between Tanzania and Mozambique. The proposed link will run from Mtwara in Tanzania to Namialo in Mozambique. The two countries are in the process of undertaking feasibility studies and securing funding for the interconnector. Once these are finalised, a formal inter-governmental memorandum of understanding will be signed by the two sides to take the project forward. 

 

Transmission System Associated with the Regional Rusumo Falls Hydroelectric Project

Three countries, namely, Tanzania, Rwanda and Burundi, are planning to build an 80 MW HPP at Rusumo border to increase renewable power generating capacity and electricity access in the respective countries. The transmission component of the project entails the construction of the 161-km Rusumo Falls–Gitega (Burundi), the 119-km Rusumo Falls–Shango/Kigali (Rwanda) and the 98-km Rusumo Falls–Nyakanazi (Tanzania) lines. It also entails the construction of three new substations, one each in Burundi, Rwanda and Tanzania, along with the extension of a substation in Burundi and one substation in Rwanda. The Rusumo Falls project is a Programme for Infrastructure Development in Africa (PIDA) priority project. Currently, the project is in the contractor selection stage.

 

Masaka (Uganda)–Mwanza (Tanzania) Transmission Line

The regional interconnector involves the construction of a 640-km-long, 400 kV line linking Masaka in Uganda and Mwanza in Tanzania. It aims to boost power trade and improve security of power supply in both the countries. The project was slated for completion in 2020 but has been delayed.

 

Tanzania (Shinyanga–Mwanza–Musoma)–Kenya (Kilgories) 400 kV Interconnection Project

The project is under the planning stage, with initial proposals for its commissioning in 2025. 

 

Burundi–Tanzania Interconnector

A 220 kV cross-border project has been proposed to link the power grids of Burundi and Tanzania. The link will run from Jiji via Mulembwe in Burundi to Kigoma in Tanzania. The line will be approximately 180 km long. The project is estimated to cost USD80 million. It is a long-term project for which NELSAP will undertake the feasibility study.

 

Issues and challenges


With the rapid increase in power demand expected to be driven by new industries and economic growth, TANESCO has set ambitious targets for strengthening and expanding the country's grid network in order to meet the national target of achieving a 50 per cent electrification rate by 2030.

 

Tanzania, as a developing country, is having difficulty investing in its electricity network. Despite good progress on ongoing electricity interconnection projects, TANESCO is encountering several difficulties in carrying out the planned projects. Due to the large capital requirements of generation and transmission projects, timely financing from the government and various multilateral donor agencies is critical. Another critical issue is the absence of private sector participation in the sector. Despite the regulations in place, the government has not demonstrated a commitment to increasing private sector investment and creating a competitive power market in the country.

 

Hence, the government needs to make concerted efforts to mobilise the huge financial resources required to implement the planned generation and transmission network expansion, including attracting private investment in the electricity sector.