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TANZANIA ELECTRIC SUPPLY COMPANY LTD (TANESCO)

PRESENTATION ON THE TANZANIAN SOLAR PV-HYBRID WORKSHOP HELD IN BERLIN,

GERMANY

16TH MARCH 2015

byEng. Patrice Tsakhara

Principal Engineer Small Power Projects

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Contents Company History Overview of power sector in Tanzania Government policy on energy sector Future plans of the energy sector Development of Renewable Energies Small Power Projects (SPP) framework Implementation of SPP program Current status of Isolated mini-grids Plans for grid extension to mini-grids Challenges to implement PV-Hybrid and

mitigation measures Support by Germany companies

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Company History TANESCO was established in 1964 with shares from the

government and private. In 1975 GoT acquired all shares making TANESCO a

state-owned power utility. TANESCO’s core business are: to generate, transmit,

distribute and supply electricity in Tanzanian mainlandand sell bulk power to Zanzibar.

TANESCO also import power from Zambia, Uganda andKenya for electrification of border towns.

Likewise, TANESCO also exports power for electrificationof border town on Kenyan side at Horohoro.

The company has been responsible for planning andimplementing various power investment projects.

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Company History cont…

1992 Energy policy allowed private sector participation in the energy sector. Up to 2005 only generation segment has attracted private sector.

In 1997 TANESCO was specified for privatization. From 2002 -2006 TANESCO was placed under management

contract. TANESCO was de-specified for privatization in 2005 to allow

investments in generation and transmission projects. From 2006 to 2008 there was shortage of power generation

due to poor hydrology. This has lead to procurement of the first Emergency Power Projects (EPP)

From 2011 to 2013 TANESCO experienced another shortage of power generation due to poor hydrology. Procurement of costly EPPs was then undertaken.

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Generation capacity in the interconencted grid system:

Total Hydros: 561 MW Total gas fired power plants: 544 MW (only 320 MW is

generating power at the moment due to shortage of natural gas)

Total liquid fuel fired power plants: 210 MW with 50 MW capacity on short term rental basis

Total of 18 isolated mini-grids with total installed capacity of 82 MW. Out of these two mini-grids with installed capacity of 29 MW is running on natural gas while the remaining 15 mini-grids with total installed of capacity of 53 MW are diesel generators.

Overview of the power sector

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Overview of the power sector cont…

Transmission network: Transmisison system comprises of 48 grid

substations interconnected by transmisison lines. 2732 km of 220 kV lines 1555 km of 132 kV lines 578 km of 66 kV lines

Distribution network: Comprises of 33 kV, 11kV, 0.4kV lines. 11,124 distribution transformers 17,021 km of 33kv lines, 5,375 km of 11kv lines Over 34,513 km of LV lines

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GoT policy on energy sector The National Energy Policy of 2003: Has allowed

private sector participation in the energy sector. The Electricity Act of 2008: Has allowed private

sector to participate in the electricity sub sector. This includes generation, transmission and distribution of electric energy to the end users.

Following the above act, the government through EWURA took initiative on the development of Small power Projects (SPP).

Standardized Power Purchase Agreements (SPPA) and the Guidelines where adopted to facilitate private sector participation in developing renewable energies in small scale (0.1 MW to 10 MW) for direct sell to end use customers and sell excess to TANESCO network.

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GoT policy on energy sector cont..The Electricity Supply Industry Reform Strategy and Roadmap (2014-2025): Aims at restructuring of the sector. By July 2017

Generation will be separated from the rest of TANESCO By July 2021 Transmission will be separated from

Distribution. By July 2023 there will be horizontal unbundling of

Distribution. The draft Renewable Energy policy of 2015:The draft policy was recently prepared by GoT and circulated to stakeholders for comments.The draft Energy Policy of 2015: The draft was recently prepared and circulated to stakeholders for comments.

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Future plans of electricity sectorGeneration expansion plan: In the short term period (now to 5 years) power

generation projects will be implemented. Technologies involved are natural gas, wind and solar PV. Over 1000 MW is expected to be added in the Grid system.

Transmission expansion plan: In the short term period transmission projects will be

implemented for power evacuation to the load centers from generation centers. This will also include 400 kV interconnector lines between Zambia, Tanzania, and Kenya. Also 220 kV interconnector lines between Tanzania, Uganda, Mozambique and Kenya. Development Partners (DP) are currently financing some of these projects and others have shown interest to finance new projects including KfW of Germany.

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Development of Renewable Energies (RE)

In the recent years there has been strong interest for private sector to invest in RE power projects, especially wind and solar PV.

Since the Government didn’t have RE policy in place, there is no conducive environment including incentives to attract private sector investment in RE power projects.

There are two potential sites for wind power, that is Sing Ida in central part and Makambako in southern part of the country.

Potential sites for solar PV are areas in the central and western part of the country (Dodoma, Singida, Shinyanga, Mwanza).

Limited penetration of RE in the grid system is challenging factor.

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Small Power Projects (SPP) framework

In 2009 the Government through Energy and Water Utilities Regulatory Authority (EWURA) approved SPP framework.

RE projects (mini hydro, biomass, solar PV and wind) with capacity range between 0.1 MW to 10 MW per project were allowed to be developed.

Standardized Power Purchase Agreement (SPPA), Standard Tariff calculation Methodology (STM) and technical guidelines on the grid integration of SPPs were approved.

Total installed capacities of SPPs are limited to 10% of the grid capacity.

For almost 6 years now since introduction of SPPs only mini hydro and biomass power projects are in operation.

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Small Power Projects (SPP) framework cont…

Determination of SPP tariff is based on the avoided cost principle to TANESCO.

The applicable tariff did not attract investors in wind and solar PV power projects due to the low tariff by then and the fact that the cost of solar equipment were high.

Economies of scale for investment in wind and solar power projects under SPP arrangement may also have contributed less response from the private sector.

Payment of SPP tariff in local currency instead of US Dollar also hindered the interest of developers.

Since 2009 to January 2015 depreciation in local currency has been high (above 20%). This has a negative effect on the SPP developers who would have used foreign currency to invest in power projects.

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Status on the implementation of SPPs

SPP NAME TECHNOLOGYEXPORT

CAP. (MW)

LOCATION SPPA SIGNED

COD/ EXPECTED

1 TANWAT - Njombe Biomass 1.5 Grid connec. 17.09.2009 15.06.20102 TPC - Moshi Biomass 9.0 Grid connec. 06.10.2009 13.09.20103 Mwenga - Mufindi Hydro 4.0 Grid connec. 19.01.2010 21.09.20124 Ngombeni - Mafia Island Biomass 1.5 Off Grid 19.01.2010 11.02.20145 AHEPO - Mbinga Hydro 1.0 Off Grid 25.02.2013 Mar-156 St. Agnes Chipole - Songea Hydro 7.5 Off Grid 11.01.2013 Jul-157 NextGen Solawazi - Kigoma Solar 5.0 Off Grid 16.01.20138 EA Power Ltd - Tukuyu Hydro 10.0 Grid connec. 25.02.20139 Darakuta - Manyara Hydro 0.24 Grid connec. 16.11.2013 Jun-15

10 Mapembasi - Njombe Hydro 10.00 Grid connec. 15.01.201449.74

SUMMARY OF SPP DEVELOPERS  

TOTAL CAPACITY

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Status on the implementation of SPPs

SPP NAME TECHNOLOGY SELL CAP. MAX LOCATION LOI DATE

(MW)1 Nkwilo project - Sumbawanga Hydro 2.9 Off Grid 12.02.20132 Ilundo power project - Tukuyu Hydro 0.4 Grid connec. 11.03.20133 Maguta power project - Kilolo Hydro 2.5 Grid connec. 23.10.20134 Luganga project - Iringa Rural Hydro 2.8 Grid connec. 23.10.20135 Luswisi project - Ileje, Mbeya Hydro 4.7 Grid connec. 23.10.20136 Yovi project - Kilosa Hydro 2.0 Grid connec. 31.12.20137 Ilungu ward project - Mbeya Hydro 5.0 Grid connec. 31.12.20138 Momba power project- Mbeya Hydro 10.0 Grid connec. 25.02.20149 Kikuletwa II project - Hai Kili Hydro 7.5 Grid connec. 20.05.2014

10 Ilondo project - Mufindi Hydro 10.0 Grid connec. 16.09.201411 Lyamanji hydropower Makete Hydro 2.3 Off Grid 16.09.201412 Waste to Energy project Biomass 5.0 Grid connec. 24.09.2014

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Status on the implementation of SPPs

SPP NAME TECHNOLOGY SELL CAP. MAX LOCATION LOI DATE

13 Lwega hydropower project Hydro 5.0 Off Grid 25.09.201414 Mpanga Hydropower project Hydro 5.8 Grid connec. 07.10.201415 Mkumbara biomass project Biomass 5.0 Grid connec. 06.11.201416 Mabuki solar power project Solar PV 10.0 Grid connec. 12.12.201417 Kishapu solar power project Solar PV 10.0 Grid connec. 12.12.201418 Nakatuta hydropower project Hydro 10.0 Grid connec. 15.01.201519 Mpanda solar power project Solar PV 1.0 Off Grid 17.02.201520 Sumbawanga solar project Solar PV 2.0 Off Grid 17.02.201521 Lugarawa power project Hydro 1.7 Grid connec. 20.02.201522 Matembwe power project Hydro 0.5 Grid connec. 20.02.201523 Kitewaka power project Hydro 4.2 Grid connec. 24.02.201524 Uzia hydro power project Hydro 1.0 Off Grid 24.02.201525 Kalumbaleza power project Hydro 1.0 Off Grid 24.02.201526 Mafia solar power project Solar PV 1.0 Off Grid 24.02.2015

113.3TOTAL CAPACITY

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SPP Tariff from 2009 to 2014

Off Gird tariff (TZS/kWh)

% of tariff increase

Year Eff. Date Wet Season Dry Season % increaseDec ‐ July Aug ‐ Nov

2009 Jan‐09 86.50 115.33 0 334.78 02010 Jan‐10 99.27 132.36 15% 368.87 10%2011 May‐11 109.02 145.36 10% 380.22 3%2012 May‐12 137.29 183.05 26% 480.5 27%2013 Sep‐13 157.40 209.87 15% 490.5 2%2014 1‐Jul‐14 177.58 236.78 12.82% 482.64 ‐1.60%

Grid connected tariff (TZS/kWh)

SUMMARY OF SPP TARIFF FROM 2009 TO 2014

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Renewable Energy Feed-In Tariff (REFIT) Program

In 2013 The Energy Regulatory Authority with financial assistance from USAID engaged a consultant to undertake study that could have come with REFIT.

In August 2014 the consultant made presentation of draft final report to the stakeholders. Some of the stakeholders challenged the report.

In December 2014 the Authority conducted stakeholders workshop on the REFIT program. They proposed REFIT for mini hydro and biomass both for main grid and mini-grid SPPs. Also there was a proposed REFIT for mini-grid connected solar and wind projects.

The Authority further proposed to let grid connected solar and wind SPPs to undergo competitive bidding process.

We are still waiting on the Authority's decision on the REFIT program.

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Support schemes for mini-grid and rural electrification

The Rural Energy Agency (REA) is responsible for financing of rural electrification projects. This is mainly extension of grid connected and mini-grid connected distribution network to the rural areas.

In areas where extension of distribution network is technically not possible REA has also financed solar PV projects in some villages.

Pilot projects on wind-solar PV hybrid system have also been installed at some public institutions in rural areas.

REA get funds from the Government of Tanzania and Development Partners like SIDA, World Bank (TEDAP), NORAD, just to mention a few.

SPPs are also being supported by REA by giving them matching grant and performance grants for projects located in rural areas.

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Current status of isolated mini-grids operated by TANESCO

POWER STATIONNO. OF UNITS

UNIT CAPACITY (kW)

TOTAL CAPACITY (kW)

1 BIHARAMULO 2 424                      848                   2 BUKOBA 4 640                      2,560                3 KASULU 2 1,250                  2,500                4 KIBONDO 2 1,250                  2,500                

5 1,250                 2 1,000                 4 640                     3 500                     

6 LIWALE 2 424                      848                   7 LOLIONDO 4 1,250                  5,000                

2 510                     1 250                     2 640                     2 424                     2 1,250                 1 250                     

2,128                MAFIA ISLAND9

2,750                MBINGA10

12,310             KIGOMA5

LUDEWA8 1,270                

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Current status of isolated mini-grids operated by TANESCO cont.

POWER STATIONNO. OF UNITS

UNIT CAPACITY (kW)

TOTAL CAPACITY (kW)

2 660                     2 640                     

12 NAMTUMBO 1 400                      400                   13 NGARA 2 476                      952

2 1,800                 1 1,915                 1 660                     3 640                     

15 SUMBAWANGA 4 1,250                  5,000                2 640                     2 350                     

17 SOMANGA 3 2,500                  7,500                7 2,000                 4 1,950                 

TOTAL 82,291     

1,980                TUNDURU16

21,800             MTWARA18

2,600                MPANDA11

8,095                SONGEA14

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Typical load profile

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Plans for main grid extension to mini-grid areas

TANESCO has got short term and long term plans to extend main grid to isolated mini-grid areas. The aim is to get rid off expensive diesel generation.

With SIDA support the Makambako – Songea transmission line will connect 4 mini-grids to the main grid and rural electrification of villages along the transmission lines.

At the moment TANESCO has go no plans to establish new mini-grids. Instead under the Government’s policy of electrifying all district headquarters, the same can be done where new districts are going to be established and are far from the main grid network.

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Future Grid Map by 2033

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Challenges for TANESCO in regard to implement PV-Hybrid

The absence of clear Government policy on the development of RE power projects including PV-Hybrid systems.

Lack of knowledge and experience as far as diesel-solar PV hybrid system is concerned, especially for megawatts size systems.

Uncertainty of SPP tariff under the existing SPP framework.

Lack of seriousness for some developers of SPPs. Lack of funds to develop pilot projects for diesel-solar

PV hybrid system that would have enlighten other developers in the sector.

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Support by Germany companies It is proposed if Germany companies/financial

institutions can assist the Government of Tanzania and TANESCO to develop pilot project for diesel-solar PV hybrid system.

Support for technical and financial consultancy services for the proposed diesel-solar PV hybrid system under SPP arrangement.

Capacity building training for TANESCO Engineers as far as diesel-solar PV hybrid system is concerned.

To assist in the establishment of a sustainable REFIT program. Some other countries in the region have succeeded to establish sustainable RE program.

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END