At Terra Energy, we are thrilled to announce the release of our newest market brief, shedding light on the dynamic landscape of renewable energy in Tanzania. This market brief was developed by our associate; Akmal Alsagh.
Tanzania finds itself at a critical crossroads, striving to balance the imperatives of growth with the pressing need to address energy poverty. Our market brief reveals that the nation has set ambitious targets, aiming to achieve 10 GW of installed capacity by 2025 and a 75% electrification rate by 2033. These aspirations underscore the pivotal role that renewable energy will play in shaping Tanzania’s development trajectory.
However, despite these ambitious goals, significant challenges persist. Approximately 7.2 million households in Tanzania still lack access to electricity. To tackle this issue head-on, our market brief advocates for a multifaceted approach that integrates decentralized renewable solutions, mini-grids, and utility-scale projects.
Tanzania’s total installed electricity capacity reached 1.7 GW in 2022, with natural gas and hydropower dominating the landscape. While the renewable energy sector has experienced some growth, it still faces obstacles. Non-hydro renewables, comprising mainly bioenergy and solar applications for residential use, constitute only a small share, estimated at 2%.
One of the most pressing challenges highlighted in our brief is the need to translate government reforms into tangible private sector engagement. Despite Tanzania’s attractiveness for renewable energy investments, donor-funded projects often overshadow those under Public-Private-Partnership (PPP) agreements. The market is also facing several challenges including poor infrastructure and lack of technical expertise needed to support large-scale renewable energy projects. Effective implementation of policies and regulations is considered as an important factor to ensure a solid and attractive environment for investment.
Despite these challenges, Tanzania’s potential for renewable energy investments is immense. Our market brief reveals promising growth in the regulatory framework for mini-grids and strong international financial flows, signaling the country’s favorable investment climate and commitment to sustainable energy development.
Moving forward, addressing these challenges will require collaborative efforts between the government, private sector, and international partners. Our market brief offers key recommendations, including mobilizing foreign investment through public-private partnerships, enhancing policy implementation, and investing in capacity building and technology transfer.
