Tanzania
With a cumulative score of 1.87, Tanzania ranks number 8 among emerging markets and number 33 in the global ranking.
- Emerging markets
- Middle East & Africa
2.23 / 5
Power score
1.03 / 5
Transport score
Buildings score
Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.
Low-carbon strategy
Net-zero goal and strategy
Tanzania has set neither a net-zero emissions goal nor a long-term carbon strategy.
Nationally Determined Contributions (NDC)
Tanzania’s first Nationally Determined Contribution (NDC) – which is a country’s plan to help achieve the goals of the Paris Agreement – committed to reducing greenhouse gas emissions 10-20% by 2030 relative to the business-as-usual (BAU) scenario of 138-153 million metric tons of carbon dioxide equivalent (MtCO2e). The government submitted an updated NDC on July 30, 2021, raising the commitment to a 30-35% reduction compared with the BAU scenario by 2030.
Tanzania’s NDC target is economy-wide, so there are no sector-specific targets, but the government does lay out mitigation actions to be taken in the energy, transport, waste and forestry sectors.
Fossil fuel phase-out policy
There is no fossil-fuel phase out policy in Tanzania
Power
Power policy
Tanzania’s energy policy is underpinned by a 6-gigawatt renewable energy target by 2025. This target was updated in 2022 after the country failed to meet previous targets. Tanzania only has about 600 megawatts of renewable power capacity. Fossil fuels still make up 60% of generating capacity and the country has a 37% electrification rate. Two tenders announced in September 2018 for 150 megawatts of solar and 200 megawatts of wind were canceled. The 2.1-gigawatt Stiegler’s Gorge hydro project, which is under construction and due to be completed in 2024, will likely remain the government’s priority for the near future.
Power policies
Power prices and costs
The Energy and Water Utilities Authority regulates retail electricity prices in Tanzania. Prices are lower than many other East African countries, averaging close to $0.09 per kilowatt-hour in 2021. Prices are low partially due to the almost 600 megawatts of installed hydro capacity, but also because of heavy subsidies from Tanzania’s Ministry of Energy, which is intended to attract industrialization in the country. With more hydro capacity under development, prices will remain low. In February 2016, state-owned utility Tanzania Electric Supply Co. (TANESCO) lobbied for slightly reduced retail prices to help the country reach its 75% electrification target in 2025, and fixed fees were scrapped for residential households.
Power market
Tanzania has a diverse on-grid power generation portfolio, consisting of thermal generation such as natural gas (1,080 megawatts) and diesel (310 megawatts), in addition to large hydro (532 megawatts), small hydro (42 megawatts) and biomass (11 megawatts). The country added 100 megawatts of solar capacity in 2021. Despite promising tenders announced in 2018 for solar and wind, the only utility-scale project under construction to date is a small 2.4M-megawatt wind farm.
A number of independent power producers sell power to TANESCO under power purchase agreements, but TANESCO still owns more than half of the country’s generation. The Ministry of Energy plans to establish a competitive wholesale and retail electricity market in 2025, but this remains little more than ambition at this stage.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
Conducting business in Tanzania’s clean energy sector presents risks. The country’s power demand has failed to increase in line with the country’s population growth. Data from the regulator show that power demand even fell between 2017 and 2018. Additionally, there are questions surrounding the validity of economic growth figures that the country has published, which is expected to fuel more investor uncertainty.
The country has significant potential for solar and hydro, but neither technology has been fully realized. There is a strong market for off-grid energy in Tanzania, and while the government continues its grid extension plans, in practice many households remain without access to energy in connected areas. In the mini-grid market, the government often changes the tariff that mini-grid developers are able to charge, making scalability difficult.
TANESCO is an unreliable offtaker. Many independent power producers operating in Tanzania have suffered from late payments from the utility, and there is little indication that TANESCO is working to amend this situation. In 2016, it lobbied for cheaper retail electricity to boost the country’s power demand, weakening its profitability.
Another challenge is the enforcement of a value-added tax exemption for off-grid solar products. Many importers and distributors have been penalized due to unfamiliarity from tax officers, in general prohibiting the off-grid market in Tanzania from realizing its true potential. There are indications that the government may seek to adopt local content requirements.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
Transport
EV market
The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.
EV policy
The government has yet to implement any substantive policy support in this sector.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
Buildings policy
The government has yet to implement any substantive policy support in this sector.
Buildings policies
Additional insights
from BNEF
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