In Tanzania, the country will have the opportunity to explore the market for mini-grids with $5 million of financial assistance provided by the International Finance Corporation (IFC), the private sector arm of the World Bank Group.
According to a report by AllAfrica.com, about 60% of the country’s power supply is mainly dependent on hydro power, resulting in power shortages during the dry season and increasing spending on alternative energy sources such as diesel generators.
General Director of Tanzania’s Rural Energy Agency, Lutengano Mwakahesya, commented: “We have an urgent task ahead of us to increase energy access in Tanzania. Mini-grids are a key part of the solution, so this program with IFC is an essential step to improve the quality of life of households, demonstrating the role of the private sector.”
The project targets the provision of affordable, off-grid renewable energy to households and businesses in rural Tanzania.
Maximising electricity access
Mini-grids are expected to provide access to electricity for 9.1 million people in Tanzania.
In the International Energy Agency (IEA) 2011 report, Energy for all – Financing access for the poor, the IEA estimates by 2030 an estimated off-grid population of 600 million to 698 million in sub-Saharan Africa, could be provided with electricity assuming micro-grids provide more than 40% of the new capacity needed. The market potential for micro-grids is also estimated at $4 billion per year.
Expanding energy sources
The IFC will work with project developers in Tanzania to promote commercially viable mini-grid business models and will advise banks and financial institutions on how to extend long term finance to mini-grid developers.
A representative from Tanzania’s World Bank Group, Rasalie Ferrao, noted that the country has been selected as one of the first countries to test the concept of using small-scale renewable energy production sources under a new programme – the ‘Scaling-up Renewable Energy in Low Income Countries Program[me]‘.
The programme sets to help Tanzania expand energy production away from fossil fuel based sources.
The IFC’s resident representative for Tanzania, Dan Kasirye, said “We plan to mobilise the financial resources and expertise of the private sector to expand energy services to low-income communities.”