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Project Development Programme East Africa
Tanzania`s Bioenergy Market
Target Market Analysis
www.renewables-made-in-germany.com
www.german-renewable-energy.com
Target Market Analysis
Tanzania’s Bioenergy Market
www.german-renewable-energy.com
Author
Francis Songela
November 2009
Editor
Deutsche Gesellschaft für Technische
Zusammenarbeit (GTZ) GmbH
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This Target Market Analysis is part of the Project Development Programme (PDP) East Africa. PDP East Africa is implemented
by the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) on behalf of the German Federal Ministry of Economics
and Technology (BMWi) in context of the Export Initiative Renewable Energies. More information about the PDP and about
renewable energy markets in East Africa: www.gtz.de/projektentwicklungsprogramm
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Target Market Analysis: Tanzania’s Bioenergy Market V
Content
1 STATUS QUO OF THE BIOENERGY SECTOR ..................................................................... 1
1.1 Brief Bioenergy Sector Overview .......................................................................................................... 1
1.2 Major Market Segments ....................................................................................................................... 2 1.2.1 Forests and Woodlands ...................................................................................................................... 3 1.2.2 Agricultural Residues .......................................................................................................................... 4 1.2.3 Animal Wastes .................................................................................................................................... 6 1.2.4 Energy Crops ....................................................................................................................................... 7
1.3 Local Capacities .................................................................................................................................... 8 1.3.1 Private Sector Capacities .................................................................................................................... 8 1.3.2 Public Sector Capacities ...................................................................................................................... 9
2 BIOENERGY MARKET POTENTIALS ................................................................................. 10
2.1 Overall Sector Outlook ....................................................................................................................... 10
2.2 Undeveloped Market Opportunities ................................................................................................... 10 2.2.1 Power Generation from Waste Biomass or Grown Biomass ............................................................ 10 2.2.2 Briquettes and Pellets Manufacturing .............................................................................................. 11
3 BIOENERGY-SPECIFIC REGULATION AND FRAMEWORK_ ........................................ 13
3.1 Policies and Regulations ..................................................................................................................... 13
3.2 Applicable Sector Support / Financing Mechanisms and Sources ....................................................... 14
3.3 Campaigns and Others ....................................................................................................................... 16
4 BUSINESS PARTNERS AND COMPETITORS IN THE BIOENERGY SECTOR ........... 17
4.1 Overview of Bioenergy Key Market Players in Tanzania ..................................................................... 17
4.2 Overview of Major Bioenergy Projects ............................................................................................... 19
4.3 Highlights in Local Bioenergy Market Developments .......................................................................... 20
Target Market Analysis: Tanzania’s Bioenergy Market VI
List of Tables
Table 1: Main Consumers of Woodfuel ................................................................................................................... 1
Table 2: Existing Biomass Potential and Exploitation .............................................................................................. 2
Table 3: Major Forest Vegetation Types in Tanzania .............................................................................................. 3
Table 4: Energy Generation Installed Potential Using Excess Bagasse ................................................................. 5
Table 5: Existing Co-Generation Plant – Sugar Industry ......................................................................................... 5
Table 6: Electricity Generation from Bagasse ....................................................................................................... 11
Table 7: Electricity Generation from Forest Residues ........................................................................................... 12
Table 8: Briquetting and Pelleting Opportunities ................................................................................................... 12
Table 9: Financing and Public Sector Support ...................................................................................................... 15
Table 10: Tanzania’s Bioenergy Market Players ................................................................................................... 17
Table 11: Bioenergy Projects in Tanzania ............................................................................................................. 19
Table 12: Tariff Figures for Different Types of Technologies ................................................................................ 20
Currency 1 USD = TZS 1,440 (May 2010)
1 € = TZS 1,776 (May 2010)
Measurement
W Watt Wp Watt peak Wh Watt hour
kW Kilowatt kWp Kilowatt peak kWh Kilowatt hour
MW Megawatt MWp Megawatt peak MWh Megawatt hour
GW Gigawatt GWp Gigawatt peak GWh Gigawatt hour
Target Market Analysis: Tanzania’s Bioenergy Market VII
List of Acronyms AREED African Rural Energy Enterprise Development
BRELA Business Registration and License Agency
CAMARTEC Centre for Agricultural Mechanization and Rural Technology
CBO Community-based Organisation
CDM Clean Development Mechanism
CEEST Centre for Energy, Environment, Science and Technology
CHP Combined Heat and Power
COSTECH Commission for Science and Technology
EABC East African Briquette Company
EIA Environment Impact Assessment
EWURA Energy and Water Utilities Regulatory Authority
KIDT Kilimanjaro Industrial Development Trust
LPG Liquid petroleum gas
MAFSC Ministry Of Agriculture Food Security and Cooperatives
MEM Ministry of Energy and Minerals
MFI Microfinance Institution
MFP Multifunctional Platforms
MLHSD Ministry of Lands and Human Settlements Development
MNRT Ministry of Natural Resources and Tourism
NGO Non-Governmental Organisation
NORAD Norwegian Agency for Development Cooperation
NSGRP National Strategy for Growth and Reduction of Poverty
PPA Power Purchase Agreement
PV Photovoltaic
R & D Research and Development
REA Rural Energy Agency
TADEP Tanzania Access Development Energy Project
TANESCO Tanzania Electric Supply Company
TATEDO Tanzania Traditional Energy Development and Environment Organisation
TIC Tanzanian Investment Centre
TIRDO Tanzania Industrial Research and Development Organisation
TOE Ton of oil equivalent
URT United Republic of Tanzania
USAID United States of America International Development Agency
VAT Valued Added Tax
VPO Vice President’s Office
Target Market Analysis: Tanzania’s Bioenergy Market VIII
Summary
Biomass accounts for approximately 90 % of the primary energy consumption in Tanzania, of which
woodfuel is the primary fuel source (44.8 million m3 of solid wood sold in 2003). Other biomass
sources are agricultural residues (such as sugar bagasse), animal wastes and energy crops (multiple
Jatropha pilot projects).
Historically the biomass energy sector has grown through NGO and government projects. The
capacity of the private sector involved in heat and power generation is currently fairly developed and
greater than that of the public sector. However, it is constrained by lack of financing and technical
skills. Combined with the high cost of new technologies and implementation, this has contributed to
sub-optimal biomass energy development. Cooking energy/technologies and power generation is the
focus in the development of biomass potential.
Target Market Analysis: Tanzania’s Bioenergy Market 1
1 Status Quo of the Bioenergy Sector
1.1 Brief Bioenergy Sector Overview
The natural topographic features of Tanzania provide the country with ample opportunities for
bioenergy resources. Currently, bioenergy is mainly used for cooking in households and institutions.
Bioenergy in the form of woodfuel (charcoal or firewood) is the dominant energy sources for most of
urban and rural Tanzanians. It accounts for about 90 % of the primary energy consumption in the
country. Over tens of thousands of rural entrepreneurs depend on the revenue resulting from
woodfuel production countrywide. Other noted uses of bioenergy include heat processing in agro and
rural industries and to a lesser extent cogeneration and biomass electricity generation.
No data on the current woodfuel consumption is available, but it is estimated that total woodfuel
consumption on the Tanzanian mainland was around 44.8 million m3 of solid round wood in 2003
(MEM 2005, MNRT 2001). In most cases woodfuel is produced and used unsustainably, contributing
to a deforestation rate which is estimated to be between 130,000 and 500,000 ha per year (MNRT
2001). Other major drivers of deforestation include agricultural expansion and new settlements;
bushfires, extraction of construction materials and logging for timber.
Table 1: Main Consumers of Woodfuel
Source: MNRT 2001
Target Market Analysis: Tanzania’s Bioenergy Market 2
The long-term prospects for sustainable supply of woodfuel as a source of energy are threatened by
the visible and worsening problems of deforestation and desertification in many parts of the country.
Regions with an acute woodfuel scarcity include Kagera, Mara, Mwanza, Tabora, Shinyanga and
Kilimanjaro. With the exception of Kilimanjaro, these are also regions with some of the poorest access
to modern energy in the form of electricity. In many places the dry, hard soils and limited rainfall of
these regions are barriers to reforestation or afforestation. Several studies revealed that one of the
important reasons for high dependence on firewood and charcoal is lack of practical alternatives such
as briquettes, pellets, biogas, LPG, etc. These alternatives are either not available or expensive and
there is a lack of complimentary modern cooking devices.
The government, private investors and NGOs have a keen interest in promoting other forms of
bioenergy such as liquid/gaseous biofuels for cooking and transportation. Rural electrification using
biomass is still at infant stage and provides opportunities for investment.
1.2 Major Market Segments
The main sources currently used for bioenergy production include forests and woodlands, agricultural
residues, animal wastes and energy crops. These market segments will be discussed in turn, based
on available biomass resources. The table below indicates biomass potential and level of exploitation.
Table 2: Existing Biomass Potential and Exploitation
Source: MEM 2003
Biomass
sources
Proven potential Level of exploitation Existing technologies
Forest Average annual
sustainable yield
24.3 million m3
Annual consumption approx.
44 million m3
Woodfuel (firewood and
charcoal) consumption in
households, institutions,
rural enterprises and
industries, etc.
Forest residues for heat
and power generation
Briquettes production
Mainly household cooking
stoves, ovens, charcoal kilns
CHP
Briquettes kilns
Agricultural
residues
15 million tons per
year
Heat and power
generation for sugar
factories and to feed
electricity to the grid
Briquettes production
Agricultural wastes to
produce biogas
CHP
Carbonization kilns and
briquetting machines
Mainly institutional biogas
Animal wastes 14 million tons per
year (cattle) and 11
million tons per year
(goats and sheep)
More than 4,000 biogas
digesters of 8 m3
to 50 m3
capacities
Mainly institutional biogas
Energy crops More than 30 million
hectares of land
suitable for
sustainable
cultivation of energy
crops
More than 400,000 hectares
of land acquired for
Jatropha, sugarcane, palm
oil and Croton
Megalocarpus plantations –
biofuel production
Some pilot experiences, no
scaling up has been
successful; there are a lot of
concerns over large-scale
biofuel production
Target Market Analysis: Tanzania’s Bioenergy Market 3
1.2.1 Forests and Woodlands
Forests and woodlands in Tanzanian mainland are estimated to cover 34 million ha and 32 % of the
total mainland area (MNRT 2006). Natural forests and woodlands are owned by central government
or district councils, villages, NGOs, community-based organisations (CBOs) or individuals. Plantations
are mainly owned by private industries or central government, religious organisations or individuals.
Table 3: Major Forest Vegetation Types in Tanzania
Vegetation type Area (ha) Percent of total forest area
Woodlands 32,544,000 95.72
Plantations 200,000 0.59
Mangrove 115,000 0.34
Others (montane forest, tropical rain
forest coastal forest)
1,141,000 3.36
Total 34, 000, 000 approx. 100.00
Source: MNRT 2006
Woodfuel Production and Use
Woodfuel is the dominant energy source for most Tanzanians. Miombo woodland represents the main
source of woodfuel in the country. In most cases charcoal is produced from miombo species using
inefficient kilns1; and cooking in rural and urban areas is mostly done using open 3-stone fire and
traditional metal charcoal stoves respectively. Efforts to promote efficient woodfuel technologies have
been led by NGOs through donor funded projects – with forest conservation objectives. These
initiatives are mainly dissemination of low-cost fuel-efficient cooking stoves and improved charcoal
production kilns. However, adopting of these technologies is lower in the rural than urban areas. In
addition, private companies have now engaged in promoting other models of efficient cook stoves.
For example, Destination All Co. Ltd, a local company based in Dar es Salaam, entered into an
agreement with the Dutch company Philips and became a wholesaler/retailer of Philips woodstoves.
The company is roughly selling 200 stoves per month. Also, Appropriate Rural Technology Institute,
an Indian-based institute with a branch in Tanzania, is promoting woodstoves and gasification
technology. The high price of charcoal and the demand for modern cooking devices in Dar es Salaam
have been the driving factors for these companies to promote such stoves.
Briquette Production
There are three private companies making briquettes from sawdust and forest residues. These are
the Kilimanjaro Industrial Development Trust (KIDT) in Moshi town, Moto Moto Company Ltd and
Mena Woodworks in Iringa. Production capacities and sales volumes are unknown, but these
companies sell most of their briquettes to institutions, especially schools to substitute firewood.
Awareness level on the use of these briquettes at the household level is still very low.
Combined Heat and Power (CHP) Generation
Based on natural forests, plantations and woodland coverage, Tanzania has significant potential to
generate enough heat and power from available biomass. In 2003, estimated cogeneration potential
from forest and agricultural residues in Tanzania was more than 315 GWh per year which is 10.5 % of
the national electricity generation (Ngeleja 2003). This potential has never been exploited due to
various reasons including low status of biomass conversion technologies and high costs of improving
technologies and resources. The total installed capacity is only approx. 3.5 MW (Ngeleja 2003).
1 Efficiency of traditional kilns ranges between 10 – 20 %. Traditional kilns produce between 1 – 1.5 bags of
charcoal for each cubic metre of wood (one bag = 28 kg).
Target Market Analysis: Tanzania’s Bioenergy Market 4
The private sector has led the way in generating heat and power from biomass. There are two private
companies located in Iringa region in the Southern highlands of Tanzania that have used forest
wastes or grown trees for combined heat and power generation. Pines, eucalyptus and wattle are the
predominant species. Companies active in this field are:
Tanganyika Wattle Company (TANWAT): TANWAT is owned, financed and managed by
the Commonwealth Development Corporation (CDC), a UK- based company. Their forest
estate comprises 8,000 hectares of wattle, 4,000 hectares of pine and 1,000 hectares of
eucalyptus. TANWAT has installed capacity of 2.5 MW and started power generation in mid-
1995. The company uses wood cuts from owned plantation to generate electricity. The power
station provides power for its own operations, process steam for its Wattle Factory evaporator
plant and had a power purchase agreement with Tanzania Electricity Supply Company
(TANESCO2) to sell surplus power to the Njombe mini-grid system until May 2008 when
TANESCO stopped buying electricity form TANWAT after extending the grid to Njombe.
TANESCO is negotiating a new agreement with TANWAT to supply electricity to other nearby
townships. TANWAT was supplying to TANESCO between 250,000 to 450,000 kWh per
month depending on season. Maximum demand for power supplied from TANWAT to
TANESCO varied between 1,400 and 2,100 kVA (John 2003). The indicative cost of selling
power to the third party was between 0.085 – 0.11 USD/kWh.
Sao Hill Sawmill Industries Ltd: Owned by the Norwegian firm Tree Farm AS since 2003
which also owns tree plantations in the Iringa region. The cogeneration plant at Sao Hill was
built in 1986 (with a capacity of producing 1.025 MW using sawmill wastes). The plant was
operated for a couple of years before it broke down due to faulty foundations and poor
maintenance. Currently, Green Resources AS (a sister company of Tree Farm AS) is
undertaking an Environmental Impact Assessment with the purpose of installing a CHP plant
at Sao Hill. The capacity of the plant will be 15 MW (Green Resources 2009).
1.2.2 Agricultural Residues
More than 15 million tons of agriculture residues are generated annually in the country (MEM 2003).
Residues include bagasse, coffee husks, coconut shells, coconut husks, rice husks, rice straw and
sisal waste. In most cases residues are burnt without energy utilisation. There are initiatives by private
companies to convert agricultural residues such as coffee husks, coconut shells, rice husks and rice
straw into briquettes to substitute firewood and charcoal in households and institutions. There are five
factories in Tanzania with capacity to produce more than 50 tons of briquettes per day. However, due
to low awareness and demand for this energy type these factories operate below their capacities at
less than 20 tons per day.
Combined Heat and Power (CHP) Generation
Sugarcane is an important commercial crop in Tanzania. Currently, sugarcane is grown in five estates
run by four companies: Kilombero Sugar Company (K1 & K2), Mtibwa Sugar Estate (MSE),
Tanganyika Planting Company (TPC) and Kagera Sugar Limited. Apart from sugar cane grown by the
estates, other sugarcane is grown by out-growers who are found at Kilombero and Mtibwa estates,
their contribution has gradually increased in recent years. In 2006/07, about 2.4 million tons of cane
were crushed producing 192,000 tons of sugar (MAFSC 2007). Estimated annual demand for sugar is
around 300,000 tons. Tanzania imports sugar to offset the shortfall. However, sugar production in
Tanzania is projected to be 567,000 tons per year by 2010 (Sugar Board – personal communication,
July 2009).
2 TANESCO is the state owned power utility responsible for generation, transmission and distribution of
electricity in the country.
Target Market Analysis: Tanzania’s Bioenergy Market 5
For a number of years, sugar factories have been utilising bagasse for heat and power generation. In
2003 excess bagasse from the five sugar factories had an estimated energy generation potential of
about 99.42 GWh per year, equivalent to 3.5 % of national electricity generation (Ngeleja 2003,
Gwang’ombe 2004). The total available capacity of existing cogeneration plants using bagasse is only
32.3 MW.
Table 4: Energy Generation Installed Potential Using Excess Bagasse
Source: Gwang’ombe 2004
Table 5: Existing Co-Generation Plant – Sugar Industry
Source: Gwang’ombe 2004
Name of the
factory
Capacity
TCH
Steam
(t/hr)
Bagasse
require
d (t/hr)
Bagasse
generat-
ed (t/hr)
Excess
bagasse
gen.-req.
(t/hr)
Total
excess
bagasse
(t)
Potential
steam
(t)
Potential
energy
(GWh)
Kilombero
Sugar
Company K1
80 40 18.18 41.60 23.42 100,434.78 231,000.00 23.10
Kilombero
Sugar
Company K2
100 50 22.73 40.00 17.27 76,000.00 167,200.00 16.72
Mtibwa
Sugar State
350 189 82.17 105.00 22.83 100,434.78 231,000.00 23.10
Tanganyika
Planting
Company
130 70 30.52 46.80 16.28 91,679.17 210,862.08 21.09
Kagera
Sugar
Company
60 30 13.64 30.00 16.36 72,000.00 158,400.00 15.84
Total 99.42
Name of the
factory
Region/location
Power generated (MW)
Use
Kilombero Sugar
Company K1
Morogoro 6 Own use and sold excess 2 MW to
TANESCO until 2006/2007
Kilombero Sugar
Company K2
Morogoro
2.8
Captive heat and power generation
Mtibwa Sugar
State
Morogoro 13
Own use. Negotiating with TANESCO
to sell 7 MW.
Tanganyika
Planting
Company
Kilim anjaro/Moshi 5,5 Own use. Expanding power generation
capacity to 17 MW. Negotiating with
TANESCO to sell electricity excess.
Kagera Sugar
Company
Kagera 5 Captive heat and power generation
Total Power 32.3
Target Market Analysis: Tanzania’s Bioenergy Market 6
Sugarcane is viewed to be the most attractive feedstock for ethanol production at the moment.
Sugarcane is one of the few crops whose production per unit area in Tanzania (99.2 tons/ha) is higher
than the world average (65.1 tons/ha) (Philip 2007). None of the above sugar factories currently
produces ethanol. However, these industries have shown growing interest in the production of ethanol
in order to diversify their income opportunities. The potential for ethanol production from the four
industries in 2004/2005 was estimated to be 20 million liters per year (GTZ, 2005).
Approximately 625,000 tons of sisal wastes are generated annually from the 46 decorticators. It is
estimated that 15,000 tons of waste can generate 1 MW of electricity. Therefore technical potential to
generate electricity using sisal waste is about 46 MW (MEM 2004). Segera Sisal Estates3 in Tanga
region has installed a biogas plant with capacity of generating 4 MW of electricity using sisal wastes at
Hale Sisal estate in Korogwe district, Tanga region (Shamte 2007). The plant produces 150 kW of
electricity, enough for use in sisal decorticating machines for 12 hours non-stop. Since 2007, the
company has been developing this project as a CDM project. The company is currently looking for
partners to develop the biogas production projects in other sisal estates located in Tanga and coastal
regions.
Briquette Production
There are two private companies which use agricultural residues to make biomass briquettes to
substitute charcoal in urban areas. These companies are East African Briquette Company (EABC4) in
Tanga and the Appropriate Rural Technology Institute (ARTI) in Dar es Salaam (see section 1.3).
They produce carbonized biomass by heating agricultural waste in airless kilns. Unfortunately,
awareness of briquettes by the average Tanzanian urban household is virtually non-existent.
Currently, USAID is supporting a pilot project to market biomass briquettes in Dar es Salaam city,
aiming at developing distribution networks. More than 80 shops sell briquettes in the city.
1.2.3 Animal Wastes
Tanzanian cattle, goats and sheep produce an estimated 25 million tons of animal wastes per year
which can potentially be fed into digesters for biogas production (MEM 2003). About 4,000 biogas
plants of 8 to 50 m3 capacities have been installed countrywide for cooking in households and social
institutions. Fixed-dome type of biogas technology has been widely promoted by the Centre for
Agricultural Mechanization and Rural Technology (CAMARTEC) and Miradi ya Ges ya Samadi
Dodoma (MIGESADO). A good number of biogas plants have been installed schools, prisons and
colleges. Recently, the Appropriate Rural Technology Institute (ARTI) designed a biogas system5 that
uses waste food rather than dung/manure as feedstock. Since 2007, ARTI has installed 20 biogas
plants in several institutions in Dar es Salaam. Adoption of biogas technology at household level is
hindered by high investment costs.
3 Katani Limited is part of Segera Sisal Estate responsible for utilization of sisal waste for biogas and bio
fertilizers. Recently, Katani formed a subsidiary company, Mkonge Energy System which will be responsible for
production and selling energy from renewable energy sources. 4 EABC has a capacity to produce about two tons per day.
5 Typical household and institution biogas plants cost around USD 800 and 3,000 respectively. Costs include
cooking stoves.
Target Market Analysis: Tanzania’s Bioenergy Market 7
1.2.4 Energy Crops
In Tanzania, potential energy crops which can be used as feedstock for ethanol production include
sweet sorghum, cassava and sugarcane (GTZ 2005). Potential crops for biodiesel production are
soybeans, sunflower, palm oil, Jatropha curcas and Croton megalocarpus (WWF 2008).
The biofuel sector is still in its infancy. Recent biofuel developments have been focusing on ethanol
and biodiesel production (from sugarcane and Jatropha respectively). Some 17 foreign and local
companies have started establishing large-scale plantations, mainly of Jatropha. Dominant foreign
companies are from Sweden6, the Netherlands and the UK. Approximately 400,000 ha of land were
under cultivation for biofuels in 2008. However, there is no actual production of biofuels in the country
because most of the companies are at various stages of setting up their companies, land acquisition,
establishment of plantations, etc.
Experiences with biofuels have not been encouraging so far, partly because of lower-than-anticipated
yields due to climatic and soil constraints, political and community conflicts over land acquisition and
significant profitability challenges. Another critical conflict in Tanzania since 2007 is the clearing of
large areas of natural forest habitats to give way to biofuels crop farming. This is a major concern as
more plantations are set up in Tanzania. Currently, also areas that are outside established forest
reserves are cleared for plantations. This includes coastal forests and miombo woodlands. Coastal
forests have a high level of endemism as a result of being separated from other humid forests by
savannah and grassland.
Farmers are planting Jatropha around their homesteads and farms as fencing materials. They
normally collect seeds and sell to private companies or individuals.
Electricity Generation:
Jatropha oil can be used to run Multifunctional Platforms (MFP), a simple diesel engine that
can power different tools. The MFPs have the potential to provide electricity to households
and motive power for cereal milling, oil pressing, welding and battery charging. In general, it
aims to provide electricity to rural populations in off-grid areas. As pilots, four MFPs have
been installed by the Tanzania Traditional Energy Development and Environment
Organization (TaTEDO) in rural areas. The MFPs are operated by village cooperative
societies.
The cost to install one MFP in a rural area is about USD 12,000; this includes milling
machinery, diesel engine, transmission poles and labour costs. TaTEDO is still assessing
technical and economical viability of these MFPs.
More than 150 households and 22 rural enterprises (e.g. shops, video show centres, barber
shops welding and battery charging centres) have been electrified. A household pays a
monthly bill of around USD 2.2 if they use electricity for lighting for four hours in a day. Rural
enterprises each pay about USD 5.2 per month.
The supply of Jatropha oil is scarce due to the limited availability of seeds, currently valued
more for planting than for oil extraction. For this reason some of the MFPs are sometimes
fuelled with diesel instead of Jatropha oil.
6 SEKAB Bioenergy Tanzania, the Swedish company has pulled out due to financial problems. SEKAB had plan to set-up a sugarcane ethanol plantation with an estimated capacity of over 2 million liters of ethanol per year from 400 hectares. Also, burn sugarcane bagasse to provide heat and power for ethanol production, and will sell excess power to TANESCO.
Target Market Analysis: Tanzania’s Bioenergy Market 8
1.3 Local Capacities
To some extent local capacities on bioenergy issues are developed in Tanzania. Existing capacities
are categorised in the private and public sector.
1.3.1 Private Sector Capacities
There are international and local companies with experience in bioenergy development. These
companies have technical capacity to carry out feasibility studies on bioenergy, expertise on
marketing research and market development for bioenergy and expertise on production of bioenergy
technologies.
Selected international companies and institutes that could partner with German companies include:
Camco Advisory Services Limited is a UK-based international consultancy specialising in
energy assessment and energy policy, planning, modeling, product development and
commercialisation. Camco/Tanzania has competences on rural and renewable energy, rural
electrification, small business development, micro-finance, marketing, carbon foot printing and
carbon asset development, forestry, land-use management and project development.
Green Resources AS is a Norwegian-based private owned company engaged in sustainable
forests business, carbon offset and renewable energy in Eastern Africa. Green Resources
intends to develop a CHP plant at Sao Hill in Iringa to cover the energy needs at the site. The
aim is to use wood waste to generate power, and use steam produced during the process for
drying timber. The total power generating capacity of the CHP will be 15 MW. An
Environmental Impact Assessment is ongoing.
Stockholm Environment Institute (SEI) is an independent international research institute,
which engages in environment and development issues at global, regional and national policy
levels for over quarter of a century. Since SEI’s inception, Africa has been a key focal region,
particularly in the areas of renewable energy, rural electrification, air pollution, and
biosciences, eco-sanitation and water resource management. In November 2008 the SEI
board took a decision to establish an SEI Africa Centre at the University of Dar es Salaam
and the Institute of Resource Assessment. The Africa coordinating office was officially
launched in June 2009.
Selected local companies which might of interest to Germany companies include:
East Africa Briquettes Company (EABC) Ltd is a Tanzania-registered company
established in 2005. The goal of the company is to establish a business venture based on the
briquetting of waste sourced from carbonized biomass in a way that is profitable, sustainable
and environment-friendly. EABC aims to support the development of a cottage industry that
produces carbon from domestic and agricultural waste materials, empowering local
communities to produce the raw material for the briquetting facilities.
Centre for Energy Environment Science and Technology (CEEST) Foundation is a
registered non-profit company based in Dar es Salaam. CEEST Foundation has more than 17
years experience in carrying out researches and studies in areas related to energy,
environment, science and technology.
Appropriate Rural Technology Institute Tanzania (ARTI-TZ) is a registered Tanzanian
non-profit organisation aiming at the application of scientific knowledge and sustainable
technologies for energy production for environmental protection, improved health,
employment and income generating opportunities.
In addition, there are few NGOs and CBOs with capacities to promoting bioenergy
technologies for environment conservation and rural development. One of the lead NGOs is
Target Market Analysis: Tanzania’s Bioenergy Market 9
the TaTEDO, which is dedicated to the dissemination of efficient cook stoves, biogas
technology, etc.
1.3.2 Public Sector Capacities
At the Ministry of Energy and Minerals (Renewable Energy Department), there is a small
number of technical staff dealing with bioenergy programmes such as sustainable wood fuels
utilization, biofuels guidelines development, etc. The department is the main government
contact point for bioenergy issues.
The Tanzania Commission for Science and Technology (COSTECH) is involving technicians
and engineers in research and development (R&D) on various bioenergy technologies.
Public applied research institutions such as Tanzania Industrial Research and Development
Organization (TIRDO), Centre for Agricultural Mechanization and Rural Technology
(CAMARTEC) all have a certain capacity among technical and research staff with expertise in
energy, though resources tend to be limited and expertise often rather outdated.
Universities and colleges – University of Dar es Salaam, Dar es Salaam Institute of
Technology and Sokoine University of Agriculture (Morogoro) have specialised professionals
on biomass energy and forestry extraction technologies.
In terms of capacities, bioenergy development in Tanzania is still constrained by:
Inadequate technical capacity to disseminate the skills and adaptation of the technologies
Limited capacity in strategic planning for mainstreaming bioenergy issues within the
government
Inadequate technical capacity in designing and installing power generation plants
Lack of expertise in production and utilisation of modern biomass fuels such as pellets,
briquettes, etc.
Low level of awareness among Tanzanians on alternative fuels including biomass briquettes,
pellets, etc.
Target Market Analysis: Tanzania’s Bioenergy Market 10
2 Bioenergy Market Potentials
2.1 Overall Sector Outlook
Tanzania’s energy consumption is estimated at 22 million tons of oil equivalents (TOE)/yr or 0.7 TOE
per capita/yr (MEM 2003). The sector is characterised by low per capita consumption of commercial
energy (petroleum, coal and electricity) and relatively high dependence on bioenergy. The
contributions of different energy sources to the energy balance are biomass fuels 90 %, petroleum 8
%, electricity 1 % and others 1 % (includes coal, solar, etc).
Tanzania has enormous biomass resources. High dependence on bioenergy is an indication that
Tanzania has huge bioenergy market potentials, but there are limited developed bioenergy options.
Due to various reasons this potential has never been fully utilized. Reasons that hinder market
development of bioenergy include low technological status of biomass conversion technologies, high
costs advancing technologies and resources, inadequate financial support from financial institutions,
low quality of locally produced bioenergy technologies, low purchasing power of the public and a lack
of public acceptance.
There is growing demand for bioenergy for cooking, power generation, etc. The demand has
encouraged private companies to start promoting bioenergy technologies at small and medium
scales. Cooking energy/technologies and power generation are main focus of these companies.
2.2 Undeveloped Market Opportunities
Tanzania has significant potential to use available biomass sources to generate electricity and
produce alternative fuels for domestic and institutional use. As stated before, available opportunities
are underdeveloped.
In view of the existing bioenergy markets, still there are undeveloped market opportunities that can
attract German bioenergy enterprises. These companies should see bioenergy as part of the solution
of Tanzanian energy needs. Major bioenergy opportunities are outlined below.
2.2.1 Power Generation from Waste Biomass or Grown Biomass
Theoretical potential: Tanzania has abundant land for sustainably grown/planted wood.
Also, estimated sustainable yield from the woodland and other forests is about 24.3 million m3
per year, and 15 million tons of agricultural wastes. Estimated cogeneration potential from
forest and agricultural residues in Tanzania is more than 315 GWh per year which is 10.5 %
of the national electricity generation. The total installed capacity is only 35.825 MW.
Additionally, use of municipal wastes can be used to generate power. A recent assessment in
one of the dumpsites in Dar es Salaam city revealed that the dumpsite can produce up to 2
MW of electricity. However, this potential has never been assessed in detail.
Geographical potential: Geographical location is one of important determining factors for
investment and pricing. Potential areas for setting-up processing plants need to be close to
the biomass sources. For example areas with forest and crops plantations might already be
suitable for installation of cogeneration plants.
Technical potential: Technical expertise on installation and operation of cogeneration plants
is limited. For example, Dar es Salaam City Council had to partner with Stabile Globus from
Italy to implementing a landfill gas capture and energy generation project. This CDM project
(methane recovery and destruction) will produce 2.5 MW of electricity and feed to the grid.
Economic potential: Estimated investment costs and energy yield for small biomass plants
is 1,400 USD/kW, capacity factor of 50 %. This is equal to small hydro and less than wind.
Target Market Analysis: Tanzania’s Bioenergy Market 11
Small hydro: 1,400 USD/kW with a capacity factor of 50 %, Wind: 1,600 USD/kW, capacity
factor of 30 % (Siyambalapitiya 2007).
Market potential: In Tanzania, especially in rural areas, only 1 % of the population has
access to electricity. This is where 75 % of country population lives. Bioenergy technologies
which are proved to be economically viable can be used to produce power. In addition, Rural
Energy Agency and TANESCO encourages private sector investment in power production.
2.2.2 Briquettes and Pellets Manufacturing
Theoretical potential: Pellets and briquettes can substitute firewood and charcoal in
households and institutions. Tanzania has enormous biomass resources which can be
converted to briquettes or pellets. These resources include forests and agricultural
residues/wastes.
Geographical potential: Forests and relevant crops are almost everywhere in the country.
Potential areas for setting-up briquettes and pellets manufacturing plants need to be close to
the major cities and other secondary towns for easy access to the market.
Technical potential: Technical expertise on pelleting and briquetting is limited.
Economic potential: Economic conditions gradually improve, so does the appeal of
switching energy use from firewood and charcoal to other options. In order to rationally
promote alternative fuel sources in the place of firewood and charcoal those sources must be
cost competitive.
Market potential: The market for pellets and briquettes is likely. Briquettes use is becoming
popular especially for Dar es Salaam residents.
Other opportunities that might be of interest to German enterprises include marketing of biogas
technology or modern cook-stoves (use solid biomass or plant oil). In addition, the following tables
summarize major bioenergy opportunities in Tanzania and recommendations for German companies.
Table 6: Electricity Generation from Bagasse
Potential reserves More than 99.42 GWh per year could be generated from excess bagasse
Under development
The total available capacity of existing cogeneration plants using bagasse is only
32.3 MW. Three sugar factories want their production capacity. Mtibwa Sugar
Estate (9 MW), Kilombero Sugar (2 MW) and Tanganyika Planting Company (17
MW). Also, there are eight new sugar sites under preparation.
Type of equipment Sugar plantation, boilers, steam engines, generators, tractors, trucks, etc
Justification
Commercial sale of electricity to TANESCO under agreed power purchasing
agreement
Organisational
set-up/operator models
Purely private investments
Planning
Not less than four years
Constraints/obstacles
Financial and local technical capacity
Recommendations for
German companies
Enter into partnership with existing sugar factories to increase electricity
generation capacity
Supply of power and heat production equipment
Offer technical and financial services
Target Market Analysis: Tanzania’s Bioenergy Market 12
Table 7: Electricity Generation from Forest Residues
Potential reserves
Available land for sustainably grown/planted wood
Over 200,000 ha of forest plantations
Under development
Private sector is leading. Two plants are operational namely Tanganyika Wattle
Company and Sao Hill saw mill. Total installed capacity is only 3.525 MW.
Expected financial volume
(million USD)
Estimated investment in power plant and civil works for small biomass project is
about 1500 USD/kW; and investment on transmission interconnection for a 5MW
delivery at 33kV over 10 km is estimated to be 100 USD/kW
Type of equipment
Wood plantation, boilers, steam engines, generators, tractors, lorries, etc
Justification
Commercial sale of electricity to TANESCO under agreed power purchasing
agreement
Organisational
set-up/operator models
Purely private investments
Planning
Not less than 2-3 years
Constraints/obstacles
Financial and local technical capacity
Recommendations for
German companies
Electricity generation (can use either waste biomass or grown biomass for
power generation)
Supply power and heat production equipment
Offer technical and financial services
Table 8: Briquetting and Pelleting Opportunities
Potential reserves
Available land for sustainably grown/planted wood
Over 200,000 ha of forest plantations
Over 15 million tons of agricultural wastes
Under development
EABC is opening a new briquetting factory in Arusha. Its production capacity is
not known
Expected financial volume
(million USD)
> USD 300,000
Type of equipment
Trucks, tractors, processing equipment (kiln, mixer, drier, compression, etc)
Justification
Wood and cost savings in households and institutions
Organisational set-
up/operator models
Private partnership investment
Planning
2-3 years
Constraints/obstacles
Financial
Recommendations for
German companies
Partner with local companies to produce and market briquettes and pellets
Supply processing equipment
Supply of cooking devices
Offer technical and financial services
Target Market Analysis: Tanzania’s Bioenergy Market 13
3 Bioenergy-Specific Regulation and Framework
3.1 Policies and Regulations
Tanzania’s Development Vision 2025 and the National Strategy for Growth and Reduction of Poverty
(NSGRP, 2005-2010) both target the energy sector in the country. Energy provision is included as
one of six goals in the first cluster of NSGRP. One of the four operational targets under the NSGRP is
access of the rural population to modern energy services:
Institutional arrangements for rural energy development established and strengthened
Contribution of solar, wind, biomass and coal for electricity generation increased from the
current 0.5 % in 2003 to 3 % by June 2010.
At least 10 % of the population using alternatives to wood fuels for cooking by 2010.
Sector policies and legislation are highlighted below:
Environment: Forest (1998), Agriculture (1995), Environment (1997) and Land (1999) policies give
guidance on the use of forests, land for setting up plantations, crops and environmental impact
assessment for investment projects. Both policies encourage private sector involvement in the
sector(s) development. Specifically, Forest and Environment policies advocate for sustainable
utilisation of wood using efficient and environmental friendly technologies.
Energy: The Energy policy (2003) supports the promotion of efficient biomass conversion and end-
use technologies in an environmentally friendly manner. In terms of energy production and utilisation,
the Energy and Water Utilities Regulatory Authority (EWURA) established in 2002 under the Energy
and Water Utilities Act (2001) is charged with regulating the sectors of electricity, petroleum and
natural gas pipeline transmission and natural gas distribution; distribution of water and sewerage. The
aim of EWURA is to increase the role of market forces and private sector participation in both water
and energy sectors.
The functions of the authority are:
To issue, renew and cancel licences
To establish standards for goods and services
To establish standards for the terms and conditions of supply of goods and services
To regulate rates and charges
To make rules
It further monitors the performance of the regulated sectors in relation to:
Levels of investment
Availability, quantity and standard of services
The cost of services
The efficiency of production and distribution of services
Other matters relevant to the authority
The Rural Energy Agency (REA) is responsible for promotion of improved access to modern energy
services in the rural areas of mainland Tanzania and through a fund within the Agency Board to
provide for grants and subsidies to developers of rural energy projects and for related and
consequential matters. Bioenergy projects are one of the focuses of the agency.
Target Market Analysis: Tanzania’s Bioenergy Market 14
The Electricity Act (2008) guides facilitation and regulation of generation, transmission,
transformation, distribution, supply and use of electricity and covers the cross-border trade in
electricity and planning and regulation of rural electrification. Electricity generated using biomass
sources will be guided by this act. In addition, the standardised small power purchase agreement
which is the agreement between a utility entity (TANESCO) and a developer for the purpose of selling
power to the grid not exceeding 10 MW but not less than 100 kW has been formulated in Tanzania.
Electricity generated by bioenergy plants may fall within that range.
Tanzania has a number of relevant regulations that guide local and foreign investments that an
investor should comply with them. Bioenergy investments are guided by the Investment Act (1997).
Under the act, qualified investors are entitled to exemption from Value Added Tax (VAT) and import
duties on imported inputs and 100 % repatriation of profits and capital investments after taxes and
other obligations are met. The act also provides for full protection of all investors agreements. As any
business, bioenergy investment share to go through all registration processes. Business Registration
and License Agency (BRELA) under the Ministry of Industries is responsible for all business licensing
and registration in the country.
If an investor wants to acquire land for setting-up a wood plantation or bioenergy plant, then the Land
Act (1999) applies. Under this act, non-citizens cannot obtain a right of occupancy unless for
investment purposes registered at the Tanzania Investment Centre (TIC). TIC is the primary agency
of government to coordinate, encourage, promote and facilitate investment in Tanzania and to advise
the government on investment related matters. TIC is the focal point for investors. It is the first point of
call for potential investors; it is a “one stop facilitative centre for all investors”. According to the Land
Act, land needed by a foreign investor is first allocated to TIC, which can then issue derivative rights
to that investor. The Tanzania Investment Act (1997) requires TIC to identify sites, estates or land for
investment purposes through consultation with government institutions and agencies. In addition, the
Environmental Management Act (2004) represents a comprehensive framework law on environmental
protection. It requires an analysis of the environmental impacts of activities undertaken or permitted
by the government of Tanzania. Under the act, activities in forest and land areas require environment
impact assessments (EIAs) (for example, the Forest Act (2002) recognises and clarifies the EIA
requirement, stating that “EIAs will be required for activities in forest and lands that impact greater
than 5 ha of land”).
In addition, the Fair Competition Act (2003) is also connected to the EWURA, serving to promote and
protect effective competition in trade and commerce, and protect consumers from unfair and
misleading market conduct.
In view of above policies and legislation, it is clearly important for German enterprises to be familiar
with applicable regulations during introduction, licensing, start-up and operation. German enterprises
can use local agents to fast track early steps like registration and licensing.
3.2 Applicable Sector Support / Financing Mechanisms and Sources
Looking from the private sector perspective, financing is a key constraint affecting the development of
the bioenergy sector in Tanzania. Donors such as the Norwegian Agency for Development
Cooperation (NORAD), the World Bank, the Finish and Swedish governments have supported almost
all programmes on sustainable forest conservation and wood conversion technologies. This support is
either channeled through the government or via NGOs working in Tanzania. The Government of
Tanzania through the REA is putting much emphasis on supporting rural electrification projects.
Priority projects within REA are small hydro and cogeneration.
Target Market Analysis: Tanzania’s Bioenergy Market 15
In Tanzania LPG and solar energy products are exempted from all taxes. The government instigated
this policy to promote fuel switching away from charcoal and to push rural electrification. As a result of
LPG tax exemption, the number of users increased by 50 % in 2006. LPG appliances, biogas
appliances and biomass briquettes are charged with a value added tax (VAT). At the moment the
argument is with the government to exonerate briquettes from VAT.
Under the investment policy and act, qualified foreign and local investors are entitled for a VAT tax
and import duty exemption and a 100% repatriation of profits and capital investments, after taxes and
other obligations are met. German enterprises that bond with local companies are eligible for
exemption.
Table 9: Financing and Public Sector Support
Sources Bioenergy/
technologies
Government
subsidies
Programmes Special loan
options
Tax relief
Forest
Efficient wood
cookstoves and
charcoal kilns
No Promotion of
efficient wood
conversion
technologies
mainly by NGOs
through donor
support
No No
Cogeneration
plants/wood
No Private sector
initiatives
Rural Energy
Fund/Rural
Energy Agency;
Banks (foreign
and local)
Exemption on
VAT and import
duties on
imported inputs
Agricultural
Residues
Cogeneration
plants/bagasse
Briquettes
manufacturing
No Private sector
initiatives
Rural Energy
Fund/Rural
Energy Agency,
AREED, Banks
(foreign and local)
Exemption on
VAT and import
duties on
imported inputs
Animal
Residues
Biogas No NGO project
through donor
support
Local banks and
MFIs
No
Energy
Crops
Biofuels (biodiesel
and bioethanol)
No Foreign and
local companies’
initiatives
N/A Exemption on
VAT and import
duties on
imported inputs
Municipal
Wastes
Land fill for power
generation
No Driven by CDM N/A Exemption on
VAT and import
duties on
imported inputs
Target Market Analysis: Tanzania’s Bioenergy Market 16
3.3 Campaigns and Others
As stated before, for many years, bioenergy developments in Tanzania have been led by NGOs,
government and special ministries responsible for energy and forests. Most initiatives were donor
funded and in many cases focused on forest conservation and poverty reduction. Recently the
bioenergy sector has started to attract local private investment, although it is at slow pace. However,
this is an opportunity for German companies to invest. Bioenergy campaigns in Tanzania are centred
on:
Encouraging efficient end-use technologies (i.e. stoves) and a wider application of alternative
sources of energy for cooking (such as solar and biogas)
Promote efficient biomass conversion and end-use technologies in order to save resources;
reduce the rate of deforestation and land degradation and minimising the threats of climate
change
Promote rural electrification
Establishment of private woodlots and plantation for woodfuel production. Private companies
are encouraged to establish their woodlots for various purposes including use of wood for
power generation
Minimising wood fuel consumption through the development of alternatives, wood fuel energy
efficiency, the promotion of sustainable renewable energy resources, and energy
conservation
Target Market Analysis: Tanzania’s Bioenergy Market 17
4 Business Partners and Competitors in the Bioenergy Sector
4.1 Overview of Bioenergy Key Market Players in Tanzania
Table 10: Tanzania’s Bioenergy Market Players
Full name Core Business
and Market
Position
Products Location Number of
Employees
Contact Details
Project Developers Green Resources Ltd Business
company/forest
plantations
Wood, carbon offset, renewable
energy
Iringa More than
3,000
Sao Hill Ltd/Green Resources Forest plantations Cogeneration Iringa - [email protected]
East African Briquettes
Company Ltd
Business company Manufacturer of biomass
briquettes
Tanga - Nicholas Harrison
Appropriate Rural Technology
Institute (ARTI) – Tanzania
Business company Manufacturing of biomass
briquettes and technologies
Dar es Salaam - Nachiket W. Potnis
Bioshape Tanzania Ltd Business company Biodiesel production from Jatropha Lindi - Pius Cheche
SEKAB Bioenergy Tanzania Business company Ethanol production from
Sugarcane
Coast - Kristen Roettcher
Consultants
Camco Advisory services
(Tanzania) Ltd
Consultancy
services
Consultancy on carbon
management and renewable
energy
Dar es Salaam 6 Jeff Felten
Stockholm Environment
Institute (SEI)
Consultancy
services
Consultancy on renewable energy
assessment
Dar es Salaam - Anders Arvidson
Centre for Energy,
Environment , Science and
Technology (CEEST)
Project
development and
consultancy
Forest plantation, carbon
assessment
Dar es Salaam - Steven Mwakifwamba
Business Care Services Ltd Consultancy
services
Business development and market
assessment
Dar es Salaam - Hebron Mwakalinga
Target Market Analysis: Tanzania’s Bioenergy Market 18
Fredka International
(Tanzania) Ltd
Consultancy
services
Renewable/bioenergy assessment Dar es Salaam - Wilfred Kipondya.
Retailers Destinations All Ltd Goods and
services
Solar pumps, woodfuel stoves Dar es Salaam Jayen Chandrana
Development
Partners
USAID/Tanzania Development
cooperation
Support environmental
conservation including biomass
briquettes
Dar es Salaam - Gilbert Kajuna
NORAD Development
cooperation
Support forest plantations and
promotion of woodfuel
technologies
Dar es Salaam - C/o
Norwegian Embassy in Dar es
Salaam
Local and
International NGOs
Tanzania Traditional Energy
Development and
Environment Organization
(TaTEDO)
NGO Renewable energy technologies
such as solar PV, efficient
woodstoves, efficient charcoal
kilns, etc
Based in Dar es
Salaam –
operates in more
than 50 % of the
regions
More than
50
Estomih Sawe
CARE International in
Tanzania
NGO Forest conservation and forest
plantation
Operates in
more than 10
regions
More than
100
Paul Baker
Tanzania Forest
Conservation Group
NGO Forest conservation and forest
plantation
Operates in
more than 12
regions
More than
100
Charles Meshack
WWF NGO Forest conservation , forest
plantation, sustainable charcoal
production
Operates in
more than 9
regions
More than
100
Peter Sumbi [email protected]
Target Market Analysis: Tanzania’s Bioenergy Market 19
4.2 Overview of Major Bioenergy Projects
Table 11: Bioenergy Projects in Tanzania
Location Installed
capacity/
generated
energy
Project
participants
Success factors Experiences / Lessons learnt
> 6
regions
Promotion of
efficient
cooking
stoves –
programme
for basic
energy
conservation
GTZ/
ProBEC
Long term support on efficient
cook stoves programmes
Scarcity of wood in most of
the project areas
Government support
Alternative fuels such as
briquettes, pellets, LPG should
be promoted
Standards for quality control of
woodfuel technologies are
important
> 13
regions
Promotion of
efficient
woodfuel
technologies
TaTEDO Long term support
Scarcity of wood in the project
areas
Donor commitments
Government support
Promotion of alternative fuels
such as briquettes, pellets
Standards for quality control of
woodfuel technologies are
important
Capacity building for local
NGOs to effectively promote
woodfuel technologies
Need for biomass energy
strategy for the country
Iringa,
Tanga,
Coast
Forest
plantations –
more than
10,000 ha
Green
Resources
Ltd/
Tree Farm AS
Land availability for plantation
Geographical location favour
growth of specified tree
species
Norwegian government
support (through NORAD) at
early stages
Supportive policies
Private sector involvement in
forest plantations
Iringa 2.5 MW Tanganyika
Wattle
Company
Own > 17,000 ha of trees
Geographical location favour
growth of identified tree
species
Biomass cogeneration has the
potential to expand
electrification in rural areas
Iringa 1.025 MW Green
Resources/
Tree Farm AS
Initial support by NORAD
Own plantations – ensure
supply of biomass
Geographical location favour
growth of identified tree
species
Biomass cogeneration has the
potential to expand
electrification in rural areas
Morogoro 8.8 Kilombero
Sugar
Company
Use of bagasse -
Morogoro 13 Mtibwa Sugar
Estate
Use of bagasse -
Kagera 5 Kagera Sugar
Company
Use of bagasse -
Kiliman-
jaro
5.5 Tanganyika
Planting
Company
Use of bagasse -
Target Market Analysis: Tanzania’s Bioenergy Market 20
4.3 Highlights in Local Bioenergy Market Developments
TANESCO is looking at different ways of increasing its generation capacity. Currently, TANESCO is
negotiating with independent power producers (IPPs) to buy electricity to feed in the main grid.
TANESCO is pushing existing cogeneration plants to start thinking of increasing their electricity
generation capacity. For example, Saohill plans to increase its generation capacity to 15 MW, others
are about to follow their own expansion plans: Mtibwa Sugar Mill (9 MW), Kilombero Sugar Mill (2
MW) and Tanganyika Planting Company has already installed a 17 MW plant.
In 2007, the MEM developed a standard tariff setting for small power producers. This is important
guidance to potential investors. Table 12 shows the comparison among the technologies for isolated
mini-grid systems:
Table 12: Tariff Figures for Different Types of Technologies
Source: Siyambalapitiya 2007
Further promising developments include:
The World Bank through its TEDAP project funds have allocated about USD 104 million over
a period of five years for grid and off-grid projects. The bulk of these funds will be routed to
TANESCO through REA. Bioenergy investment projects can benefit from these funds as this
is one of the priority areas under REA.
The MNRT in collaboration with other ministries is preparing a national woodfuel action plan.
According to the terms of reference, the plan will propose market-oriented activities that will
ensure sustainable production and utilisation of biomass. It will also propose feasible
alternative fuels such as briquettes, pellets, etc.
Technology Escalated (in TZS/kWh)
base operation and
maintenance (year 1)
Escalated (in TZS/kWh)
base fuel rate (year 1)
Hydroelectric small power producer 24.9 None
Wind small power producer 38.8 None
Biomass small power producer (waste) 19.2 31.3
Biomass small power producer (grown) 19.6 62.5
Target Market Analysis: Tanzania’s Bioenergy Market 21
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