Tanzanians need electricity for basic quality of life, but they are faced with a major power crisis:
- Only ten percent have access to electricity from the national power company, and electrification rates are far less than that in the countryside, where 80% of the population live
- Only 2% of rural households receive power via the Tanzania Electricity Supply Company (TANESCO) grid so electrification is largely limited to district headquarters.
Rural communities can acquire electricity in various ways through community-based mini-grids (e.g. micro-hydro or biomass supply systems), installing solar electric systems, or waiting for the national grid to come to their vicinity. For lighting, rural homes use kerosene lanterns which are a health and fire hazard - an expensive and poor quality solution. For radio, dry cell batteries are used and replaced frequently - another expensive and poor quality solution. The reality for almost all rural Tanzanians is that life after sunset slows right down due to the lack of electricity resulting in children not being able to do their homework, productivity being restricted and quality of life being impaired.
Solar home systems (SHS), or solar business systems, are the future for rural Africa as it will take decades for national grid electrification companies to reach rural villages due to their inability to efficiently service urban populations and invest in expanding access. The Government of Tanzania has a solar power policy that promotes the use of personal solar home (or business) systems for rural off-grid electrification, and discourages the continued use of kerosene and batteries.
With Tanzanian’s desire for electricity being so strong, the national market for solar home systems has multiplied by a factor of fifteen in the last five years, from 100kWp in 2005 to over 1.5MW in 2009. A number of projects have been put in place including:
- One of the first donor-funded projects supporting private sector solar companies was the UNDP/MEM Mwanza Solar PV Project 2004-2009. It focused on building up the technical and marketing capacity of new and existing solar companies through training and awareness campaigns. National solar equipment standards were developed as a result
- Sida/MEM Solar PV Project followed the Mwanza PV Project and is ongoing. Managed by Camco on behalf of the Ministry of Energy and Minerals (MEM) with funding from the Swedish International Development Agency (Sida), this project is similar in design to the Mwanza Project, but larger in scale, targeting sixteen regions countrywide. It includes business development services for solar companies (technical and marketing training for solar retailers, technicians and vocational school instructors), marketing and awareness, networking among solar industry stakeholders, and policy and institutional support for the implementation of national quality control standards.
These projects combined saw the market for national solar technology increase 15 times over and the Tanzanian Renewable Energy Association (formerly the Tanzanian Solar Energy Association) strengthening to successfully lobby for complete tax exemptions for all solar products entering the country.
While these results seem impressive, the market penetration of solar systems still remains relatively limited for a number of reasons, including up-front costs (most retailers sell on a cash basis only), excessive margins, lack of credit, and inconsistent quality (including imitation solar products).
Clusters Solar PV Project
To address these remaining barriers, a new solar project has being devised. The Clusters Solar PV Project is being implemented by Camco through the Rural Energy Agency (REA) and in collaboration with the Ministry of Energy. The project is being funded by the World Bank and aims to provide standardized high-quality solar systems that are purchased in bulk to reduce costs with credit financing and subsidies.
Camco developed the Clusters Solar PV Project concept out of the realisation that ownership and ongoing maintenance of systems is needed to make a real difference. This project focuses on private sector involvement, driven by successfully established farmer or worker cooperatives, corporations, and companies providing solar PV products on a wholesale basis.
Under this model, Tanzania’s Rural Energy Agency provides a small 20% subsidy for each solar set-up system while the farmer will pay the remaining 80% (a 20% deposit with the remaining amount being paid off over the following three years).
In 2010 the project is expected to provide solar systems to over 1,000 rural homes and, being a model with enormous extension and replication capacity, the project will lead to the generation of multiple megawatts of off-grid green energy procured and managed by farmer groups.
The Project is currently benefiting cashew, tea and coffee farmers in Southern Tanzania but additional funding will enable the project to work in new sectors and regions. It is Camco’s desire to develop four separate Cluster PV projects for the North, South, Central and Lake Zones of Tanzania. These separate projects would target different farmer and worker groups and their sector needs.
There are dynamic teacher associations across Tanzania that can be targeted to form Cluster Groups. Thousands of teachers live in rural areas without electricity but through their salaries they have access to a Savings and Credit Cooperative Societies (SACCOS) making them perfect microfinance clients.
The aim is for these Cluster Projects to work with ten to twenty groups in each of the four zones, resulting in approximately 40,000 new rural solar home systems annually, providing quality and affordable electricity for rural households and businesses.
However, the projects do have associated risks around Cluster Group identification, management capacity and financing. Each Cluster group must have financial credibility and experience with loan practices, have physical assets to guarantee loans, have a membership large enough to warrant affordable wholesale prices and must be efficiently led and managed. The absence of any of these elements could hamper the implementation of a Cluster Project, or at a minimum slow down implementation.
The Tanzanian solar market has benefited greatly from donor-funded projects supporting private sector development. There is still a long way to go with current supply meeting a miniscule share of real need and demand, but as group procurement, affordability and quality improves, market growth will continue on its current steep exponential curve.