All markets

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.


Compare

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

Renewable energy auction
Feed-in Tariff
Import tax incentives
Net Metering
Renewable energy target
VAT incentives

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.

Loading...

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)

2012201420162018202005001K1.5K2K MW

Electricity Generation (in GWh)

2012201420162018202002K4K6K8K GWh
Loading...

Utility privatisation

Which segments of the power sector are open to private participation?


Generation
Transmission
Retail

Wholesale power market

Does the country have a wholesale power market?


Available
Not available

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?


Available
Not available

Bilateral power contracts

Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?


Available
Not available

Fossil fuel price distortions - Subsidies

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?


Available
Not available

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?


Available
Not available

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

Electric vehicle target
Electric vehicle purchase grant or loan incentive
VAT incentives for EV
Import tax incentives for EV
EV charging infrastructure target
EV charging infrastructure support

Fuel economy standards

Does the country have a fuel economy standard in place?


Available
Not available

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?


Available
Not available

Energy efficiency policy

Are there minimum energy performance standards for buildings?


Available
Not available

Energy efficiency incentives

Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?


Available
Not available

Buildings policy

The government has yet to implement any substantive policy support in this sector.

Buildings policies

Low-carbon heat target/roadmap
Tax credits
Boiler scrappage schemes
Heat pumps purchase grants/loans incentive
Ban on boilers: new build homes
Ban on boilers: all homes

Additional insights
from BNEF

Explore more detailed information on global commodity markets and the disruptive technologies driving the transition to a low-carbon economy.

Read more

Powered by

Energy Transition Factbooks

This marks the 11th anniversary of Climatescope, BNEF’s annual assessment of energy transition opportunities. The project has been expanded to include activity not just in clean power but in the decarbonization of the transportation and buildings sectors.

Climatescope 2022 print report cover

Power Transition Factbook

Download factbook
Climatescope 2022 print report cover

Electrified Heating Factbook

Download factbook

Stay up to date

Subscribe to our mailing list to get the latest news about Climatescope directly in your inbox.


Results
Sectors
PowerTransportBuildings
About
Contact

© 2022 Climatescope. View license and Privacy policy