TANZANIA ELECTRIC SUPPLY COMPANY LTD (TANESCO) PRESENTATION ON THE TANZANIAN SOLAR PV-HYBRID WORKSHOP HELD IN BERLIN, GERMANY

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1 TANZANIA ELECTRIC SUPPLY COMPANY LTD (TANESCO) PRESENTATION ON THE TANZANIAN SOLAR PV-HYBRID WORKSHOP HELD IN BERLIN, GERMANY 16 TH MARCH 2015 by Eng. Patrice Tsakhara Principal Engineer Small Power Projects 22-Mar-15 1

2 Contents Company History Overview of power sector in Tanzania Government policy on energy sector Future plans of the energy sector Development of Renewable Energies Small Power Projects (SPP) framework Implementation of SPP program Current status of Isolated mini-grids Plans for grid extension to mini-grids Challenges to implement PV-Hybrid and mitigation measures Support by Germany companies 22-Mar-15 2

3 Company History TANESCO was established in 1964 with shares from the government and private. In 1975 GoT acquired all shares making TANESCO a state-owned power utility. TANESCO s core business are: to generate, transmit, distribute and supply electricity in Tanzanian mainland and sell bulk power to Zanzibar. TANESCO also import power from Zambia, Uganda and Kenya for electrification of border towns. Likewise, TANESCO also exports power for electrification of border town on Kenyan side at Horohoro. The company has been responsible for planning and implementing various power investment projects. 22-Mar-15 3

4 Company History cont 1992 Energy policy allowed private sector participation in the energy sector. Up to 2005 only generation segment has attracted private sector. In 1997 TANESCO was specified for privatization. From TANESCO was placed under management contract. TANESCO was de-specified for privatization in 2005 to allow investments in generation and transmission projects. From 2006 to 2008 there was shortage of power generation due to poor hydrology. This has lead to procurement of the first Emergency Power Projects (EPP) From 2011 to 2013 TANESCO experienced another shortage of power generation due to poor hydrology. Procurement of costly EPPs was then undertaken. 22-Mar-15 4

5 Overview of the power sector Generation capacity in the interconencted grid system: Total Hydros: 561 MW Total gas fired power plants: 544 MW (only 320 MW is generating power at the moment due to shortage of natural gas) Total liquid fuel fired power plants: 210 MW with 50 MW capacity on short term rental basis Total of 18 isolated mini-grids with total installed capacity of 82 MW. Out of these two mini-grids with installed capacity of 29 MW is running on natural gas while the remaining 15 mini-grids with total installed of capacity of 53 MW are diesel generators. 22-Mar-15 5

6 Overview of the power sector cont Transmission network: Transmisison system comprises of 48 grid substations interconnected by transmisison lines km of 220 kv lines 1555 km of 132 kv lines 578 km of 66 kv lines Distribution network: Comprises of 33 kv, 11kV, 0.4kV lines. 11,124 distribution transformers 17,021 km of 33kv lines, 5,375 km of 11kv lines Over 34,513 km of LV lines 22-Mar-15 6

7 GoT policy on energy sector The National Energy Policy of 2003: Has allowed private sector participation in the energy sector. The Electricity Act of 2008: Has allowed private sector to participate in the electricity sub sector. This includes generation, transmission and distribution of electric energy to the end users. Following the above act, the government through EWURA took initiative on the development of Small power Projects (SPP). Standardized Power Purchase Agreements (SPPA) and the Guidelines where adopted to facilitate private sector participation in developing renewable energies in small scale (0.1 MW to 10 MW) for direct sell to end use customers and sell excess to TANESCO network. 22-Mar-15 7

8 GoT policy on energy sector cont.. The Electricity Supply Industry Reform Strategy and Roadmap ( ): Aims at restructuring of the sector. By July 2017 Generation will be separated from the rest of TANESCO By July 2021 Transmission will be separated from Distribution. By July 2023 there will be horizontal unbundling of Distribution. The draft Renewable Energy policy of 2015: The draft policy was recently prepared by GoT and circulated to stakeholders for comments. The draft Energy Policy of 2015: The draft was recently prepared and circulated to stakeholders for comments. 22-Mar-15 8

9 Future plans of electricity sector Generation expansion plan: In the short term period (now to 5 years) power generation projects will be implemented. Technologies involved are natural gas, wind and solar PV. Over 1000 MW is expected to be added in the Grid system. Transmission expansion plan: In the short term period transmission projects will be implemented for power evacuation to the load centers from generation centers. This will also include 400 kv interconnector lines between Zambia, Tanzania, and Kenya. Also 220 kv interconnector lines between Tanzania, Uganda, Mozambique and Kenya. Development Partners (DP) are currently financing some of these projects and others have shown interest to finance new projects including KfW of Germany. 22-Mar-15 9

10 Development of Renewable Energies (RE) In the recent years there has been strong interest for private sector to invest in RE power projects, especially wind and solar PV. Since the Government didn t have RE policy in place, there is no conducive environment including incentives to attract private sector investment in RE power projects. There are two potential sites for wind power, that is Sing Ida in central part and Makambako in southern part of the country. Potential sites for solar PV are areas in the central and western part of the country (Dodoma, Singida, Shinyanga, Mwanza). Limited penetration of RE in the grid system is challenging factor. 22-Mar-15 10

11 Small Power Projects (SPP) framework In 2009 the Government through Energy and Water Utilities Regulatory Authority (EWURA) approved SPP framework. RE projects (mini hydro, biomass, solar PV and wind) with capacity range between 0.1 MW to 10 MW per project were allowed to be developed. Standardized Power Purchase Agreement (SPPA), Standard Tariff calculation Methodology (STM) and technical guidelines on the grid integration of SPPs were approved. Total installed capacities of SPPs are limited to 10% of the grid capacity. For almost 6 years now since introduction of SPPs only mini hydro and biomass power projects are in operation. 22-Mar-15 11

12 Small Power Projects (SPP) framework cont Determination of SPP tariff is based on the avoided cost principle to TANESCO. The applicable tariff did not attract investors in wind and solar PV power projects due to the low tariff by then and the fact that the cost of solar equipment were high. Economies of scale for investment in wind and solar power projects under SPP arrangement may also have contributed less response from the private sector. Payment of SPP tariff in local currency instead of US Dollar also hindered the interest of developers. Since 2009 to January 2015 depreciation in local currency has been high (above 20%). This has a negative effect on the SPP developers who would have used foreign currency to invest in power projects. 22-Mar-15 12

13 Status on the implementation of SPPs SPP NAME SUMMARY OF SPP DEVELOPERS TECHNOLOGY EXPORT CAP. (MW) LOCATION SPPA SIGNED COD/ EXPECTED 1 TANWAT - Njombe Biomass 1.5 Grid connec TPC - Moshi Biomass 9.0 Grid connec Mwenga - Mufindi Hydro 4.0 Grid connec Ngombeni - Mafia Island Biomass 1.5 Off Grid AHEPO - Mbinga Hydro 1.0 Off Grid Mar-15 6 St. Agnes Chipole - Songea Hydro 7.5 Off Grid Jul-15 7 NextGen Solawazi - Kigoma Solar 5.0 Off Grid EA Power Ltd - Tukuyu Hydro 10.0 Grid connec Darakuta - Manyara Hydro 0.24 Grid connec Jun Mapembasi - Njombe Hydro Grid connec TOTAL CAPACITY Mar-15 13

14 Status on the implementation of SPPs SPP NAME TECHNOLOGY SELL CAP. LOCATION MAX LOI DATE (MW) 1 Nkwilo project - Sumbawanga Hydro 2.9 Off Grid Ilundo power project - Tukuyu Hydro 0.4 Grid connec Maguta power project - Kilolo Hydro 2.5 Grid connec Luganga project - Iringa Rural Hydro 2.8 Grid connec Luswisi project - Ileje, Mbeya Hydro 4.7 Grid connec Yovi project - Kilosa Hydro 2.0 Grid connec Ilungu ward project - Mbeya Hydro 5.0 Grid connec Momba power project- Mbeya Hydro 10.0 Grid connec Kikuletwa II project - Hai Kili Hydro 7.5 Grid connec Ilondo project - Mufindi Hydro 10.0 Grid connec Lyamanji hydropower Makete Hydro 2.3 Off Grid Waste to Energy project Biomass 5.0 Grid connec Mar-15 14

15 Status on the implementation of SPPs SPP NAME TECHNOLOGY SELL CAP. LOCATION MAX LOI DATE 13 Lwega hydropower project Hydro 5.0 Off Grid Mpanga Hydropower project Hydro 5.8 Grid connec Mkumbara biomass project Biomass 5.0 Grid connec Mabuki solar power project Solar PV 10.0 Grid connec Kishapu solar power project Solar PV 10.0 Grid connec Nakatuta hydropower project Hydro 10.0 Grid connec Mpanda solar power project Solar PV 1.0 Off Grid Sumbawanga solar project Solar PV 2.0 Off Grid Lugarawa power project Hydro 1.7 Grid connec Matembwe power project Hydro 0.5 Grid connec Kitewaka power project Hydro 4.2 Grid connec Uzia hydro power project Hydro 1.0 Off Grid Kalumbaleza power project Hydro 1.0 Off Grid Mafia solar power project Solar PV 1.0 Off Grid TOTAL CAPACITY Mar-15 15

16 SPP Tariff from 2009 to 2014 SUMMARY OF SPP TARIFF FROM 2009 TO 2014 Grid connected tariff (TZS/kWh) Off Gird tariff (TZS/kWh) % of tariff increase Year Eff. Date Wet Season Dry Season % increase Dec July Aug Nov 2009 Jan Jan % % 2011 May % % 2012 May % % 2013 Sep % % Jul % % 22-Mar-15 16

17 Renewable Energy Feed-In Tariff (REFIT) Program In 2013 The Energy Regulatory Authority with financial assistance from USAID engaged a consultant to undertake study that could have come with REFIT. In August 2014 the consultant made presentation of draft final report to the stakeholders. Some of the stakeholders challenged the report. In December 2014 the Authority conducted stakeholders workshop on the REFIT program. They proposed REFIT for mini hydro and biomass both for main grid and minigrid SPPs. Also there was a proposed REFIT for mini-grid connected solar and wind projects. The Authority further proposed to let grid connected solar and wind SPPs to undergo competitive bidding process. We are still waiting on the Authority's decision on the REFIT program. 22-Mar-15 17

18 Support schemes for mini-grid and rural electrification The Rural Energy Agency (REA) is responsible for financing of rural electrification projects. This is mainly extension of grid connected and mini-grid connected distribution network to the rural areas. In areas where extension of distribution network is technically not possible REA has also financed solar PV projects in some villages. Pilot projects on wind-solar PV hybrid system have also been installed at some public institutions in rural areas. REA get funds from the Government of Tanzania and Development Partners like SIDA, World Bank (TEDAP), NORAD, just to mention a few. SPPs are also being supported by REA by giving them matching grant and performance grants for projects located in rural areas. 22-Mar-15 18

19 Current status of isolated minigrids operated by TANESCO POWER STATION NO. OF UNITS UNIT CAPACITY (kw) TOTAL CAPACITY (kw) 1 BIHARAMULO BUKOBA ,560 3 KASULU 2 1,250 2,500 4 KIBONDO 2 1,250 2, , ,000 5 KIGOMA 12, LIWALE LOLIONDO 4 1,250 5, LUDEWA 1, MAFIA ISLAND 2, , MBINGA 2, Mar-15 19

20 Current status of isolated minigrids operated by TANESCO cont. POWER STATION NO. OF UNITS UNIT CAPACITY (kw) TOTAL CAPACITY (kw) MPANDA 2, NAMTUMBO NGARA , , SONGEA 8, SUMBAWANGA 4 1,250 5, TUNDURU 1, SOMANGA 3 2,500 7, , MTWARA 21, ,950 TOTAL 82, Mar-15 20

21 Typical load profile 22-Mar-15 21

22 Plans for main grid extension to mini-grid areas TANESCO has got short term and long term plans to extend main grid to isolated mini-grid areas. The aim is to get rid off expensive diesel generation. With SIDA support the Makambako Songea transmission line will connect 4 mini-grids to the main grid and rural electrification of villages along the transmission lines. At the moment TANESCO has go no plans to establish new mini-grids. Instead under the Government s policy of electrifying all district headquarters, the same can be done where new districts are going to be established and are far from the main grid network. 22-Mar-15 22

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24 Future Grid Map by Mar-15 24

25 Challenges for TANESCO in regard to implement PV-Hybrid The absence of clear Government policy on the development of RE power projects including PV-Hybrid systems. Lack of knowledge and experience as far as dieselsolar PV hybrid system is concerned, especially for megawatts size systems. Uncertainty of SPP tariff under the existing SPP framework. Lack of seriousness for some developers of SPPs. Lack of funds to develop pilot projects for diesel-solar PV hybrid system that would have enlighten other developers in the sector. 22-Mar-15 25

26 Support by Germany companies It is proposed if Germany companies/financial institutions can assist the Government of Tanzania and TANESCO to develop pilot project for diesel-solar PV hybrid system. Support for technical and financial consultancy services for the proposed diesel-solar PV hybrid system under SPP arrangement. Capacity building training for TANESCO Engineers as far as diesel-solar PV hybrid system is concerned. To assist in the establishment of a sustainable REFIT program. Some other countries in the region have succeeded to establish sustainable RE program. 22-Mar-15 26

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