Tanzania is set to develop 60 solar mini grids in rural areas following CrossBoundary Energy Access (CBEA) signing an agreement with PowerGen Renewable Energy for the off-grid projects.
CBEA will provide US $5.5m for the development which will will provide quality electricity for the first time to 34,000 people in private homes and businesses in rural Tanzania. To ensure the financing of this project, CBEA signed a loan agreement with Renewable Energy Performance Platform (REPP), a development financing platform supported by the British government and managed by Camco Clean Energy. Such innovative project finance solutions will be key to unlocking the more than $11 billion for mini-grids needed from investors to connect at least 100 million people.
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Energy in Tanzania
Tanzania’s sunshine hours per year range between 2,800 and 3,500 with global horizontal radiation of 4–7kWh per m2 per day. To date, about 5.3MWp of Photovoltaic (PV) solar energy have been installed in Tanzania. The Government supports solar development within the country by removing VAT and import taxes on the main solar components (panels, batteries, inverters, and regulators).
Mini-grid developers like PowerGen have so far struggled to attract long-term financing for their projects because each mini-grid is too small to be individually financed. To address this, CBEA established a special purpose entity in Tanzania that will purchase PowerGen’s existing and future operating mini-grids in Tanzania.
PowerGen will continue to provide long-term customer and asset management services to the mini-grid customers. This minimises transaction costs and allows investors and lenders to provide long-term financing based on the cash flow generated by the assets themselves, similar to how most of the world’s 1,000GW of wind and solar projects have been financed.
