James Richards. Public Finance International, 10-01-17: The African Development Bank has approved a $870,000 grant to promote off-grid electricity generation in Tanzania. The money will go towards funding private sector clean energy projects, with a view to improving access to electricity in rural areas of the East African country. The grant was approved under the Sustainable Energy for Africa facility, which is funded by the governments of Denmark, the UK, the US and Italy.
National energy coverage in the East African country is estimated to be around 20%. In rural areas, coverage is particularly poor, with only 7% of the population having access to electricity. According to the AfDB, this means almost 30 million people lack a connection to the electricity transmission grid.
Moreover, low population density makes grid expansion projects – which would need to traverse vast swathes of uninhabited land – prohibitively expensive. A significant market therefore exists for off-grid electrification schemes.
The government of Tanzania has set an objective of increasing access to electricity by promoting renewable energy powered by off-grid and mini-grid electrification schemes. Official estimates suggest as much as half the country could be served by off-grid power, and that mini-grids could benefit around nine million people.
By 2022, the government aims to have established 1.3 million connections in rural areas and ensure the average access rate to electricity in all areas is boosted to 35%.
Funding from the AfDB will therefore channel “appropriately tenured and priced” finance to private sector companies developing and operating projects in rural areas using renewable technologies.
Commenting on the scheme, which was approved at the end of November, Tonia Kandiero, AfDB resident representative in Tanzania, said: “The SEFA support will help address [the] existing finance gaps in the market and accelerate private sector participation in off-grid electrification in Tanzania.”
She added: “We expect this initiative to make a real contribution to Tanzania’s ambitious energy access targets, ultimately improving livelihoods for all rural communities in the country.”
Kandiero confirmed that the funding would be provided in the context of the AfDB’s New Deal on Energy for Africa strategy. This, she said, “stresses universal energy access through increased adoption of clean energy technologies and partnerships with the private sector”.