Rea presentation to Renewable energy day

NATIONAL RENEWABLE
ENERGY DAY
RENEWABLE ENERGY FINANCING OPPORTUNITIES FROM

Sustainable Energy for all by 2030
THE GOVERNMENT

National Museum, Shaaban Robert Street,
Dar es Salaam,
JUNE, 6TH – 7TH 2012

Rural Energy Agency (REA)
P.O. Box 7990
Dar-Es-Salaam
Tel:+255 (0) 22 241 2001-3
Fax: +255 (0) 22 241 2007
Email: info@rea.go.tz
Website:www.rea.go.tz

PRESENTATION OUTLINE
 Background
 Projects Financed through REF since 2007

 Project implementation Status

 Budget Allocation 2007/08 – 2011/12

 Project Eligibility Criteria

 Exploiting Opportunities

 Required funds to Finance ongoing/New Projects

 Challenges

 Way forward

 END

BACKGROUND

ENERGY SECTOR REFORMS
The following are some of Institutional and regulatory
frameworks in the sector:-

 National Energy Policy 2003

 Rural Energy Act 2005

 Electricity Act 2008

 Energy and Water Utilities Regulatory Authority Act 2001

 Petroleum Exploration and Production Act 1980

 Petroleum Act 2008 (downstream)

 Public Private Partnership Act 2010

REA/REF OPERATIONAL
EXPERIENCES

From the Energy Policy 2003; a Policy
statement states that :-
“ Rural energy is diverse and characterized by various actors and
interests. A sustainable institutional framework that can cope

with the diversity, manage and co-ordinate various efforts, is a
key factor for successful development of rural energy. So far,
appropriate focus for handling rural energy services is lacking.
There is a need to establish an institutional framework that can
mobilise, co-ordinate and facilitate private and public initiatives
in rural and renewable energy”.
 The Rural Energy Agency (REA) was established as an
institutional framework to mobilize, coordinate and facilitate
private and public initiatives for provision of modern energy
services in rural Mainland Tanzania . REA/REF started
operations in October, 2007.

VISION AND MISSION OF REA

 Vision

Transformation of rural livelihood
through provision of modern energy
services.

 Mission
To promote and facilitate availability
and access to modern energy services in
rural Tanzania

REA/REF GOVERNANCE

Board reports to both Ministers

Minister of MoF Minister of MEM
Minister appoints
Board from
Rural Energy Board stakeholder reps

Stakeholders
REB governs REA is
REF secretariat to REB

Rural Energy Staff of Rural
Fund Energy Agency
REB apponts Trust Agent to Works with
manage REF payments project developers
Trust Project Developers
Agent & Partners

SOURCES OF FINANCE FOR THE
REF FOR FINANCIAL YEAR 2011/12.


PROJECTS FINANCED THROUGH
SINCE 2007


BUDGET ALLOCATION 2007/08 –
2011/12

TZS

YEARS

PERCENTAGE DISTRIBUTION OF
PROJECTS FINANCED FROM REF AS
OF MARCH 2012


EXPECTED NUMBER OF
CONNECTIONS FROM TURNKEY
RE THROUGH TANESCO


DISTRIBUTION OF SOLAR PV
SYSTEMS

PERCENTAGE DISTRIBUTION OF
PROJECTS ISSUED WITH
COMPLETION CERTIFICATE


PROJECT ELIGIBILITY CRITERIA
Eligible projects supported by the REF include:
 Grid Extension;
 Off-grid;
 Small hydropower

 Supply into Main Grid & Distr. Net.

 Supply to Mini grid & Distr. Net;

 Supply into Main Grid

 Supply into Mini grid

 Green field

Solar Packages/Solar lanterns;
 Wind;

 Biomass; and

 Energy efficiency.

 Technical Assistance to project developers
 According to Section 22(3) of the Act, the Fund is used mainly to co-
finance projects from project champions and cannot be used for financing
operation costs or debts services costs of any project or developer.

SMALL POWER GENERATION AND
DISTRIBUTION PROJECTS (SPGD)


SMALL POWER GENERATION AND
DISTRIBUTION PROJECTS (SPGD
CONT.
REA in collaboration with public and private
sector is carrying out the following:-
a) Promoting development of small power
projects which can sell power to grid and

mini-grid networks by putting in place;
 Standardized Power Purchase Agreement
(SPPA) and Standardized tariffs (SPPT)
calculation methodologies based on the
avoided cost to the power utility;

 Guidelines and Rules, specifications,
standard and norms for connection of small
power project to the grid/minigrid;

 Credit line to enable small power developers
to access long term loans from commercial
banks

EXPLOITING OPPORTUNITIES
1. REA supports development of rural electrification projects by
providing the following:-
 Matching grants for:-
- Market development (e.g. market studies, promotion, education,

etc)
- Business improvement (e.g. business plan preparation, staff
training, etc)
- Pre-investment and preparation activities (e.g. preparation studies
for licenses)
- Market entry (e.g. establishing new outlets and networks,
demonstrations)
- New initiatives (e.g. new alliances and partnerships, new
territories, etc)
 Performance grants; (during development phase)
 Technical assistance; (Engagement of consultants)
 Capacity building (training, );
 Facilitation of carbon finance;
 Support to participate in local and national exhibitions;

EXPLOITING OPPORTUNITIES CONT.
2. Scaling Up Renewable Energy Program in Low Income
Countries (SREP)
 In 2011 Tanzania through REA expressed interest to be among the pilot
countries;

 Tanzania was in the reserve list only six countries were selected;
 In 2012SREP sub – committee meeting held in Nairobi March 2012
select Tanzania to be the 7th country in the pilot list;
 A total of USD 50 Mln has been allocated to Tanzania though REA;
 To prepare list of renewable energy projects to be implemented under
SREP financing.
Measuring Success
• Remove barriers to renewable
energy
• Lead to replication of renewable
energy investments
• Increase installed renewable
energy capacity in a country’s
energy supply

REQUIRED FUNDS TO FINANCE
ONGOING PROJECTS FY 2012/13 (BILLION
TZS)


NEW PROJECTS FY 2012/13 (BILLION
TZS)


OTHER DPS

Solar PV

SHP

Biogas

SSMP 1

Pilot
Regions
for
IREP

CHALLENGES
o Increased electricity demand which require massive
investments in generation, transmission and
distribution;
o Inadequate funds allocation and availability while
the grants requests are ever increasing

o Inadequate private sector participation in
investment;
o Limited long-term financing especially for small /
isolated rural energy projects;
o High interest rates loans from commercial banks;

WAY FORWARD
 REA intends to:-
 Use Low Cost Design Standards for affordability
strategy and scale up rural electrification;

 Increase sources of funds for Rural Energy Fund;
 Coordinate with Local Government Authorities on
energy issues;
 Continue to build capacity of the private sector to
participate in scaling up access to modern services
to rural communities;
 Continue with international networking and
linkages eg South-South cooperation;
 Disseminate Baseline Energy Survey results; and
 Carry out Rural Energy Master Plan.

SPP DEVELOPMENT
RENEWABLE ENERGY PROJECTS


ASANTENI KWA KUNISIKILIZA!

THANK YOU FOR YOUR ATTENTION

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