Liberalization and the leveraging of new technologies in the electricity sector may go a long way to expanding access to power, while the government weighs up new sources of generation.

With approximately 80% of Tanzanians living in rural areas, extending the national electricity grid has proven a challenge—today, only 21% of the population is hooked up, with solar panels utilized in areas that have no mid-term hopes of being connected.

The country currently has a generation capacity of 1,438.24 MW and a per capita consumption rate of 46 kWh per annum, a figure that is increasing by over 10% a year. According to the state-owned Tanzania Electric Supply Company (TANESCO), which is soon to undergo a restructuring aimed at liberalizing the sector, hydro contributes 73% of total power generation, with gas and thermal contributing the bulk of the remainder. Shortages have not been uncommon in recent years, due mainly to the country's reliance on hydro sources, although TANESCO is hoping that a better mix of hydro, coal, and renewables, as well as a steady supply of gas when the Mtwara-Dar pipeline is completed, will provide the country with the energy stability it needs and limit the state's need to import fuel oil, the high price of which negatively impacts the trade balance. “We want to generate enough power so that even if hydropower does not contribute anything, we will still have enough power from natural gas," said Felchesmi J. Mramba, Acting Managing Director of TANESCO.

TANESCO is also looking at innovative ways of circumventing the problem of a limited national grid. Plans include developing solar energy infrastructure in areas that might not be hooked up to the grid, within the coming decade, building small hydro energy facilities that can provide power in smaller communities of around 3,000 people, and constructing mini-grids that are not connected to the main grid but instead dedicated to particular regions. “You can have a mini grid with power generation from solar, biomass, and possibly diesel for night time supply to create a kind of hybrid generation," added Mramba.

The sector is also set to undergo a revolution as TANESCO draws up plans for restructuring. “We are thinking of establishing three companies: one for generation one for transmission, and another for distribution," Mramba informed TBY. In terms of generation, the restructuring will also be accompanied by liberalization, with the sector opened up to private players. “More participation from the private sector will relieve the government somewhat when it comes to investing in power generation," said Mramba. While transmission will remain solely a state enterprise, TANESCO sees future opportunities also opening up in the distribution sector. “Initially, we are thinking to remain with one distribution company, but to open up in the future so that other players that want to participate may do so in various places," he explained.

The future of the country's generation sector will be shaped by the development of its natural gas resources. With diesel currently a key resource for the country's thermal infrastructure, gas is likely to provide a domestic source of generation diversification. The Mtwara-Dar gas pipeline will stretch 500 kilometers from the south of the country to Dar es Salaam, bringing sufficient gas for 3,900 MW of generating capacity. The government is also actively looking to get the right infrastructure in place for when the gas begins to arrive, recently signing a PPP agreement with the Sumitomo Corporation for the construction of a 240-MW gas-fired plant on the outskirts of Dar es Salaam at a cost of $414 million.

With technology now at the forefront of East Africa's development, new solutions are also creating new challenges. With more and more schools adopting e-readers as an innovative way to bring books to students, as well as mobile money solutions creating new opportunities for Tanzanians without access to traditional e-banking, extending access to electricity is becoming even more essential. A combination of market liberalization, new energy resources, and an increased interest in technology could be exactly what the country needs to shine a light on the remaining 79%.