A look at Tanzania’s first wind farm

Despite development works for the Mwenga farm starting in April 2018 – when German manufacturer Enercon was awarded a turbine supply contract – the project took off a year later.

REPP’s investment manager, Camco Clean Energy (Camco), arranged to extend a $1.2m subordinated loan from REPP, which was designed to maintain equity returns at a reasonable level in the context of a cost over-run and was approved by REPP’s investment committee in June 2019.

Camco and REPP were not the only stakeholders in the project: given its position as REPP’s sole donor, the UK Government was also heavily involved in the wind farm’s development.

REPP is supported with £148m of funding from the UK’s International Climate Finance – a government-backed commitment to assist Global South countries when facing climate change challenges – through the Department for Business, Energy and Industrial Strategy (BEIS).

The Mwenga wind farm – consisting of three turbines and located in southern Tanzania’s Iringa region – will be connected to the existing rural grid, which is already operated by a 4MW hydropower plant, belgong to renewable energy developer Rift Valley Energy Group.

The hydropower plant has been operational since 2012 and has provided energy to 4,500 homes and businesses. The wind farm’s developers hope that the project, once operational, will connect 1,500 additional customers over the next two years.

Camco’s managing director Geoff Sinclair was satisfied with the project as it provided a “demonstration of wind’s potential in the country and hopefully paves the way for further wind projects.”

“It is also quite innovative in that it forms a hybrid system – another first for Tanzania – with an existing hydro project that combines grid, corporate and local offtake. Once completed, the wind farm will provide added stability and enable constant power to be provided to customers throughout the seasons,” added Sinclair.

The wind farm will also help with the hydropower plant’s seasonal unreliability. According to Dr Matthew Josephat Matimbwi, executive secretary at the Tanzania Renewable Energy Association (TAREA), the rationale behind the wind farm is largely to compensate for the low levels of water registered during the dry season.

“During the dry season, the hydropower plant  is no longer able to produce 4MW of electricity because of the river’s water levels. This is the driver behind the development of the wind farm, as well as an attempt to mitigate climate change."

The Mwenga wind farm is not an isolated case of renewable energy investment in Tanzania but is actually part of a bigger plan to help the country grow while transitioning to greener energy sources.

Vision 2025 is a general development plan established by the Tanzania Planning Commission in 1999 “to graduate the country from a least developed country to a middle-income country with a high level of human development by 2025”.

As part of Vision 2025, the country introduced in 2012 the Big Results Now initiative to speed up projects in the energy sector, improve electricity access, and generate 100MW of electricity from wind.

“The Mwenga wind farm aligns perfectly with Vision 2025, as one of the plan’s targets is providing electricity to the whole population, using all the renewable sources of energy and technologies possible,” said Matimbwi.

The country has also adopted a national energy policy, called the National Rural Electrification Programme, which aims to increase electricity access from 36% in 2014 to 50% by 2025, focusing specifically on renewables.

The country’s climate and weather are also very conducive to wind energy. According to an analysis published in 2017 by the University of Sydney’s Institute for Sustainable Futures, the country has abundant wind resources, especially in the Great Lakes region, the plains, and the Rift Valley.

Areas such as central Tanzania’s Singida region and Njombe, in the western part of the country, have an average of 9.9m/s and 8.9m/s respectively, an adequate speed for wind-based electricity generation.

Stakeholders cite the positive impact the Mwenga wind farm will have on local communities as the main rationale behind their decision to invest in the project.

Camco managing director Geoff Sinclair said that the wind farm will provide customers with a cheaper source of power.

“The project improves Mwenga’s rural network, providing a wider range of consumers with access to electricity supply that is cheaper than the national grid and more reliable than other sources of power. This will enable a faster rate of economic growth and job creation, along with significant health benefits.

“The project itself has so far created approximately 50 temporary jobs during construction and will create a further six permanent jobs during operation,” said Sinclair.

According to Dr Matimbwi, the Mwenga project will also benefit local communities by giving them the electricity needed to power their activities.

“The wind farm will impact local communities by giving them the electricity needed to develop their economic activities, continuing the work done by the hydro plant.

“In this area, people were using diesel-power engines to run their milling machines, which was very expensive. By using power from the Mwenga project, the costs of running the machines will lower and allow a margin for profit,” added Matimbwi.

Despite the energy resources available in the country and the government’s pledge to invest in renewable energy, foreign investors might still feel discouraged from investing in Tanzania.

Institutional and regulatory barriers are one of the main difficulties of developing renewable energy projects in the country, stakeholders say.

“It’s very difficult to get a bankable PPA signed, offtaker creditworthiness remains an issue, and tariffs are regularly and somewhat randomly reduced to levels that undermine commercial viability.

“Given the regulatory and institutional barriers I imagine a lot of investors are seriously asking themselves if it’s worth it to invest. On our part the answer is yes, but only where we can be confident that the risks that I mentioned are well mitigated,” added Sinclair.

Organisations like TAREA, which lobbies for the use of renewable energy at an institutional level, might be the point of contact between private investors and the government.

“Our responsibility is negotiating with the Tanzanian authorities to enable the private sector to develop renewable energy technology. This is our main role,” concluded Matimbwi.