Rooftop Solar Systems
Indicative Return:
Investment Timeframe
Market Size
Ticket Size
Develop and operate rooftop solar energy systems to provide lighting and energy for other domestic and industrial uses, such as refrigerators, water heaters and other appliances, for residential and industrial consumers specifically in areas where the national grid does not reach.
Expected ImpactDevelop and operate rooftop solar energy systems to provide lighting and energy for residential and industrial consumers specifically in areas where the national grid does not reach.
RegionsSector
Renewable Resources and Alternative Energy > Alternative Energy
Direct Impact SDGs:
Indirect Impact SDGs:
Development need: Energy is important in promoting Tanzania’s industrial development. This applies particularly to transforming productive sectors like agriculture, which are beset by challenges of low productivity. However, the energy sector itself is faced with challenges, including unreliability and inefficiencies in supply (1, 2, 3).
Policy priority: The Tanzanian government recognizes energy as important in promoting socio-economic development. It is committed to promote improved performance and spur prudent and optimal use of the energy resources so as to tap into unutilized potential in the productive sectors. Over the medium to long run, the government seeks to implement its 100% renewable energy policy (1, 4).
Gender inequalities and marginalization issues: Energy is a critical enabler in reaching socio-economic development goals for men and women. However, the benefits of increased access to modern and cleaner energy services often fail to accrue evenly to both gender. Women bear the burden of inefficient energy technologies, which in turn affects their health, time and productivity (5).
Investment opportunities introduction: Tanzania is endowed with diverse energy sources, including natural gas, biomass, hydro, geothermal, solar and wind power, much of which is untapped. Significant opportunities exists in the exploration of new and renewable energy resources and promotion of energy efficiency technologies and conservation initiatives (6).
Key bottlenecks introduction:
About 50% of the Tanzania’s population lives in poverty, out of which 35% is unable to access all of the basic needs, including energy services. The poor spend about 35% of their household income on energy, compared to 14% for other socio-economic groups, which may result in limited purchasing power (7).
Development need: Tanzanian energy sector is faced with several challenges including: lack of adequate and sustainable energy diversification systems; insufficient promotion and use of energy efficient technologies and behaviors; inability to optimally utilize the renewable energy potential across the (1,4,25)
Policy priority: Tanzania’s government is committed to increase power generation predominantly by using renewable sources, such as hydropower, wind, solar and thermal energies. The emphasis is premised on the fact that if renewable energy is produced and utilized in a modern and sustainable manner, it will help to eliminate energy shortages and inefficiencies in the country (8).
Gender inequalities and marginalization issues: Increasing access to modern energy services can make a significant difference in women’s lives in terms of their health, time use, education and income generation. Given the opportunity, women have demonstrated that they can be producers and suppliers of energy products, as well as energy service providers (9).
Investment opportunities introduction: Alternative energy opportunities exist in the manufacturing and distribution of solar panel and kits, energy storage systems, solar generators, inverters, chargers and charger controllers (10).
Key bottlenecks introduction: Solar has not been utilized fully as energy sources in Tanzania, even though the country is in one of the major global solar belts, with 2,800-3,500 hours of sunshine per year and a global radiation of 4-7 kWh/m2 per day. Despite this potential, solar energy has predominately been used for drying to date (11).
Critical IOA Unit
1 million solar-powered homes in Tanzania
Tanzania’s estimated market value for rooftop solar systems is US 11.6 million. However, sales through the Cash+PayGo business model had a negative CAGR of -19% between 2014 and 2018. This implies a need to adopt an alternative consumer financing model, such as PayGO only (13).
The solar energy market in Tanzania has drastically grown and increased over the last few years. Solar energy is used mostly in rural areas with about 64.8% compared to urban areas with only 3.4%. Close to six million people were supplied with improved solar energy access from 2016 to 2018. The number of off-grid transactions went up from 36 in 2017 to 107 in 2018 (13, 14).
Currently, there are more than one million solar-powered homes in Tanzania, with solar photovoltaic (PV) panels ranging from 10 to 100 kW per home (14).
In a benchmark project from Uganda, an investment for a USD 250,459 off Feed-in-Tariff (FiT) rooftop solar energy system start yielding positive results from year 7 all through to year 15 (16).
Ticket SizeMarket – Highly Regulated
Business – Supply Chain Constraints
Market – High Level of Competition
Out of half the Tanzanians that live in poverty, 35% is unable to access all of the basic needs, including energy services. The poor spend about 35% of their household income on energy while the better offs spend only 14%. Lack of access to modern energy services creates a vicious cycle of poverty for rural communities due to continued limited production opportunities (23).
Traditional biomass accounts for 90% of total primary energy consumption in the Tanzania. Nearly 1 million tons of charcoal consumed each year produces 20–50 million tons a year in CO2 emissions, and requires an estimated 30 million m3 of wood, with annual average loss in forest cover at 100,000–125,000 hectares. This energy supply and end use structure reflects Tanzania’s low level of development and contributes to the intensification and perpetuation of poverty (4).
Despite its large abundance and reliability, solar power constitutes only a small share of installed energy capacity in Tanzania. Out of the total electrified households, 74.9% and 24.7% are electrified with national grid and solar power, respectively (12).
Tanzania is mostly dependent on imported fossil fuels for its electricity particularly petroleum products. The Country imports an average of imported a total of 4.6bn litres of petroleum products per year. This represents a heavy burden for the country’s socioeconomic development and energy plans. Increasing dependence on fossil fuels is causing fuel price shocks, inflation and it is hindering government efforts to expand energy access due to the scarcity of financial resources (4)
Rooftop solar systems help to meet Tanzania’s energy needs. It can play a key role in the provision of affordable, sustainable and locally generated electricity (4).
Promoting renewable energy sources through rooftop solar systems reduces Tanzania’s overreliance on imported fossil fuels, particularly given the growing energy needs. It also provides an alternative to biomass energy which is currently used for cooking (3).
The energy generated through rooftop solar systems provides productive use opportunities in a number of sectors, such as agriculture, commercial enterprises and industrial activities, which allows for greater income generation (13).
People: Communities without access to the grid obtain a reliable and affordable energy source for consumptive and productive purposes.
Planet: The environment benefits from lower greenhouse gas emissions compared to fossil fuels. The latter is the largest single source of greenhouse gas emission. It accounts for almost 25% of the total greenhouse gas emission (30).
Corporates: Solar product manufacturers obtain new market opportunities, and distributors enjoy enhanced demand for products and services.
Public sector: The government benefits from greater energy coverage through renewable sources.
People: Communities with access to the grid obtain an alternative energy source offering reliable, affordable and sustainable energy.
Gender inequality and/or marginalization: Women and youth obtain employment opportunities particularly in marketing and distribution networks.
Planet: The environment enjoys a lower reliance on biomass for cooking, which contributes to a more sustainable use of forests. This will reverse the current trend where the average annual loss in forest cover attributed to charcoal production is estimated at 100,000–125,000 hectares (25).
Corporates: Secondary businesses and SMEs benefit from opportunities to sell related products, such as solar battery chargers, refrigerators or water heating systems.
Public sector: Public institutions, such as local government buildings, benefit from reliable energy supplies.
The end use of the system, can create significant environmental damage if not managed well. This is particularly the case because renewable energy technologies in developing countries including Tanzania are new. A lot of people have an insufficient understanding of these technologies in terms of its establishment, application, and socioeconomic
and environmental importance 12)
Unavailability of equipment, inputs, accessories and spare parts could may limit the efficiency of rooftop solar systems and hence limit the impact.
Lack of quality control standards and enforcement, resulting in low-quality products being sold in the local market, may compromise the impact of the rooftop solar systems.
If the rooftop solar systems are not affordable to low-income communities, for example due to unsuitable financing options provided, the expected impact may be limited.
Impact Classification
B—Benefit Stakeholders
Rooftop solar systems provide energy for consumptive and productive purposes, and mitigate environmental impacts of non-renewable energy sources currently used.
Low-income households, especially those not within the reach of the electricity grid, solar power companies and distribution actors, and the environment benefit from rooftop solar systems.
While the rooftop solar system model is proven, input availability, quality of products and affordability and access for low-income communities require consideration.
Develop and operate rooftop solar energy systems to provide lighting and energy for residential and industrial consumers specifically in areas where the national grid does not reach.
National Energy Policy of 2003: Outlines government commitment to promote environmentally sound technologies. It also emphases the role of private sector in reducing the stress on resources use and the environment. The central role of science and technology in the exploitation, processing and utilization of natural resources is also highlighted (31).
The National Rural Electrification Program, 2013: Outlines government commitment to (i) increase access to electricity in rural areas; (ii) scale-up the supply of renewable energy in rural areas. Key areas of focus are renewable technologies, including solar photovoltaic (PV), wind, biofuels, wind, and geothermal. This program is strategically relevant and fully aligned with TDV 2025 (32)
National Energy Policy 2015: Outlines government commitment to enhance utilization of renewable energy resources for power generation and promote energy efficiency and conservation in all sectors of the economy (33).
National Five Year Development Plan 2021 (FYDP III): Promotes improvements in infrastructure networks to attain low-cost energy service that allows more inflow of investments and make Tanzania a destination for producing efficient and competitive goods and services as well as a source for competitive energy supplies within the region. (1)
Financial incentives: The Tanzania Rural Electrification Expansion Project provides renewable energy companies with credit lines of USD 10-30 million. It also offers working capital and term loans to renewable energy companies and small power producers (13).
Fiscal incentives: For solar components, such as panels, batteries, inverters and regulators, Tanzania offers exemption of import taxes (import duty and VAT) (13). In general, Tanzania offers 0% import duty on project capital goods, as well as allows 50% capital allowances in the first year of use for plant and machinery used in manufacturing processes (21).
Tanzania Bureau of Standards (TBS) Quality Control Regulations, 2018: Provides the basic standards required for solar products. It allows for testing, verification and registration of products (13).
Rural Energy Act 2005: An Act to establish the Rural Energy Board, Fund and Agency to be responsible for promotion of improved access to modern energy services in the rural areas of Mainland Tanzania (34).
Energy and Water Utilities Regulatory Authority (EWURA) ACT 2001, (CAP 414). An Act to establish a Regulatory Authority in relation to energy and water utilities and to provide for its operations. (35).
Small Power Producer (SPP) Policy, 2008: Provides the regulatory framework encouraging low-cost investment mini-grids. It create a feed-in tariff which is technology-neutral (13).
Helvetic Solar is a private company operated by a Tanzanian entrepreneur, Patrick Ngowi. The company has installed more than 6,000 small rooftop solar systems in Tanzania and four other East African. Ngowi’s inspirational story has been featured and profiled on many international platforms and media, such as CNN, BBC and Forbes (15).
Private sector
SimuSolar, Mobisol
Ensol
JUMEME
PowerCorner
Solar Sisters. D.light
Green Light Planet
ZOLA
Solaris-Tanzania
Jaza, Solar Grid
Sunny Money
Ensol
Arti
Solar Grid
Government
Ministry of Energy and Minerals
Energy and Water Utilities Regulatory Authority (EWURA)
Tanzania Bureau of Standards (TBS)
Arusha Technical College
University of Dar es Salaam College of Engineering and Technology
Tanzania Renewable Energy Business Incubator.
Multilaterals
World Bank Group (WBG)
UNDP
UNEP
USAID (East Africa Energy Program and Power Africa Off-Grid Project)
Non-Profit
The Tanzania Renewable Energy Association (TAREA)
Tanzania Gender and Sustainable Energy Network (TANGSEN)
The Tanzania Association of Microfinance Institutions (TAMFI)
Savings and Credit Cooperative Union League of Tanzania Ltd. (SCCULT)
Public-Private Partnership
Global Off-Grid Lighting Association (GOGLA)
Overseas Private Investment Cooperation (OPIC)
Sector & Subsector Sources
1) United Republic of Tanzania, Third National Five-Year Plan (FYDP 3), 2021
2) United Republic of Tanzania, National Energy Policy 2015)
3) World Future Council, Climate Action Network for Tanzania, Policy Road Map for 100% Renewable Energy and Poverty Eradication in Tanzania, 2017
4) Institute for Sustainable Futures,100% Renewable Energy for Tanzania, Access to Renewable Energy all within One Generation, 2017
5) African Development Bank, Gender Country Briefs – Tanzania, 2017
6) UNDP, Tanzania’s Se4All Investment Prospectus, 2015
7) GTZ (2007): Eastern Africa Resource Base: GTZ Online Regional Energy Resource Base: Regional and Country Specific Energy Resource Database: IV – Energy Policy.
8) Clean technologies, The Potential Renewable Energy for Sustainable Development in Tanzania: A Review, 2018
9) ENERGIA International Network on Gender & Sustainable Energy. Mainstreaming Gender in Energy Projects, A practical Handbook, 2011
10) SmartSolar Tanzania 2022, The Information Platform for Solar in Tanzania, Smartsolar-tanzania.com/solar-sector-information/regulations-for-solar-in-tanzania/
11) Mashauri Adam Kusekwa, Biomass Conversion to Energy in Tanzania: A Critique
IOA Sources
12) Clean technologies, The Potential Renewable Energy for Sustainable Development in Tanzania: A Review, 2018
13) USAID, Off-Grid Solar Market Assessment Tanzania, 2019
14) Mathew Matimbwi et al, Tanzania Energy Situation, 202
15) USAID, Cost-Benefit Analysis of Off-Grid Solar Investments in East Africa, 2017
15) USAID, Tanzania Power Africa Fact Sheet
16) GET.INVEST, Market Insights, Uganda: Captive Power Case Study: 300 kWp Rooftop Solar PV System at an Office Building,
17) Tanzania Invest.com
18) International Trade Administration, Energy Resource Guide, Tanzania, 2021
“19) UKaid, Tanzania Market Snapshot, Horticulture Value Chains and Potential for Solar Water Pump Technology, 2019
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20) Public-Private Partnership Act. No. 18, 2010
21) EAC Investment Guide, United Republic of Tanzania Standard Incentives for Investors
22) International Trade Administration, Tanzania – Country Commercial Guide, https://www.trade.gov/country-commercial-guides/tanzania-energy
23) Tanzania Energy Situation, Energypedia, 2020 https://energypedia.info/wiki/Tanzania_Energy_Situation
24) Global SDG Indicator Platform, https://sdg.tracking-progress.org/indicator/9-4-1-carbon-dioxide-emissions-per-unit-of-value-added/?tab=map
(25) United Republic of Tanzania, Intended Nationally Determined Contributions (INDCs), 2021
26) Renewable Energy in Africa, Tanzania Country Profile, 2015
27) Access of Civil Society Organisations for Clean Energy Access, Energy access in Tanzania: the Role of Civil Society Organisations, 2016
28) Tanzania: Carbon dioxide (CO2) emissions, https://www.theglobaleconomy.com/Tanzania/carbon_dioxide_emissions/
29) 29 USAID, Greenhouse Gas Emissions Factsheet: Tanzania, 2018
https://www.climatelinks.org/resources/greenhouse-gas-emissions-factsheet-tanzania#:~:
30) Huria Journal Vol 26 (1), March 2019: AligHnment to Climate Compatible Development: A Content Analysis of the Tanzania National Energy Policy
31) United Republic of Tanzania, National Energy Policy 2003
32) United Republic of Tanzania, The National Rural Electrification Program, 2013
33) United Republic of Tanzania, National Energy Policy 2015
34) United Republic of Tanzania, Rural Energy Act 2005
35) Energy and Water Utilities Authority Act 2001 and 2006
36) United Republic of Tanzania, Energy Access Situation Report, 2016