Tag Clean Energy Policy and Financing

Solar and Energy Transition: Good policy intentions but less progress: Assessing Tanzania and EAC’s Utility scale solar energy potential and policy gaps to fix

Governments are struggling with little success to attract and retain utility scale solar projects and many have died in their nascent stages. Yet utility scale solar projects could be a significant contributor to resolving the regions power shortages and increased energy access by sizeable proportions. So, what is holding back utility scale solar projects and how can governments maneuver to attract and retain more investors. 

By Moses Kulaba, Governance and Economic Policy Centre

@energypolicy @cleanenergy @solarafrica @energytransition

Multiple studies have concluded that the Eastern Africa region has the highest technical potential for solar power technologies, with estimates of 175 PWh and 220 PWh annually for Concentrated Solar Power (CSP) and Photovoltaics (PV) respectively. African countries with the highest CSP and PV potentials are Algeria, Egypt, Namibia, South Africa, Sudan, and Tanzania.  The annual technical solar power potential in Tanzania is estimated to be 31,482 TWh for CSP technology and 38,804 TWh for PV technology. Despite this potential, Tanzania and EAC lags behind its peers such as South Africa, Algeria and Egypt. Besides the technical aspects as earlier discussed, the policy terrain in East Africa has been largely zig zag and therefore not coherent enough to support investment.

In this second part of our analytical series on solar as a clean energy source, we attempt to shade some light on the policy terrain in Tanzania and East Africa generally and how this is contributing towards holding back large-scale investment and utility scale solar penetration.

Policy and investment terrain

Generally, the policy and investment landscape in East Africa has been evolving at a snail pace. Both Tanzania, Kenya and Uganda have renewable energy policies in place however these are not backed up by adequate promotion, implementation and funding. The regulatory terrain has also been discordant.  For the region to benefit, the policy and investment trajectory will have to align and move faster, catching up with the global trends and the drive to clean energy.

Tanzania’s policy terrain.

The government passed a National Energy Policy (NEP) in 2015 with a commitment to increase the share of renewables in its energy mix. The NEP 2015 seeks to facilitate improvement of investment environment to promote and support private sector participation. The policy further commits to scaling up utilization of renewable energy source by among others introducing a.. feed-in-tariffs for renewable energy technologies and structure power purchase agreements for renewable energy.  

It further commits to facilitate integration of renewable energy technologies in buildings and industrial designs and establish frameworks for renewable energy integration into the national and isolated grids; an Promote sustainable biofuel production and usage.

However, actualization of this has been slow. To date contribution of renewables to Tanzania’s energy mix remains low at 1.2 %. By 2021 Tanzania’s electricity generation came mostly from natural gas (48%), followed by hydro (31%), petrol (18%) with solar and biofuels contributing a mere 1% each. The National energy consumption balance is still dominated with biomas (charcoal and firewood) use at around 85%.

Tanzania government admits that that solar utilization is constrained by high initial costs, poor after sales services, insufficient awareness on its potential and economic benefits offered by solar technologies plus inappropriate credit financing mechanisms.

Previous policies, particularly the 2003 was successful in the establishment and operationalization of Energy and Water utilities regulatory authorities, the Rural Energy Agency (REA) and the Rural Energy Fund, However, it fell short of making advancements on the renewable energy, particularly by not creating a designated and operational Renewable Energy Fund. By design it is implied that funding of the renewable sector would come directly from the consolidated Energy Fund. However, with conflicting priorities and government’s focus on increasing energy access to hydro and gas fired electricity, much of the available funding was channeled towards rural electrification.

In 2012 Tanzania was one of the pilot countries selected to prepare the Scaling Up Renewable Energy Program (SREP). The chief objective of this plan was to transform the energy sector of Tanzania from one that is more dependent on fossil fuels to one that is more diversified with a greater share of renewable sources contributing to the energy mix through catalyzing the large–scale development of renewable energy.

The SREP–Tanzania Investment Plan was prepared by the Government of Tanzania, through a National Task Force led by the Ministry of Energy and Minerals (MEM) with support from the Multilateral Development Banks (MDBs). However much of this plan is yet to fully takeoff and its translation into actual deliverables yet to materialise

Cognizant of the significant gaps that exist, in 2023 the Minister of energy at time, Hon January Makamba revealed that the government was developing a new Renewable Energy Policy to further enhance investments in renewable energy. This policy would capitalize on the substantial financial resources, capital markets, and advancements in new technologies dedicated to renewable energy globally. He also announced ongoing efforts to identify areas with renewable energy resources and prioritize native investments in wind and solar projects. The government would provide support in this regard and establish guidelines for project implementation.

In 2023 Tanzania entered into an agreement to construct the Country’s first-ever solar photovoltaic power station to feed into the national electricity grid. According to the Ministry of Energy, the project is part of a larger initiative of installing 150 MW of solar energy in the Kishapu district of the Shinyanga region. The first phase of the project to be constructed by Sinohydro Corporation from China was estimated at TZS 109 billion and was scheduled for completion before end of 2024.

According to the Minister, the implementation of the solar project reflected the government’s commitment to establishing a diverse mix of electricity sources in the national grid, incorporating water, gas, wind, and solar power. This approach aims to ensure a continuous supply of electricity, even in the event of a failure in one source.

There are also several large-scale solar power projects under development, including the 30 MW Singida project and the 50 MW Nyumba ya Mungu project. In addition to government efforts, there are also private companies and organizations working to develop renewable energy projects in Tanzania.

Similarly, Zanzibar, the semi-autonomous Island of Tanzania, also signed in 2023 an agreement with a Mauritius-based Generation Capital Ltd and Tanzania’s Taifa Energy to build its first large-scale 30MW solar PV power plant, as it seeks to become energy independent. The plant will cost $140 million. The Power Purchase Agreement (PPA) between the state-owned Zanzibar Electricity Corporation (Zeco) and the two companies to develop the 180 megawatts plant will be implemented in phases, according to Zanzibar’s Ministry of Energy and Minerals.

Kenya’s solar terrain

Garissa Solar Farm

So far, Kenya is leading in large solar projects.  There are at least 10 large solar farms in Kenya. The Garisa solar farm, is the largest in East and Central Africa, with 55 MW generation capacity. The solar farm sits on85 hectares (210 acres) and consists of 206,272 265Wp solar panels and 1,172 42kW inverters owned and operated by Rural Electrification and Renewable Energy Corporation. Others already operational or proposed include; Malindi Solar (52MW), Alten Kasses (52 MW), Kopere Solar Project (50MW), Eldosol Solar Project (48MW), Radiant (50MW), Rumuruti (40 MW), Nakuru Solar project (40MW), Witu (40MW) and Makindu (40MW).

Kenya has buttressed its renewable energy credentials with a new Energy Transition and Investment Plan (ETIP) launched in 2023. The ETIP spells out Kenya’s road map to delivering a 100% clean energy driven economy by 2050. The country is however yet to figure out how it will fund this ambitious plan. Over the past recent years Kenya has been facing significant budgetary constraints affecting funding of its major national development plans. Even when the government has committed to achieving 100% clean energy by 2030, it bets heavily on funding from external donors. With the recent trend in aid inflows and if they remain unchanged in the short and medium term, it will be a tall order Kenya to meet this target.

Uganda’s solar uptake

Uganda has been slowly catching up with its peers. Uganda’s policy commits to make modern renewable energy a substantial part of the national energy consumption. To increase the use of modern renewable energy, from the current 4% to 61% of the total energy consumption by the year 2017[i].

The policy terrain has been zigzagging and investment in renewables is still low but the government has blended its focus on hydropower generation with small investments in solar projects as back up for its hydropower. There was a big growth in 2021, reaching 92 MW, followed by a significant increase of around 6.9 MW, reaching a total of 98.9 MW Uganda’s installed solar energy capacity in 2022.

Some of the projects contributing to this growth include Kabulasoke Solar PV Park is a 20MW solar PV power project, located in Central, Uganda, Bufulubi solar project in Tororo and Access solar plants in Soroti.  New pipeline projects include the Amea West Nile Solar PV Park, a ground-mounted solar project, whose construction was expected to commence from 2024 and subsequently enter into commercial operation in 2025. The power generated from the project will be sold to Uganda Electricity Transmission under a power purchase agreement. 

This however falls short of achieving the targets as stipulated in Uganda’s Renewable Energy policy. Uganda’s renewable energy policy commits to establish and maintain a responsive legislative, appropriate financing and fiscal policy framework for investments in renewable energy technologies. It mentions forms of financing such as strengthening the Credit Support Facility and Smart Subsidies which are intended to scale up investments in renewable energy and rural electrification.

Moreover, a special financial mechanism, a credit support facility known as the Uganda Energy Capitalisation Trust, was instituted to help realise the policy but this expired in 2012 and had never been renewed[ii]. Uganda lags in meeting its policy targets as only 10 solar projects had been completed by 2022[iii].

What is the current market and investment size?

According to global energy reports, there is a substantive market size of solar photovoltaic (PV) in East Africa and Africa generally. The Middle East & Africa solar photovoltaic (PV) market size was valued at USD 5.00 billion in 2022. The market was projected to grow from USD 6.93 billion in 2023 to USD 37.71 billion by 2030, exhibiting a cumulative Average growth rate (CAGR) of 27.4% during the forecast period.

Despite its immense solar power potential, East Africa and Africa generally continues to lag behind other continents when it comes to building up utility scale grid and off-grid solar capacity, in part due to a stagnant policy regime, overlapping institutional roles, limited research, technical capacity and lack of appropriate financing facilities for investment.  Some proposed projects have failed to take off.  As a consequence, the total investment share of utility scale projects into East Africa remains comparable low.  

So, what can EAC governments do to make utility scale solar markets attractive?

Recommendations

# Governments must make policy switches from paper to aggressive attracting of investment into the solar PV East African markets. The policies may exist but the implementation gap is too big. Policy interventions and a national course-correction is urgently needed to effectively overcome structural barriers and create local value in the emerging solar market many of which is still left behind in this progress.

# Decentralization of energy generation away from vertically integrated power monopolies such as TANESCO and Kenya power could be a game changer.  De regulation and introduction of net metering by independent Solar PV power producers to directly generate and sell to customers could improve profitability of solar projects and attract new investments.

# Financing institutions must scale up project financing of renewable energy projects.  Solar projects are still expensive and funding is difficult to come by. Kenya’s Garisa solar project required an investment of KSh13. 7 billion ($135.7 million) and was funded by the Exim Bank of China. Other projects have required substantive investment with funds generated from private developers and energy venture capitalists. The existing financial institutions are yet to master tailing project financing to utility scale solar projects.

# Addressing land rights and underlying injustices. Large solar farms require large tracts of land and these can be a source of land grabbing, land deprivation and injustice, generating conflicts and endless litigation between potential investors and the communities. The renewable policies and investments have to sit well with land rights, guaranteeing free prior informed consent, fair compensation and equity,

# Socio-economic: Identifying and prioritizing suitable areas for building large-scale solar power plants is a complex problem. In contrast with the simplistic view, identifying appropriate geographical areas for solar power installation is not only linked with the amount of received solar radiation, but there are many other technical, economic, environmental, and social factors that should be considered like: alternative land uses, topographical characteristics of the land, conserving protected areas, potential environmental impacts, water availability, potential urban expansion, proximity to demand centers, roads proximity, and potential for grid connectivity.

# Solar technology firms must address intermittence and storage of renewable energy. Solar power is generally reliant on the availability of sunshine. Depending on the weather and hours of the day and night. Unfortunately, the technology has not advanced far enough and made cheaply available to East for storage of solar power. For solar power users the days are hot and the nights are cold.

# Government leaders must have a unified political will to support renewables as part of the master energy mix and regional energy power pool. So far there is a divided political opinion on what solar power can do in helping the governments to meet their national energy demands. While Kenya is a front runner, other countries are still focused on hydro and gas. The future of distributed solar therefore depends largely on good political will driving favorable polices and changing mindset to embrace solar power as a new source of energy. This could be reflected in new generation policy drivers such as requirement for solar considerations in building designs and integrated power systems.

[i] Renewable Policy for Uganda; https://s3-eu-west-1.amazonaws.com/s3.sourceafrica.net/documents/118159/Uganda-Renewable-Energy-Policy.pdf

 

[ii]

[iii]

Energy Transition: Understanding basics of solar energy and why it has failed to peak in East Africa

 

East Africa has abundant hot sunshine around the year yet harvesting this for large utility scale electricity has remained small. Partially, it is because the technical aspects of solar power make it a complicated energy source system than it may appear. Understanding is important in helping to shape policy and accelerated solarisation.

By Moses Kulaba, Governance and Economic Policy Center

@energy transition @solarenergy @solarafrica  @energypolicy

Early in March 2024 a heat wave hit South Sudan with temperatures soaring between 41 to 47 degrees Celsius. The temperature and its accompanying heat were too high that the South Sudanese Ministry of Health closed schools, advised the public to stay indoors and drink a lot of water to remain hydrated.  

The images of South Sudanese baking eggs under the open sun on the streets of Juba went viral rekindling the debate on the potential of harnessing solar energy to generate power. In a two part articles and policy briefs we discuss the technical aspects of solar power and the policy terrain undermining the utility scale investment levels in East Africa.

East Africa has abundant hot sunshine around the year yet harvesting this for large utility scale electricity has remained small. With about 50 MW generation, the Garissa Solar Plant is the largest grid connected solar power plant in East & Central Africa.

So far Egypt has the largest solar park in Africa. It spans 37 kilometers and has a total generation capacity of around 1.8 gigawatts, which is enough to power hundreds of thousands of homes and towns. The question is therefore asked why have we not seen large uptake of utility scale solar projects in East Africa? The answer zeros down to technology, political will and mindset.

The technical aspects of solar power make it a complicated energy source system than it may appear.  The mechanics behind solar power and how it can be harnessed with impact on a larger scale can/ is more complicated than it may appear. Harnessing solar for electricity generation requires technical expertise, political will and investment.  This brief dissects the basics of solar power and its potentials as a Peaker clean power source for East Africa.

What is solar power

According to scientists, solar energy comes from nuclear reactions which happen deep in the sun’s core. The sun is a giant hot glowing mass of hydrogen and helium at the center of our solar system.

Every second the sun burns and loses about 4 million tons of mass in a continuous complex nuclear fusion reaction. That mass when converted into energy is what drives solar energy outwards from the sun radiating into the solar system. Solar energy radiates from the sun as electromagnetic waves of different frequencies and energies which can be trapped and transformed into solar electricity.

The solar panel collects energy from the sun, this energy goes into an inverter, which is a key component of a solar PV installation. The inverter converts the steady electric power coming into the inverter into alternating current (AC) which is the predominant form of power used in an electric grid or connected to a service panel at a house.

Role of solar in global power systems

Globally the role of solar is still small although it has been increasing over the years. Solar power contributes about 10% of all renewable energy and 1% of total world energy. Bioenergy, hydro power and wind contribute the bulk (90%) of the total renewable energy of about 900 Mtoe, accounting for 10.5% of total energy use. Solar photovoltaic and solar thermal provide 5% each of renewable energy. These statistics are growing as the world constantly moves towards clean energy solutions by 2030.

According to Renewable Capacity Statistics 2024 report released by the International Renewable Energy Agency (IRENA) shows that 2023 set a new record in renewables deployment in the power sector by reaching a total capacity of 3, 870 Gigawatts (GW) globally.

With solar energy continuing to dominate renewable generation capacity expansion, the report underscores that the growth disparity did not only affect geographical distribution but also the deployment of technologies. Solar accounted for 73% of the renewable growth last year, reaching 1 419 GW, followed by wind power with 24% share of renewable expansion.

Renewables accounted for 86% of capacity additions; however, this growth is unevenly distributed across the world, indicating a trend far from the tripling renewable power target by 2030.

The 473 GW of renewables expansion was led once again by Asia with a 69% share (326 GW). This growth was driven by China, whose capacity increased by 63%, reaching 297.6 GW. This reflects a glaring gap with other regions, leaving a vast majority of developing countries behind, despite massive economic and development needs. Even though Africa has seen some growth, it paled in comparison with an increase of 4.6%, reaching a total capacity of 62 GW. Clearly, the room for solar as a new form of energy is still available.

Determinants of solar power and characteristics

The amount of solar received on the earth is determined by a number of factors such as what is technically called irradiance and irradiation. Solar Irradiance is the term generally used to measure the solar flax at a given location and is usually quoted in units of Watts per square meter. Solar Irradiation is used to measure the long-term average solar flax at a given location and usually quoted in Kwh per square meter.

This can further be categorized as Direct Normal Irradiation (DNI) which is the solar power measured at the surface of the earth at a given location with a surface element perpendicular to the sun’s rays. Diffused Horizontal Irradiance/irradiation (DHI) measuring the radiation at the earth’s surface from light scattered by the atmosphere and Global Horizontal Irradiation (GHI) which is the total irradiance from the sun measured at the earth surface on a horizontal plane.

Africa is often considered and referred to as the “Sun continent” or the continent where the Sun’s influence is the greatest.  According to the “World Sunshine Map”, Africa receives many more hours of bright sunshine during the course of the year than any other continent of the Earth and many of the sunniest places on the planet lie here.  This has also been. recognized by the international council of science who confidently pointed out that Africa has the best resources when it comes to solar power availability. This resource is usually measured in form of solar irradiance.

The amount of solar irradiation and irradiance are further determined by factors such as

  1. Geographical location and proximity to the equator, whereby close proximity to the equator provides short distance to the sun with the sun rays having a direct strike to the earth’s surface and therefore higher temperatures optimal for solar energy.
  2. Elevation above, where by the higher you go, the more exposure to sunlight and amount of sunshine received
  3. Seasonality of weather, cloud cover and precipitation, which determine how much sunshine is recorded at a given location.

Strategically located along the equator, East Africa receives between 500-3500 hours of sunshine per year, therefore making it a perfect site for harnessing solar energy throughout the year.

Trends of Solar installations and future of utility scale solar power

Solar Photo Voltaic (PV) installations have been increasing beyond expected projections, however the rate is still too low to pace the required demand.  The costs of solar PVs have been dropping constantly by around 20% for every doubling of cumulative shipped volume. At the present rates the costs could have about every 10 years.

Solar panels are made from semi-conductor materials which conduct photovoltaic cells through a complex process of doping and bonding as energy moves through different bands to release electricity. This harnessed for domestic use or as Concentrated Solar Power (CSP) for Utility scale electricity generation. According to statistics CSP is expected to grow by nearly 90% over the next 5 years and nearly tripling the rate of the past 5 years.

Solar and Socio-economic effects

Utility scale solar projects require large tracts of land to set up. For example, the 1,547 MW China Great Wall Project in the Tegger Desert occupies 1200 square kilometers of land with an installed solar field of 43 square kilometers. The US Star 1 and 2 project sits on a large piece of land with1,720,000 panels field generating 1,664 MW enough to power 255,000 homes.  This requirement for size to pave way for their establishments, can lead to land grabbing, mass evictions and displacements escalating socio-economic conflicts between the local residents and the investors. East Africa is already awash with land-based conflicts, displacement from ancestral lands and unfair compensation of victims.

Solar and the environment

Because of its low penetration, the environmental impacts of solar energy are still minimal.  These could increase as the uptake expands however the following can be noted

  • Land use and eco system. Solar farms at utility scale electricity generation requires large areas of land and this can cause disturbances to the land vegetation and sensitive eco-systems. The thousands of solar panels spread across hundreds of square meters can be an eye sore and environmental nuisance
  • Impacts on birds (avian): Solar can have adverse impacts to birds through distraction inflight eye sights and incineration. According to a study by the USGs estimated that its Ivanpah CSP plant in Nevada was incinerating about 6000 birds per year. Globally it was estimated that between 40,000 to 140,000 birds died due to large utility scale solar projects.
  • Toxic materials used; Solar panels are produced using toxic materials such as silicon which reacts and decomposes to produce tetrachloride, a toxic substance must be well disposed as an industrial waste.

Generally, solar is not carbon free based on a 30-year life cycle analysis but has a very low carbon foot print. This carbon foot print could increase as solar penetration expands matching the global drive towards a clean energy future. However, for now it remains one of cleanest source of energy.

Please read our next article on Tanzania and EAC’s potential and the policy terrain and regulation