Faced with rapid growth in electricity demand, the Government of Tanzania has set the goal of increasing the installed generating capacity from currently 1,500 MW to 5,000 MW by 2025. This objective is reflected in the implementation of the 2016 update of the electrical system master plan. In parallel, TANESCO, the national utility, has decided to increase the share of renewable energies in its energy mix to 40%, for both environmental and financial reasons.
The construction of a 150 MWp solar photovoltaic power plant in Shinyanga, in the north of the country, is a key element serving this dual purpose. A first 50 MWp phase could be commissioned in 2020, making it one of the largest solar power plants in Africa.
As part of a partnership with Artelia, ICEA was commissioned by TANESCO and the French Development Agency to develop the financing plan and carry out the economic and financial analysis of the project.
Four technical options, two phasing options and two financial plans have been simulated in a model developed by ICEA to define the optimal scenario for project implementation. The preferred scenario involves an investment of USD 116 million.
The economic and financial analysis has demonstrated the low cost of the energy produced, with an LCoE well below USc 5 per kWh, the profitability of the operation for TANESCO, including in the context of current tariffs, and, above all, the economic profitability of the project for the country compared to the development of conventional sources of electricity.
Following the analysis, the economic and financial simulation model used was made available to TANESCO’s staff. Our team provided training on the principles of economic and financial modeling and the use of the model.