United Republic of Tanzania

POWER SYSTEM MASTER PLAN

2012 UPDATE

Produced by:
Ministry of Energy and Minerals May 2013
 LIST OF ABBREVIATIONS

AfDB African Development Bank

BoT Bank of Tanzania
CCM Chama Cha Mapinduzi
COSS Cost of Service Study
DSM Demand-side Management
EAPMP East Africa Power Master Plan
EEPCo Ethiopia Electric Power Company
EPC Engineering, Procurement and Construction Contract
ERT Energizing Rural Transformation
ESKOM Electricity Supply Company (RSA)
EWURA Energy and Water Utilities Regulatory Authority
FYDP Five Years Development Plan
GoT Government of the United Republic of Tanzania
GWh Gigawatt-hours = 1,000,000,000 watt-hours
GWh Gigawatt-hours = 1,000,000,000 watt-hours
IDC Interest During Construction
IPP Independent Power Producer
IPTL Independent Power Tanzania Limited
KPLC Kenya Power and Lighting Company
kWh Kilowatt-hours = 1,000 watt-hours
LTPP Long Term Plan Perspective
MCA-T Millennium Challenge Account Tanzania
MEM Ministry of Energy and Minerals
MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umasikini Tanzania
MKUZA Mkakati wa Kukuza Uchumi Zanzibar
MoF Ministry of Finance
MPEE Ministry of Planning, Economy and Empowerment
MPIP Medium-Term Public Investment Plan
MVA Mega Volt Ampere
MVAr Mega Volt Ampere Reactive
MW Megawatt = 1000,000 watts
MWh Megawatt-hours = 1,000,000 watt-hours
NBS National Bureau of Statistics
NDC National Development Corporation
NGO Non-Governmental Organisations
POPC Presidents Office Planning Commission
PPA Power Purchase Agreement
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PPP Public Private Partnership
PSMP Power System Master Plan
R&D Research and Development
REA Rural Energy Agency
REB Rural Energy Board
REF Rural Energy Fund
SADC Southern African Development Community
SAPP South African Power Pool
SEZ Special Economic Zone
SME Small and Medium Enterprises
SNC SNC-Lavalin International Inc.
SPP Small Power Producer
SVC Static Var Compensator
TANESCO Tanzania Electric Supply Company Limited
TANWAT Tanzania Wattle Company
TEDAP Tanzania Energy Development and Access Project
TPC Tanzania Plantation Company
TPDC Tanzania Petroleum Development Corporation
URT United Republic of Tanzania
USD United States Dollar
WVES Way Leave Village Electrification Study
ZECO Zanzibar Electricity Corporation
ZTK Zambia Tanzania Kenya Interconnector

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Contents
List of abbreviations.......................................................................................................................i
Acknowledgement ...................................................................................................................... vii
CHAPTER one ............................................................................................................................ 1
1 INTRODUCTION .................................................................................................................. 1
1.1 Purpose and Scope ....................................................................................................... 1
1.2 Scope of the work .......................................................................................................... 2
1.3 Information collected for the PSMP Update ................................................................... 2
1.4 Factors considered in the Update plan .......................................................................... 3
CHAPTER TWO .......................................................................................................................... 5
2 POWER DEMAND FORECAST ........................................................................................... 5
2.1 Background ................................................................................................................... 5
2.2 Issues related to the load forecast ................................................................................. 5
2.3 National economy.......................................................................................................... 6
2.4 The Energy Sector ...................................................................................................... 12
2.5 Forecast Approach and Methodology .......................................................................... 20
2.6 Regional forecast ........................................................................................................ 26
2.7 Derivation of global energy sales forecast ................................................................... 34
2.7.1 Forecast Results .................................................................................................. 39
2.8 Sensitivity .................................................................................................................... 42
2.9 Comparison of Trend Analysis and Econometric Analysis ........................................... 43
CHAPTER THREE .................................................................................................................... 45
3 GENERATION.................................................................................................................... 45
3.1 Existing Generation Plants .......................................................................................... 45
3.2 Future Generation Options .......................................................................................... 49
3.2.1 Hydroelectric power ..................................................................................................... 49
3.2.1.1 Hydrology and Hydro System Capability .............................................................. 49
3.2.1.2 Hydrological Data Update ..................................................................................... 49
3.2.1.3 Hydro generation simulations ............................................................................... 49
3.2.1.4 Existing Hydroelectric Power Plants ..................................................................... 50
3.3 Development costs ...................................................................................................... 67
3.3.1 Generation Costs ................................................................................................. 69
3.4 Plant Data and Operating Costs .................................................................................. 73
3.5 Import Options - The Zambia-Tanzania-K Inter-connector ........................................... 76
3.6 Security of supply from Zambia through ZTK interconnector ....................................... 78
3.7 Other power interchanges ........................................................................................... 79
3.8 Renewable .................................................................................................................. 80
3.8.1 Nuclear ................................................................................................................. 83
3.8.2 Solar Photo Voltaic (PV) ....................................................................................... 84

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 3.9 Generation Plan Results.............................................................................................. 84
3.10 Ranking on costs of new power options....................................................................... 86
3.11 Basic technical screening ............................................................................................ 86
3.12 Project Ranking and Availability .................................................................................. 86
3.13 Detailed Generation Costs and Screening Tables ....................................................... 88
3.14 Environmental and Social Impact Assessment ............................................................ 91
3.15 Status of environmental assessments ......................................................................... 93
3.16 Project Assessments in the Current PSMP .................................................................. 93
CHAPTER FOUR ...................................................................................................................... 94
4 TRANSMISSION EXPANSION PLAN ................................................................................ 94
4.1 Introduction ................................................................................................................. 94
4.2 Load flow analysis ..................................................................................................... 110
4.2.1 Year-2012 case .................................................................................................. 110
4.2.2 Year-2015 case .................................................................................................. 112
4.2.3 Year-2020 case .................................................................................................. 115
4.2.4 Year-2035 case .................................................................................................. 118
4.3 Transmission System Costs ...................................................................................... 121
4.3.1 Summary of cost estimate .................................................................................. 125
CHAPTER FIVE ...................................................................................................................... 133
5 ECONOMIC AND FINANCIAL ANALYSIS ....................................................................... 133
5.1 Main Assumptions ..................................................................................................... 133
5.1.1 Discount rate ...................................................................................................... 133
5.1.2 Debt Equity Ratio ............................................................................................... 133
5.1.3 Interest Rate....................................................................................................... 134
5.1.4 Interest During Construction (IDC)...................................................................... 134
5.1.5 Inflation Rate on Capital Cost ............................................................................. 134
5.2 Financial Analysis ...................................................................................................... 134
5.2.1 Summary of Financial Analysis ........................................................................... 134
5.3 Estimate of Long Run Marginal Costs ....................................................................... 138
5.3.1 Summary of Results ........................................................................................... 139
5.4 Economics of Connecting the Isolated Loads ............................................................ 140
5.4.1 Approach for Examining the Economics of Connecting the Isolated Loads......... 140
5.4.2 Results for the Interconnection ........................................................................... 141
CHAPTER SIX ........................................................................................................................ 142
6 CONCLUSION AND RECOMMENDATIONS ................................................................... 142
6.1 Conclusion ................................................................................................................ 142
6.2 General Recommendations ....................................................................................... 143
6.3 Specific Recommendations ....................................................................................... 144

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 List of Tables
Table 2- 1: Regional Population Projections (000) ................................................................... 11
Table 2- 2: Electricity Sales and Number of Customers ............................................................. 15
Table 2- 3: System Losses ........................................................................................................ 19
Table 2- 4: GDP Growth Analysis .............................................................................................. 22
Table 2- 5: Selection of Anticipated Major Loads in Tanzania .................................................... 24
Table 2- 6: Summarised General Assumption ........................................................................... 25
Table 2- 7: Detailed Forecast Results ........................................................................................ 28
Table 2- 8: Regional Peak Demand Forecast ............................................................................ 29
Table 2- 9: Peak Demand and Generation Forecasts ................................................................ 30
Table 2- 10: Sales Forecast (GWh) by Econometric Method ..................................................... 41
Table 2- 11: Trend of Electricity Share per Customer Tariff Category ........................................ 42
Table 2- 12: Forecast Comparison: EconometricGlobal vs Trend -Total in GWh ..................... 43

Table 3-1: Existing Hydro Plant Characteristics ......................................................................... 45

Table 3- 2: Existing Thermal Plants ........................................................................................... 47
Table 3- 3: Existing Plant Retirement Dates (Interconnected System) ....................................... 48
Table 3- 4: Existing Hydroelectric Power Plants ........................................................................ 50
Table 3- 5: Overall Power Development Strategy ...................................................................... 51
Table 3- 6: Power Generation Projects for Short Term Expansion Plan .................................. 52
Table 3- 7: Mid to Long-Term Strategies ................................................................................... 53
Table 3 - 8: Interconnection Projects ......................................................................................... 54
Table 3 - 9: Selected Outage Rates for Generation Planning in PSMP ...................................... 55
Table 3- 10: Plant service lives .................................................................................................. 55
Table 3- 11: Selected operation and maintenance, and other annual costs ............................... 56
Table 3- 12: Plant overall implementation schedule ................................................................... 57
Table 3- 13: Minimum on-power lead times for hydroelectric plants (years) ............................... 58
Table 3- 14: Minimum On-Power Lead Times (Years) for Thermal Plants ................................. 58
Table 3- 15: New Hydro Options and Generation ...................................................................... 59
Table 3- 16: New Hydro Plant Characteristics ........................................................................... 60
Table 3- 17: New Thermal Options ............................................................................................ 62
Table 3- 18: Candidates Renewable Projects ............................................................................ 63
Table 3- 19: Coal Resources Utilization for future generation .................................................... 64
Table 3- 20: Expected Gas Delivered and Power Generation as per Mtwara Dar es Salaam
Pipeline .............................................................................................................................. 65
Table 3- 21: Use of Natural Gas (SS, M-Bay, Mkuranga, Deep Sea) Existing/committed
Thermal .............................................................................................................................. 66
Table 3- 22: Schedule of construction costs for hydroelectric projects ....................................... 68
Table 3- 23: Schedule of construction costs for thermal projects ............................................... 69
Table 3- 24: New hydro Costs ................................................................................................... 71
Table 3- 25: Thermal generation alternatives for Tanzania and screening ................................. 72
Table 3- 26: Proposed Fuel Oil Costs ........................................................................................ 73
Table 3- 27 New thermal plants earliest time ............................................................................. 74
Table 3- 28: New Thermal Plant Operating Costs ...................................................................... 75
Table 3- 29: New Renewable Plants Earliest Time .................................................................... 80
Table 3- 30: New Renewable Plant Operating Costs ................................................................. 80
Table 3- 31: Energy Efficiency Program - Energy and Peak Reduction ..................................... 83
Table 3- 32: Generation Plan Base Case................................................................................ 85
Table 3- 33: Ranking of hydro and thermal options .................................................................... 87
Table 3- 34: Thermal generation alternatives for Tanzania and screening tables (Sheet 1 of 2) 89
Table 3- 35: Criteria and indicators used for comparison of power options ................................ 92

Table 4- 1: Parameters of the Existing Transmission Line System ............................................ 97

Table 4- 2: Unit Cost of Transmission Lines ............................................................................ 102
Table 4- 3: Unit cost of substation per bay ............................................................................... 102
Table 4- 4: Grid Substation Load forecast ............................................................................... 104
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Table 4- 5: Transmission System Additions from 2012 to 2015 ............................................... 107
Table 4- 6: Transmission System additions from 2016 to 2020 ................................................ 108
Table 4- 7: Transmission Additions from 2021 to 2035 ............................................................ 109
Table 4- 8: 400kV and 220 kV Transmission line assumed parameters ................................... 109
Table 4- 9: Phased transmission lines cost estimates ............................................................... 122
Table 4- 10: Phased transformers cost estimate ...................................................................... 123
Table 4- 11: Phased Substation Cost Estimate ........................................................................ 124
Table 4- 12: Phased Reactive Compensation Cost Estimate ..................................................... 125
Table 4- 13: Cost Estimate Summary ...................................................................................... 125
Table 4- 14: System Loss Rates .............................................................................................. 127
Table 4- 15: Calculation of Energy Loss Savings ..................................................................... 131
Table 4- 16: System Loss Remedy Costs ................................................................................ 132

Table 5- 1: Term Financing Requirement (2013 2017) USD Million ...................................... 135
Table 5- 2: Summary of short term financing requirement (2013 -2017) .................................. 136
Table 5- 3: Breakdown of Capital Costs................................................................................... 136
Table 5- 4: Breakdown of Overall Financing Requirements for Capital Costs .......................... 137
Table 5- 5: Annual Revenue Requirements, Energy Supplied and Unit Cost of Supply ........... 138
Table 5- 6: Marginal cost ($ per kWh) ...................................................................................... 140
Table 5- 7: Isolated Load Centres and Feasibility of Connection to the Main Grid ................... 141

Figure 2- 1: Historical Gross Domestic Product (GDP) ................................................................ 7

Figure 2- 2: Historical Load Factor (%) ...................................................................................... 17
Figure 2- 3: Electricity Sales Forecast: 2011 - 2035................................................................... 31
Figure 2- 4: Gross Generation Forecast: 2011 - 2035 ................................................................ 32
Figure 2- 5: Peak Demand Forecast: 2011 - 2035 ..................................................................... 33
Figure 2- 6: Econometric Modelling Forecast............................................................................. 35
Figure 2- 7: Econometric Forecast Sum of Three Categories versus Global ........................... 40
Figure 2- 8: Econometrics Forecast Scenarios .......................................................................... 43

Figure 4- 1: Existing Grid System .............................................................................................. 96

Figure 4- 2: Generation and Transmission Plan Year 2035 .................................................... 99

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 ACKNOWLEDGEMENT
The 2012 PSMP update is a joint effort by intergovernmental institutions which spent six
months working hard and tirelessly to come up with this review. The entire work was
carried out by a team of experts from Ministry of Energy and Minerals (MEM),
Presidents Office, Planning Commission (POPC), Ministry of Finance (MoF), National
Bureau of Statistics (NBS), Rural Energy Agency (REA), Tanzania Electric Supply
Company (TANESCO), Tanzania Petroleum Development Corporation (TPDC) and
Energy and Water Utilities Regulatory Authority (EWURA). The work was carried out
from September, 2012 to February, 2013. Technical Team and their institutions were:
1. Juma F. Mkobya MEM
2. Oscar J. Kashaigili MEM
3. Lusajo K. Mwakaliku - MEM
4. Mbayani Y. Saruni MoF
5. Omary H. Juma POPC
6. Rustis S. Bernad NBS
7. John I. Kabadi - TANESCO
8. Lebbi M. Changullah - TANESCO
9. Ephata J. Ole-Lolubo - TANESCO
10. Hieronimin I. Shirima - TANESCO
11. Fokas M. Daniel - TANESCO
12. Abdallah M. Chikoyo - TANESCO
13. Elineema Mkumbo REA
14. Lwaga A. Kibona TPDC
15. Godfrey H. Chibulunje - EWURA

The Team wishes to acknowledge the support extended to them by the Permanent
Secretary, Ministry of Energy and Minerals, Mr. Eliakim C. Maswi; Commissioner for
Energy and Petroleum Affairs Eng. Hosea Mbise, Assistant Commissioner for Energy
Development, Mr. James Andilile; and Assistant Commissioner for Electricity Eng.
Innocent Luoga for their close guidance and direction. Nevertheless, the team also
wishes to thank the Planning Unit of TANESCO and the Department of Energy in the
Ministry of Energy and Minerals for collecting necessary and essential data of energy
demand of the entire country. The data provided were used as the critical input for PSMP
review.

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 CHAPTER ONE

1 INTRODUCTION

1.1 Purpose and Scope

The 2012 Power System Master Plan (PSMP) reflects and accommodates recent
development in the economy, including development in the gas sub sector as well as
government policy guidelines. The policy guidelines include, among others the desire by
the government to accelerate economic growth through the Vision 2025, MKUKUTA and
the Five Year Development Plan (FYDP). The FYDP targets to improve key
infrastructure networks, including power infrastructures to attain low cost energy service
that will allow more inflow of foreign direct investment (FDIs) to Tanzania.

The FYDP targets to increase per capita electricity consumption from 81kWh in 2011/12
to 200kWh by 2015/16 through increased generation capacity alongside accelerated
electrification program. This program has been formulated with the purpose of increasing
electrification level from the current 18.4 percent to 30 percent by 2015/16. This implies
connecting 250,000 new customers per annum for five years from 2013 to 2017.

The fundamental objective is also to attain stable power supply in order to achieve
Economic Growth, Energy Security and Environmental Protection. The government of
Tanzania set the maximum target to reduce poverty by achieving high economic growth,
which could be achieved through a stable and efficient power system.

The overall objective of the Plan is to re-assess short-term (2013 2017), mid-term
(2018 - 2023) and long term (2024 - 2035), generation, transmission plans requirements
and the need for connecting presently off-grid regions, options for power exchanges with
Ethiopia (through Kenya), Zambia, Uganda, Rwanda, Burundi and Mozambique, and
increased supply of reliable power. While the short-term plan requires immediate
decision and actions, the mid to longer terms plan require coordinated planning,
project development studies which ensures that future supply utilises the least cost
projects, consistent with sound planning criteria and addresses national interests.

This report has been prepared drawing inference on specific data items or detailed
procedures in the previous 2008 PSMP and the subsequent 2009 update studies. In
2008, a Power System Master Plan (PSMP) was developed by the consultant SNC-
Lavalin of Canada for the Government of Tanzania, through TANESCO, to provide a
fundamentally new plan to guide the development of the power system in Tanzania for
the next 25 years. The study provided a detailed assessment of load demand
projections, available options for meeting the demand and requirements for a new higher
voltage backbone transmission system for the country.

The Plan was firstly updated in 2009 by MEM and TANESCO with the technical support
from the SNC- Lavalin consultant which review the progress and challenges encountered
during the first year of implementation. The 2012 update was conducted by technical
staffs from MEM, TANESCO, Presidents Office - Planning Commission, Ministry of
Finance, TPDC, EWURA, REA and NBS. The Plan has also incorporated comments
from various stakeholders. The Update covers the following main components:
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 a) Revised load forecast based on the current situation and updated expectations;
b) Reassessment of the short-term, mid-term and long-term generation plan;
c) Update of the transmission plan to reflect the update in plans for connecting
presently isolated regions and increased generation capacities; and
d) Economic and financial analysis

1.2 Scope of the work

The following five primary components underlie the 2012 update study:
a) Confirmation of planning criterion;
b) Load forecast update;
c) Generation plan update, including updating and confirming data on all generation
sources, existing and future options;
d) Transmission plan update, including ongoing additions and reinforcement to the
existing system, plans for interconnecting presently isolated areas, and options for
import from neighbouring countries; and
e) Preparing a new PSMP Update report.

1.3 Information collected for the PSMP Update

The following information, was used for the 2012 Update study
Load forecast data
a) Historical to date peak demand at branch, sub-station, grid and national levels;
b) Historical to date energy sales by category of load and by region and substation;
and
c) Historical to date level of losses, energy production, energy purchases and energy
exports;
d) The information on the accelerated electrification scheme and its implementation
status;
e) Current and recent electricity forecasts
f) Historical performance of the national economy up to year 2011; and
g) Information on expectations for the growth of the national economy and the
individual sectors.

Hydrological data
a) Existing hydrological data from1940 to date reference hydrology from TANESCO;
b) Data on reservoirs and hydro plants from TANESCO;
c) All meteorological/synoptic records to date from The Tanzania Meteorological
Agency;
d) All stream flow and reservoir water level records to date from Ministry of Water;
and
e) Estimates/studies of water abstraction amounts including information from the
Ministry of Water.

2
System planning
a) Existing system operating and maintenance data;
b) Fuel types, prices, volume and characteristics;
c) Generation and transmission expansion planning criteria used in previous studies;
d) Inventory and characteristics of existing and committed units including hydro
units, simple cycle gas turbine units, combined cycle units and others (solar, wind,
etc.); Inventory and characteristics of transmission facilities including transmission
lines and substations;
e) Transmission system current configuration and short- term plans; and
f) Previous study reports on identified new generation options and transmission.

The overall update program consisted of data update and validation, analyses and report
writing. The detailed scope of work was as follows:

Load forecasts
a) Initial update of load forecast based on updated consumption data;
b) Review of updated load forecast;
c) Confirmation of schedule for interconnection of presently isolated regions; and
d) Adjustments and finalization of forecast study.

Generation planning
a) Review / update and finalize generation and planning criteria;
b) Update hydro generation study using updated hydrological records;
c) Review and update list of new generation candidates, and finalizes plant
characteristics for use in the plan; and
d) Prepare preferred new generation plan, based on new base case forecast, short
term generation commitments, retirement dates.

Transmission planning
a) To distribute regional load into respective substations;
b) Update PSS/E files of system configuration and characteristics for 2012
conditions;
c) For the new base case generation plan, the year 2015 and 2020 were considered
for the mid-term and 2035 for long term; and
d) Prepare estimates of investment costs.

1.4 Factors considered in the Update plan

The update plan has taken into account a broad spectrum of new information and
planning criteria. Primary factors affecting the results, as compared with the 2009 PSMP
update, include:

Load forecast
a) The impact of current level of losses on the forecast;
3
 b) Accelerated electrification program - 250,000 new customers annually for five
years from 2013 to 2017 to reach the target of 30 percent connectivity by
2015/16;
c) The target of reaching 75 percent electrification of households by 2035;
d) Program for interconnection of remaining isolated systems;
e) Emerging of high demands of power (Mtwara corridor) and Mining activities; and
f) Average household size of 8 persons.

Generation options
a) Availability of resources to meet projected demand (eg. hydro, gas, coal, wind
etc);
b) Lead time of projects (eg hydro projects have very long lead time);
c) Contracts/Retirement of project; and
d) Capital cost of the project

Transmission Plan

a) Concentrating on 220 and 400 kV backbone voltage; and

b) Developing transmission plans in every interval of five years, while focusing in
introduction of 400 kV where necessary, instead of defining requirements for the
whole horizon up to year 2035.

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 CHAPTER TWO

2 POWER DEMAND FORECAST

2.1 Background
This section provides estimate of the power demand in Tanzania over the study period
from 2011 to 2035. The objectives of the load forecast activity were to provide set of
forecasts for both short, mid and long terms for Tanzania Interconnected Power System,
and the isolated systems. The forecast then forms the basis in the planning of generation
and transmission facilities. This forecast study explicitly account for changed economic
background, government development objectives in the power sector in addition to
specific issues concerning the power demand.

2.2 Issues related to the load forecast

Current level of losses: the level of losses in 2010 was 25 percent, split as 5.3 percent
for transmission while distribution losses (commercial or non-technical) were 19.7
percent. Plans to reduce these losses and how they are provided for in the forecast will
affect the overall generation requirements both in the short, mid to longer term of the
forecast.

New major loads in Tanzania: as for the previous forecast study, the mining and
industrial loads growth continues to play a strong drive in the load growth in Tanzania.
The development of mining and industries properties usually implies the sudden addition
of major loads to the sector. A significant issue in planning is the combination of size,
timing and uncertainty of these loads. The load forecast will identify the mining and
industrial loads and assess the likely impact on the forecast of the uncertain additions.

Rate of electrification: There is a strong determination by the Government to

accelerate electrification in Tanzania. The Government is targeting 30 percent
connectivity by 2015, involving connection of 250,000 new customers per annum starting
2013 to 2017. The Rural Energy Policy, and the Tanzania Energy Development and
Access Expansion Program (TEDAP) will serve to guide the levels of rural electrification.
So far REA has been actively participating in rural electrification mainly in grid extension.
Other rural electrification initiatives include; electrification of villages that will be affected
by the 400kV Backbone transmission line, MCC funded electrification projects in seven
regions (Morogoro, Iringa, Mwanza, Kigoma, Mbeya, Tanga and Dodoma) and
electrification expansion program under ORIO project in Mpanda, Ngara and
Biharamulo.

Interconnection of isolated systems: The update load forecast has assessed the
possibility and timing for the interconnection of the isolated regions/systems into the
main grid system. These efforts are well in line with the forecast to accelerate
electrification in Tanzania by connecting the remaining six regions (Ruvuma Kigoma,
Kagera, Rukwa, Lindi and Mtwara) by 2019. The prime drivers to interconnecting the

5
isolated regions are mainly to provide adequate and reliable power, and relieve the
country from costly diesel generation.

Number of persons per household: Household size is critical in load forecast as it is

used to determine specific consumption and degree of electrification. This plan has used
8 persons per household. The choice of 8 persons is driven by the fact that the
customers of electricity are counted basing on the number of houses connected with
electricity meter. In most parts of Tanzania particularly in urban areas, it is common to
observe one house being occupied by more than five households. It is also common to
see a number of separate small houses (hut) in one compound each occupied by
different household but all sharing one connection.

Tariffs: Economic theory suggests that the consumption of a good will decrease as the
selling price of that good is increased. There are two practical difficulties in taking into
account this concept: (i) the price elasticity of demand for electricity is not known for
Tanzania and an estimate would need to be made based on experience elsewhere and
(ii) the increase in tariffs is the purview of EWURA.

Sections 23(2) and 24(2) of the Electricity Act, 2008 directs EWURA to make
amendments or review tariffs charged by a licensee once in every three years to allow
price stability in the electricity sub sector in the determination of tariffs. EWURA based
on those guiding factors is taking into account the Cost of Service Study to provide multi-
year tariffs that are based on prudent costs.

EWURA has developed a Rate Setting Methodology that recommends principles to be

adopted for the determination of tariffs in generation, transmission, distribution and
supply segments of the electricity sub sector. In the generation and transmission
segments, a forward looking approach is to be applied as opposed to historical cost
approach as previously used. The recommended approach considers the determination
of efficient costs necessary to meet the existing and future loads with the resulting
capacity and energy charges linked to the efficient expansion of the network.
Furthermore, the use of a forward looking approach in the determination of costs and
relevant tariffs in the distribution and supply segment will be applied. The estimation of
efficient capital expenditure will be based on the expansion path for the segment whilst
efficient operating and maintenance expenditures will be estimated by the Reference
Utility Model.

2.3 National economy

Highlights of the economy
The real GDP has recorded an average growth rate of 6.9 percent over the period of
2001 to 2011. Growth slowed down in 2009 to 6.0 percent, lower than 7.4 percent
recorded in 2008, on account of the negative impacts of the global financial and
economic crisis. However, the growth in real GDP bounced back to 7.0 percent in 2010
and slowed down again in 2011 to 6.4 percent following the impact of erratic power
supply which affected particularly manufacturing and trade sub sectors as well as the
spill over of the Euro Zone debt crisis. Consistent with rapid increase in mobile phone
usage, the highest growth continued to be registered in the communication sub activity,
6
which grew at 19.0 percent in 2011. Other sectors that recorded higher growth in 2011
were financial intermediation (10.7 percent); construction (9.0 percent); and trade (8.1
percent). The economy is however expected to pick up in the medium term following
Government initiative to stabilise power supply and implement development projects as
outlined under FYDP. The total GDP in 2011 at current market prices reached TSh
37,532,962 million or approximately equivalent to Tsh. 869,436.3 per capita income.

On sector by sector, the growth rate in agricultural, hunting and forestry economic
activities was 3.6 percent in 2011 compared to 4.2 percent in 2010. The slowdown in
growth was mainly due to unfavourable weather conditions during the 2009/10 season
which affected crop production. Industry and construction economic activities grew by
6.9 percent in 2011 compared to 10.2 percent in 2010. The decline in growth rate was
caused by the low growth in all sub activities due to lack of reliable power supply. In
particular, the growth rate of electricity and gas sub activities decreased drastically to 1.5
percent in 2011 compared to 10.2 percent in 2010. The decrease was due to shortage of
rain which led to decline in water levels in the main hydropower dams of Kihansi and
Mtera; increase in human economic activities that are detrimental to the sources of water
in the power generation dams; delapidated power plants; and temporary clossure of gas
power plant for maintenance. The growth rate of services economic activities was 7.9
percent in 2011 compared to 8.2 percent in 2010. This was due to slowdown in growth in
all sub activities except financial intermediation, administration and education sub-
activities. The figure below summarises the GDP growth over the period 1999 2011.

Figure 2- 1: Historical Gross Domestic Product (GDP)

7
Inflation
Between 1999 and 2007, annual inflation has been at single digit averaging at 5.8
percent during that period. However, in 2008 and 2009, inflation reached double digits of
10.3 percent and 12.1 percent, respectively. These spikes of high inflation were due to
global food and energy crises and drought in neighbouring countries. The overall annual
average inflation rate eased to 5.5 percent in 2010 and picked up again to double digit of
12.7 percent in 2011 on account of food shortage in the Eastern Africa region; increase
in electricity tariffs; increase in the cost of production associated with usage of expensive
thermal energy; and continued increase of fuel price in the World Market.

Food is the main contributor to CPI, accounting for 47.8 percent of the total CPI basket,
followed by transport (9.5 percent) and energy (9.2 percent.) This shows that food prices,
fuel prices and energy are very significant in the determination of the inflation trend. The
vagaries of weather and energy supply have a bearing on inflation. Given the fact that
global demand for fossil fuel is expanding continuously, it is quite likely that inflationary
pressures due to energy costs will continue to be felt. Domestic supply bottlenecks,
particularly due to drought and poor infrastructure, also contribute to inflationary
pressures.

Economic Outlook
The review of leading indicators of growth such as electricity generation, production and
consumption based tax revenues, importation of industrial raw materials, and exports of
manufactured, mineral and agricultural commodities have shown positive progress
during the first half of 2012. Given such performance of those leading indicators, coupled
with continued efforts to stabilize power supply and implementation of the FYDP I and
other economic policies, the overall performance of the economy in 2012 and beyond is
expected to remain buoyant. In the medium-term, growth is expected to pick up
supported by prospects of increase in FDI particularly in oil and gas explorations,
continued implementation of infrastructure projects, favourable weather conditions, and
stability in power supply among others.

Long Term Perspective

Tanzanias long-term growth potential is high, as the country begins to make full use of
its resources and expands from a comparatively small market base. The availability of
supporting infrastructure is a key factor to accelerating the pace of growth of modern
sectors of the economy. It is however worth to note that much of Tanzanias
infrastructure, such as roads, water supply, power system and telecommunication
facilities, requires considerable capital investment for rehabilitation and expansion to
meet new demand.

The Tanzania long-term development plan is articulated in the Tanzania Development

Vision 2025. The Vision 2025 projects a growth of 8 percent of the economy annually by
2025. The PSMP update has taken into consideration the Vision 2025 and is aimed at
increasing power capacity at a rate of 15 percent per annum in order to support the
economic development envisaged in Vision 2025. Likewise in developing this forecast,
the newly Tanzania Five Year Development Plan 2011/12 to 2015/16 has been
considered. The key output/target of the FYDP is to increase electricity generation
capacity from the current 1117 to 2,780MW and increase consumption from the current
8
81 kWh per capita (using current population of 42 million) to 200kWh (the minimum for
Low Income Countries - LIC).

The government aims to transform agriculture to be the backbone of the economy, as it

generates reasonably high incomes and ensures food security and food self-sufficiency.
Currently, the sector depends mainly on rainfall and technology is characterized with low
mechanization. Transformation of the sector is planned to be achieved through
implementation of Kilimo Kwanza Resolution embarked in June 2009, SAGCOT and
ASDP. However, dependence on agriculture will be reduced with an overall objective of
having a diversified and semi-industrialized economy with a substantial industrial sector
comparable to mid-income countries.

On the other hand, the Mini-Tiger Plan 2020 proposes to accelerate the economic
growth to 8-10percent from the current 6-7 percent by adopting the Asian Economic
Development Model. The Model is focusing on employment creation by attracting
Foreign Direct Investment (FDI) and promoting exports by developing Special Economic
Zone (SEZ). Specifically, it sets the following targets for 2020:

a) GDP to be growing at an average of 8-10 percent and reach $40 billion;

b) Exports to be expanded from $1.1 billion to $20 billion;
c) Per-Capita Income (PCI) to be increased from $280 to at least $1,000;
d) Creating 2-3 million new jobs by 2020; and
e) Develop at least 25-30 SEZs in the country and attracting FDI aggressively.

In keeping abreast with MKUKUTA and MKUZA initiatives, the government underscore
the need to re-align and focus in its development agenda in terms of Government
intervention into priority areas particularly investment in physical infrastructure, including
power infrastructure. In this regard the government has prepared a Five Year
Development Plan 2011/12 to 2015/16 that is aimed at fast-tracking realization of the
Vision 2025 goals and objectives.

The FYDP recognizes the challenges on resource mobilization, and it has zeroed in on a
few areas of prioritization, of which their implementation will unleash the country's growth
potentials. These are in areas of agriculture, industry, transport, energy, ICT and human
resources. According to this policy document, concerted and strategic measures will be
taken to accelerate growth to between 12 percent and 15 percent per year in current
prices and overall investment will be raised to more than 30 percent of GDP.

The FYDP document recognizes that there are a number of challenges, which need to
be addressed to move Tanzania to a higher level of production. One of the key
challenges is the development of low cost energy to make Tanzania a destination for
producing efficient and competitive goods and services as well as a source for
competitive energy supplies within the region. As such, Tanzania 1 is ranked low in terms
of its competitiveness capable of attracting investment in the country.

1
World Economic Forum: The Global Competitiveness Report, 2010-2011
9
The overall goal over the next five years in the implementation of the FYDP is to broaden
the countrys sources of economic growth. The main objectives of the plan are to
improve infrastructure networks as well as to attain low cost energy service that allows
more inflow of investments into the country. This will include the effective use of the
countrys mineral wealth and to leverage its gain for the development of infrastructure.

Population
Table 2-1 presents the population estimates by region for the last three censuses as well
as projections of population to 2011 and then for the forecast period. The growth rates
assumed for each region correspond to the growth between the census of 1988 and the
census of 2002. No adjustments were made for the in and out migration between
census periods as these are assumed part of the census exercise.

10
 Table 2- 1: Regional Population Projections (000)
S/n Mainland 1978I 1988I 2002I 2008 2010 2015 2020 2025 2030 2035 2036

1 Arusha 926 744 1,293 1,570 1,665 1,896 2,123 2,350 2,582 2,817 2,865

2 Dar es Salaam 843 1,361 2,498 2,961 3,118 3,486 3,814 4,131 4,456 4,772 4,834

3 Dodoma 972 1,235 1,699 2,005 2,112 2,358 2,568 2,748 2,918 3,077 3,107

4 Iringa 925 1,193 1,495 1,680 1,737 1,858 1,950 2,019 2,074 2,115 2,121

5 Kagera 1,010 1,314 2,034 2,380 2,564 3,091 3,726 4,512 5,459 6,559 6,798

6 Kigoma 649 857 1,679 1,669 1,814 2,231 2,737 3,371 4,147 5,066 5,269

7 Kilimanjaro 902 1,105 1,381 1,569 1,636 1,799 1,949 2,083 2,206 2,319 2,340

8 Lindi 528 646 791 887 924 1,016 1,111 1,210 1,310 1,409 1,429
III
9 Manyara na 604 1,040 1,288 1,388 1,680 2,038 2,484 3,022 3,652 3,789

10 Mara 724 946 1,369 1,692 1,823 2,194 2,635 3,174 3,819 4,562 4,723

11 Mbeya 1,080 1,476 2,070 2,502 2,662 3,063 3,485 3,974 4,519 5,102 5,222

12 Morogoro 939 1,221 1,760 2,022 2,115 2,350 2,581 2,819 3,065 3,308 3,356

13 Mtwara 772 889 1,128 1,272 1,324 1,451 1,580 1,725 1,879 2,033 2,064

14 Mwanza 1,443 1,877 2,942 3,364 3,566 4,077 4,564 5,020 5,469 5,916 6,005

15 Pwani 517 636 889 1,015 1,063 1,184 1,312 1,451 1,599 1,749 1,780

16 Rukwa 452 699 1,142 1,399 1,503 1,798 2,146 2,567 3,065 3,633 3,756

17 Ruvuma 562 780 1,117 1,303 1,375 1,567 1,778 2,014 2,273 2,548 2,605

18 Shinyanga 1,324 1,764 2,805 3,549 3,842 4,683 5,688 6,930 8,434 10,192 10,576

19 Singida 614 792 1,091 1,295 1,367 1,549 1,726 1,898 2,068 2,238 2,272

20 Tabora 818 1,036 1,718 2,171 2,349 2,849 3,442 4,181 5,079 6,127 6,356

21 Tanga 1,038 1,280 1,642 1,880 1,967 2,185 2,404 2,639 2,888 3,138 3,187

MAINLAND TOTAL 17,038 22,455 33,583 39,475 41,914 48,366 55,356 63,299 72,330 82,331 84,454

Zanzibar

22 North Unguja 77 97 137 159 167 189 214 242 286 335 346

23 South Unguja 52 70 95 108 113 126 141 157 168 179 181

24 Urban West 142 209 391 511 559 699 875 1,094 1,193 1,291 1,311

25 North Pemba 106 137 186 212 222 247 276 307 376 457 475

26 South Pemba 99 128 176 202 211 237 265 297 366 449 467

ZNZ TOTAL 476 641 985 1,192 1,272 1,498 1,770 2,097 2,389 2,711 2,779

Country Total 17,514 23,096 34,568 40,667 43,186 49,864 57,125 65,396 74,719 85,042 87,233

11
 NOTE:
Actual Population Census Results were 1978, 1988 and
I 2002
II In 1988 Arusha region was split into 2 regions of Arusha and Manyara
III na' means Manyara is included in Arusha for that year

2.4 The Energy Sector

Institutional framework
The energy sector in Tanzania involves a number of stakeholders, both government and
non-government institutions within and outside the country. The degree of their
involvement in energy activities varies significantly, ranging from users of energy,
production of energy equipment, financiers of energy projects, researchers, Non-
Governmental organisations (NGOs), policy makers and regulator of energy sector. Key
players, in the context of Tanzanias energy, include the Ministry of Energy and Minerals
(MEM), Tanzania Electric Supply Company (TANESCO), Tanzania Petroleum
Development Corporation (TPDC), the Rural Energy Agency (REA), the Energy and
Water Utilities Regulatory Authority (EWURA), development partners and private sector

Legal framework of the Energy Sector

These are Electricity Act of 2008, Petroleum (Exploration and Development) Act of 1980,
Petroleum (Supply) Act of 2008, EWURA Act of 2001 and REA Act of 2005. Currently
the Ministry is in the process of preparing the Natural Gas Policy which will guide the
preparation of Natural Gas Act and Natural Gas Utilisation Master Plan. The National
Energy Policy , 2003 which is under review supports the institutional framework and
specifically depicts the structural changes that occurred over the last decade in the
economy, as well as the social and political transformations at national and international
levels.

Electricity Sub-sector
The Tanzanian power system (interconnected grid) comprises of hydro and thermal
generation units owned by TANESCO and IPPs (permanent and rental) with a total
nameplate (installed) capacity of 1,466MW out of which 565MW hydro and 900.7MW
thermal. Rental capacity of the IPPs constitutes 317 MW, equivalent to 21.7 percent of
the total installed capacity. The isolated system is served by thermal generators with a
total nominal capacity of 75 MW.

TANESCO has so far been the sole vertically integrated electricity supplier on the
mainland and supplies bulk electricity to Zanzibar. TANESCOs monopoly position was
ended in June 19922 to allow private sector participation in power trading. To date, there
2
TANESCO was established in 1931 as the Tanganyika Electric Supply Company. At the time it was one of a number
of power supply companies in the country. In 1957 all licences were revoked and a single licence issued to
TANESCO under the Electricity Ordinance.

12
are independent power producers (IPPs) which supply power to the national utility:
Independent Power Tanzania Ltd (IPTL) 100MW (diesel), Songas 189MW (natural gas),
Symbion 225MW (60MW natural gas, 165MW Jet A1 and Diesel), Aggreko 100MW
diesel, the other small (TPC 17 MW biogas, Mwenga 4MW hydro, TANWAT 2.7MW bio
gas. Tanzania also imports electricity through cross-border interconnections of 9MW
from Uganda, 5MW Zambia and 5MW from Kenya. Tanzania also exports up to One MW
of power to Kenya through cross-border interconnection. However, distribution of
electricity in Unguja (Zanzibar) and Pemba is a sole responsibility of the Zanzibar
Electricity Corporation (ZECO)..

The current power system

The administrative regions of TANESCO, generally follows political administrative region
in Tanzania. The Dar es Salaam region however is composed of four TANESCO
regions. There are two areas that are separated from the national grid: the western
regions of Kagera, Kigoma and Rukwa and the south-eastern regions of Lindi, Mtwara
and Ruvuma. There are also three main islands that are part of the United Republic of
Tanzania. Of the three, Unguja and Pemba are connected to the system but Mafia is
not.

Tanzania, along with the sub-Saharan African countries has experienced a prolonged
drought (from 2003, 2006, 2009 and 2011). These dry spells have often depleted the
entire hydropower reservoir system. The worst situation was in 2006 and in 2011 in such
a way that the country was threatened by complete closure of Kidatu and Mtera
hydropower plants, which accounted for an average of about 25 percent to the entire
power system installed capacity.

The peak demand reached 828.99MW in 2011, for on grid customers. The total units
generated in 2011 within TANESCO power system was 3,704GWh while imports from
IPPs and neighbouring countries were 1,621MWh. The total units distributed in the
country were approximately 4,076GWh, implying total system loss of 23.5 percent or
1,249GWh. Approximately, 2.1 percent of electricity generated in 2010 is taken to
represent the level of suppressed demand in Tanzania.

Up to 2011, the transmission system in Tanzania operated at 220kV (2,732 km), 132kV
(1,538km) including submarine cable to Zanzibar, and 66kV (546 km). The medium and
low voltage lines are 33kV (12,603 km, including submarine cable to Pemba) and 11kV
(6,392km) while the numerous distribution networks, 400/240V lines have a total length
of approximately 26,565 km.

Inter-Connected Grid System Development

Up to 1979, TANESCOs Interconnected System consisted of the Coastal System of Dar
es Salaam, Tanga and Morogoro and the Northern System of Arusha and Moshi.
Generation was based on the Pangani River System at Nyumba ya Mungu, Hale and
Pangani Falls and the Great Ruaha River System at Kidatu, as well as thermal units at
13
Ubungo in Dar es Salaam. In 1981, the Mtera dam and the second phase of the Kidatu
power station were completed and the Interconnected System was expanded to include
deliveries to Zanzibar. In 1985 the grid was extended to the southwest through Iringa
Municipal, Mufindi and ultimately to Mbeya and north from Iringa to Dodoma.
Subsequently, the grid system was extended to Singida (1986), Shinyanga (1987),
Mwanza (1988), Musoma (1989), Tabora (1989), Tukuyu (1993), Njombe (2007), and
finally Pemba (2010).

In 1988, the Mtera Generating Station was added to the grid system. In 1994, the
Pangani Falls Redevelopment Project was added, including a 132 kV transmission line
to Tanga. A new second 220kV transmission line from Kidatu to Dar es Salaam was
constructed in 1995. Another 220 kV transmission line from Singida to Arusha was also
constructed in 1997. Two gas turbine units at Ubungo with a total installed capacity of
37MW were installed in 1994 and an additional two gas turbines with 75MW total
installed capacity in 1995. In 2002, a 220 kV transmission line from Lower Kihansi to
Iringa and Kidatu were added. In 2008 a gas plant with total installed capacity of 100MW
was added at Ubungo while another 45MW gas plant at Tegeta Dar es Salaam was
commissioned in October 2009. Two more generation plants, 100MW gas fired plant at
Ubungo was commissioned in 2012 while 60MW HFO at Mwanza is expected to be
commissioned in 2013.

Currently, the generation equipment in the isolated centres consists of nearly 90 diesel
units with capacities of 1500 kW or less. Many of these units are out of service or in
need of extensive repair. In recent years, about 20 diesel units were installed in Kigoma
(6), Kasulu (2), Kibondo (2), Sumbawanga (4), Songea (1) and Loliondo (4) with a total
capacity of about 15,750kW. The isolated system has suffered the same challenges on
fuel and spare parts, as has the grid system, thus leading to power outages. The main
objective to interconnecting the isolated regions into the main grid is therefore to relieve
TANESCO from costly diesel generation and provide adequate and reliable power.

Table 2-2 summarises the countrys electricity sales and number of customers by
regions for the year 2010. The table also shows the degree of electrification in each of
the load centres considering that customers in tariff category T1 represent households
with electricity connections in the country.

14
Table 2- 2: Electricity Sales and Number of Customers

15
Recent Development in the Power Sector
The following are some of the main developments that have been implemented or under
implementation on the power systems:
a) Grid reinforcement and extension of the grid to mines in the northwest (Buzwagi
and North Mara),
b) Formulation of emergence power plan to address severe draught whereby the
government had to acquire rental power plants of 205MW (Aggreko 100 MW and
Symbion 55MW in Dodoma and 50MW in Arusha) capacities.
c) Installation of a permanent 100MW gas power plant at Ubungo in 2012.
d) Extension of the gas pipeline to fuel a 45MW gas plant at Tegeta, Dar es Salaam
in 2009.
e) Implementation of rural electrification program under the Tanzania Energy
Development Access Project (TEDAP).
f) Several Small Power Producers (SPPs) agreements such as TPC, Mwenga and
TANWATT were implemented.
g) Initiative to construct a Backborne Transmission Investment Project (BTIP
400kV) as part of reinforce the grid system from Iringa to Shinyanga is underway.
h) Construction of a Gas pipeline from Mtwara to Dar es Salaam, and
implementation of Wayleave Village Electrification Scheme (WVES)

Other developments in the power sector include:

a) Upgrading and rehabilitation of the distribution networks in Tanga, Iringa, Mbeya,
Morogoro, Mwanza and Dodoma, and development of the second submarine
cable from Dar es Salaam to Zanzibar 132-kV.
b) The laying of a 33 kV submarine cable from Tanga to Pemba.
c) Natural gas discoveries: Songo Songo, Mnazi Bay, Mkuranga, Kiliwani, Ntorya
and Deep Sea eight discoveries (Chaza, Jodari, Zafarani, Pweza, Mzia, Chewa,
Papa 1 and Lavani 1).
d) Development of coal production at Ngaka area. Reinforcement of the Northeast
grid from Dar es Salaam to Arusha via Chalinze Tanga and Same (400kV
transmission line) project.
e) Extension of grid system to the Northwest regions of Kigoma, Rukwa and Kagera
(220kV line).
f) Development of two wind farms of 50MW each.100MW wind farms in Singida.

Load Characteristics, Tariffs, Electrification and Losses

Daily load patterns: The hourly generation data collected for the years 1991 to 2011
and investigated to reveal load characteristics in Tanzania. A sample of 24 daily load
curves were examined throughout that period: a typical weekday, a Saturday and a
Sunday in April and in October of the years 1991 (before load shedding), 1994 (an early
16
period of severe load shedding), 2004 with virtually no load shedding and 2006 with
severe load shedding as well as on 2009 and 2010 to 2011.

The daily load pattern, with the exception of that for Sunday, displays a fairly constant
load during the day with an evening peak. The Sunday pattern has both a morning and
an evening peak and is typically at a lower demand level than for the other days of the
week.

Seasonality: There is virtually no seasonality in the load on the Tanzanias power

system.

System load factor: The graph in Figure 2-2 presents the records of load factors from
1990 to 2011. This graph suggests that the load factor has been quite steady from 1990
to about 2001. During that period the load factor averaged about 65.2 percent with
variation between 61.4 percent and 67.8 percent. For the most recent five years the
average load factor rose to about 69.7 percent and if the amount of energy not served is
added with no change in peak demand, the average would be about 70.8 percent. For
the 2010, adding the load shedding to the electricity generated while keeping the same
peak, the load factor would increase to 62.43 percent which is used in the forecast with a
target gradual increase to 71.78 percent in 2035. The level of electricity not delivered to
customers (load shedding) was taken to represent the supply system constraints. An
alternative scenario is to project demand without adding back the amount of load shed
which will give unrealistic forecast of electricity.

Figure 2- 2: Historical Load Factor (%)

Tariff structure: A review of the tariff structures in Tanzania shows that there have been
several major changes in structure during that period:
a) From 1980 to 1987 there were residential, small commercial, light industry, low
voltage supply, high voltage supply, street lighting and Zanzibar;

17
 b) In 1987, agriculture, energy intensive and the National Urban Water Authority
(NUWA) were added; however, it is not clear how the previous categories were
split in order to obtain the new ones;
c) In 1990 the structure remained the same but the definition of the prior categories
was changed slightly;
d) In 1995, the structure was changed significantly;
e) The new Tariff T1 (General Use) grouped the loads from the previous residential,
small commercial and light industrial;
f) The new T2 (Low Voltage Supply) appears the same as the previous low voltage
supply;
g) The new T3 (High Voltage Supply) grouped the categories High Voltage Supply
and High Intensive Supply Energy;
h) Those Agriculture and the NUWA accounts customers that are served at 11 kV or
higher would become T3 customers and the others would be either T1 or T2,
depending upon the size of the monthly bills. Given the size and type of
customers, it has been assumed that all of these customers are served at 11 kV
or above and therefore would become T3 customers;
i) Public lighting remains as before except that places of worship were added;
j) Zanzibar remains as before;
k) In 2003 another tariff structure change occurred and remains in effect to date;
l) Tariff T1 was split into D1 (domestic low usage) and T1 (general use) and added
public lighting; and
m) In 2008 only the tariff rates changed but maintained the tariff structure as it was in
2003, which remains in effect to date.

Accelerated electrification
There is a program of accelerated electrification for Tanzania as a whole that is being
implemented by TANESCO and the Government with support from development
partners. The policy is to:
a) complete backlog on electricity connection applications in urban, peri-urban and
rural areas9;
b) Electrify agro-based industries such as ginneries and tea plantations to add value
to the agriculture process;
c) Electrify development centres along the route of transmission lines; and
d) Implement REA funded projects.

In 2007, TANESCO set a target of connecting 100,000 customers per year. In 2011, the
company managed to connect 75461 new customers, equivalent to 75.5 percent of the
annual target. Connections against the target have been increasing continuously from 56
percent in 2008 to 59 percent in 2009 and further up to 66 percent in 2010. However,
18
lack of funds to procure service line materials were among the limitations to reach the set
target. In 2012 the Government set a new target of connecting 250,000 urban, peri-urban
and rural customers per year. This new target aims at achieving the National objective of
ensuring that 30 percent of the population has access to electricity by 2015 from the
current level of 18 percent. The new targets of electrification will be achieved through
concerted efforts by all key stakeholders like REA, TANESCO, private developers, and
the recent government strategy to reduce connection fees as an incentive to attract
many electricity customers.

System losses
An estimate of losses was taken from the COSS projections for the period 2011 2015
inclusive. The losses are split into transmission and distribution losses respectively for
the same period and shown below.

Table 2- 3: System Losses

2010 2011 2012 2013 2014 2015 2035
Transmission 5.3% 5.3% 5.6% 5.5% 5.5% 5.4% 4.8%
Distribution 19.7% 19.7% 17.8% 16.4% 15.1% 15.1% 11.0%
Total Losses 25.0% 25.1% 23.4% 22.0% 20.6% 20.5% 15.8%

The projections of loss values compares well with values derived using generation
records for the year 2010 with the sales records for the same period.

19
2.5 Forecast Approach and Methodology
General
The update load forecast uses similar approach and methodology as was developed and
used for the 2008 forecast (2008 PSMP) and its Update forecasts of 2009 and 2011 to
project sales, energy requirements and peak demand for Tanzania. The methodologies
used were:-

a) Trend line analysis for regional forecasts to arrive at total country forecasts; and
b) Econometric analysis as an overall check on the reasonableness of the results
obtained using trend-line approach.

Load forecast strategy

The basic premise taken in this forecast is that it will provide an estimate of the needs of
the customers and NOT an estimate of what can be supplied to the customer. This
implies that:
The base year of the forecast will be adjusted to the level of demand estimated under an
unconstrained system; Gross Domestic Product and its components will grow at higher
than the average rates experienced in the past to reflect the removal of the constraints
on growth in the economy that was caused by the lack of plentiful and reliable electric
power; Population growth will follow the trend observed in the Tanzanias Population and
Housing Census projections (2002). The forecast of unconstrained sales is equal to the
forecast of sales for each category taking into account the underlying trends in each
category plus the estimated impact of the shortages of capacity.

Approach used for forecasts

In arriving at national forecasts, individual regional forecasts were carried out based on
the following steps:
a) Derive a forecast of sales for the regional load using a trend-line approach in
which the trends in number of customers and the unit consumption in each
category of load are studied and projected;
b) Assess the impact of the issues specific to the load forecast in the country;
c) Estimate the load factors that would apply in an unconstrained system,
d) Forecast the underlying trend in unconstrained sales for specific categories;
e) Estimate the losses, both transmission, distribution-categorised as technical as
well as non-technical losses and derive the energy required;
f) Derive a forecast of the unconstrained energy and peak demand for the sector;
and
g) Estimate the transition in energy and peak demand between the current
constrained situation and the unconstrained forecast.
The forecast approach also do take into account , development agenda, as articulated in
the Tanzania Development Vision 2025, Long Term Plan Perspective (LTPP-2010-
20
2025), Five Year Development Plan(2011/12 2015/2016) MKUKUTA (2010 2015),
and CCM Election Manifesto, as a basis of judgement in applying future growth rates to
the unit consumption of electricity. Furthermore, the approach accounts explicitly for the
expected new industries as obtained from the recent industrial surveys, special program
to accelerate electricity connection by 2015/16, emerging of gas economy as well as
increase level of rural electrification.

Data validation
Validation of data was undertaken through tracing historic changes in a given data set.
Graphs of the basic input data (e.g customers and unit consumption) are prepared for
each region and these graphs are analysed for establishing historical trends. This
examination permitted the selection of a historic time period for projection.

Assumptions
There are two group of assumptions used in this forecast- general and specific. The
general assumptions are summarised in the Table 2-6 and are applicable to all cases
while specific ones apply to a given region only. The demand forecast assesses only the
domestic demand although the future regional power trade has been considered under
the generation plan section.

General Assumptions
a) The base year for the forecast is the calendar year 2010. The forecast is provided
for the period 2011 to 2035.
b) Customer categories retained: In order to carry out the analysis of historic
trends for use in projecting future trends, it is necessary to have a database
covering a long period of time that has a consistent definition. The tariffs
definitions are as follows:-
T1 (general use) plus D1 (domestic low usage tariff) taken together, which
includes the prior categories of residential, light commercial, light industrial,
and public lighting;
T2 (low voltage demand), which includes the prior categories of low voltage
supply;
T3 (High voltage usage tariff)3, which includes the prior categories High
Voltage Supply, High Intensive Supply Energy, Agriculture and NUWA;
c) Historic period retained: Based on the review of the tariff structures and their
changing definitions, the historic period retained is from 1986 to 2010 inclusive 4.
d) The Tariff increases substantially higher than inflation can be expected to have an
impact on consumer behaviour, depending upon the price elasticity of their
3
Variations in this tariff have been applied to specific mining loads
4
It would be preferable to have a longer historic period; however, the earlier data are not consistent and the 25 years
of historic data (1986 to 2010) are sufficient for a forecast of 20 to 25 years.

21
 consumption. The increase of electricity tariffs in Tanzania does not portray the
behaviour of normal demand and supply curves because of the following:
There is low level of electrification; and
There is currently a high level of suppressed energy; by the time that adequate
supplies of energy become available, the impact of the expected high increase
will have dissipated.
e) Projections of economic and demographic parameters: It is assumed that the
forecast period is split into three periods: the shorter term of 2012 to 2017 with
relatively high growth during which 1.25million customers will be connected, the
medium term period covering 2018 to 2025 with moderate growth rate responding
to Tanzania Development Vision 2025 and LTPP. The longer term, that is 2026 to
2036 responding to characteristics of middle income countries.

An assessment of historical GDP growth over the past 14 years reveals that, the
growth rate has been stable in all period. The historical analysis of growth rate was
conducted by dividing time horizon into four categories. The results are summarized
in Table 2-4 below.

Table 2- 4: GDP Growth Analysis

Period of Analysis High Case Base Case Low Case
Four-year growth 7.0% 6.8% 6.6%

Eight-year growth 7.2% 6.9% 6.3%

Ten-year growth 7.3% 7.1% 6.7%

Fourteen-year growth 7.8% 6.6% 4.8%

f) Impact of Demand-Side Management: a special program to connect new

customers as outlined above will go in tandem with demand side management
program. The following assumptions have been used in the forecast as they relate
to demand-side management:

For customers in the T1, T2 and T3 categories, special programs will be

implemented during 2013 to 2017 and their impact will be felt from 2018 to the
end of planning horizon;
The estimates of consumption in the new major customers such as mining and
other loads are assumed to have taken into account demand side
management in their programs.

22
g) Estimates of load shed: It is assumed that the demand for energy and peak
capacity in 2010 was 2.1percent greater than actual sales in the T1, T2 and T3
categories.

h) Additional electrification: In implementing a five-year program of connecting

250,000 new customers per year, two approaches were considered: (i) allocating
new customers on a pro-rata basis across all regions and (ii) assuming more weight
to regions other than Dar es Salaam. Given relatively high level of electrification in
Dar es Salaam, the second approach is used. After end of the five-year program,
historical growth rates were used to project forward up to 2035.

i) Loads from Extraction of Natural Resources and others: It is estimated that

Tanzania has some 140.2 million tons of gold reserves, 535.8MT of coal, 33.04TCF
of gas and abundant reserves of other minerals. In the wake of the liberalization of
the economy, the government has been heavily promoting private investment in the
natural resource extraction sector. Considerable development are expected in the
growth of mining/extraction activities and the position of natural resources in the
economy, and it is likely for the trend to intensify over the forecast period.

The development of mining activities in a specific region impacts directly on the

future power needs in the region, and finally future power needs for the country.
The new identified mining loads, their expected power needs, and respective
locations are shown in Table 2-5. In the current update forecast study, these have
been treated explicitly and are included as a set of specific assumptions in addition
to other identified loads for each regional forecast.

23
Table 2- 5: Selection of Anticipated Major Loads in Tanzania
Mine Capacity (MW) Location Expected Online
Kabanga Nickel 32 Kagera 2016
Mibongo Gold 20 Kigoma 2016
Ntaka Hill Nickel 30 Lindi 2018
Dangote Cement plant 40 Mtwara 2015
Panda Hill Gold 5 Mbeya 2016
Buckreef Gold 8 Geita 2015
Geita Gold 30 Geita 2015
Mchuchuma Iron
Smelter 100 Iringa 2018
Golden Ridge - Gold 7 Shinyanga 2015
Dutwa Nickel 10 Shinyanga 2015
Bulyanhulu Gold 20 Shinyanga 2013
Textile Mill 30 Shinyanga 2014
Williamson Diamond 10 Shinyanga 2013
Williamson Diamond 12 Shinyanga 2014
Williamson Diamond 3 Shinyanga 2015
Liquidified Natural Gas
Power plant(LNG) 100 Lindi 2018
Expansion of Makonde
Plateau Water Supply and
Sanitation Authority 6 Mtwara 2017
Ikwiriri Sugar factory 4 Lindi 2014
Fertilizer Factory 30 Lindi 2017
Dawasa- Ruvu pumping
Expansion 12 Coast 2015
Hong Yu Steel (T) Ltd
Expansion 34 Coast 2015
Eagle Cement Co. Ltd 20 Coast 2015

j) Losses: The estimate of losses for the forecast period is based on the losses in
2010 and is amounted to 25.0 percent including transmission loss of 5.3 and
distribution losses of 19.7 percent as per Cost of Service Study (COSS, 2010). For
the update forecast, the COSS projects reduction of losses up to 21.6 percent by
2015. Thereafter, the projection is assumed a rate of 0.2 percent deduction up to
the end of plan. A reasonable and achievable target for reduction of losses would
be to achieve a level of about 15.8 percent by 2035. A number of projects are
ongoing like grid reinforcement project which includes TEDAP, DarTanga-Arusha
distribution grid upgrade and reinforcement, selected MCC distribution
24
 reinforcement and installation of smart meters to curb electricity theft and ensure
revenue protection with the TANESCO grid system.

k) Load factor: The data available indicates a load factor of 55.31 percent for 2010. If
the amount of load shed in 2010 is added to the energy generated and the peak is
kept the same, the load factor would increase to 62.43 percent with a gradual
increase to 71.78 percent in 2035. The level of electricity not delivered to
customers (load shedding) was taken to represent the supply system constraints.
An alternative scenario is to project demand without adding back the amount of
load shed which will give unrealistic forecast of electricity.

l) Specific assumptions used in the forecast for each region have been adopted for
the following factors:
i. Population growth
ii. Number of people per household
iii. Rate of increase in customers under the electrification program (applied to T1
customers)
iv. Rate of increase in customers in T2 and T3 as well as in T1 beyond the
electrification program
v. Unit consumption for all three categories
vi. Amount and timing of new industrial loads
vii. Amount and timing of major expansions of existing T3 customers.

Table 2- 6: Summarised General Assumption

High Case Assumptions Base Case - Assumptions Low Case - Assumptions
Base Year Data - 2010 Base Year Data - 2010 Base Year Data - 2010
Target Achieve 100% of the Target Achieve 85% of the High Target Achieve 75% of the High
250,000 new customers per annum Case target (212,500) Case target (187,500)
for 5years.
Household size 8 people Household size 8 people Household size 8 people
Emerging of high demands of Emerging of high demands of Historical growth rates
electricity (industrial survey, open electricity (industrial survey, open
up of economy Mtwara corridor up of economy Mtwara corridor
and mining activities) and mining activities): Assuming
structural breaks delays and shift
of projects
By 2025 Tanzania is assumed to be By 2025 Tanzania is assumed to be Business as usual, following
a middle income Country according a middle income Country according historical trends
to the TDV 2025 to the TDV 2025
FYDP-I requires 2780 MW FYDP-I requires 2780 MW
by 2015/16 by 2015/16
Requires >6700 MW by Requires >6700 MW by
2035 2035

25
2.6 Regional forecast
Description of models used
Several models and databases are used in the derivation of the regional forecasts.
Databases, from which the models draw their input data, include:
a) Sales and numbers of customers for each tariff category (T1, T2 and T3)
b) Population (historical and projected) and household size for each region
c) GDP values, historical as well as projected as categorised by economic sectors of
Agriculture, Industries and Service sectors.
d) Industrial survey data, involving new plans and rehabilitation/Expansion programs
evolution in a given region
e) Historical peak demand and diversity factors for each region
f) A model for the derivation of the sales and peak demand of each region (there is
a separate, similarly structured model for each region);
g) A model to aggregate the regional forecasts to represent the interconnected grid;
and isolated grid
These forecasts extend from 2011 to 2035; they combine the short to medium term
forecast with the long-term forecast.

2.6.2 Interconnected grid

The description provided earlier implies that by year 2019 all the remaining isolated load
centres would have been connected into the main grid system. The forecasts of sales for
each region in the interconnected grid are presented in summary form in Table 2-3; the
detailed forecasts by tariff category, by region and by year are contained in internal work
files. The table also presents the losses, recovered load shedding, generation
requirements, the sum of the non-coincident peak demand as well as the coincident
peak demand for the overall grid; including the isolated loads as they are integrated into
the main (these amounts for each of the twenty-one regions are included in the forecast
model. It includes, in alphabetical order:

26
Arusha (including Lindi Rukwa
Manyara)
Dar es Salaam (including Mara (Musoma) Ruvuma
Pwani)
Dodoma Mbeya Shinyanga
Iringa Morogoro Singida
Kagera Mtwara Tabora
Kigoma Mwanza Tanga
Kilimanjaro Pemba Unguja

Table 2-7 summarizes the results. It should be noted that there is a strong increase of
annual demand growth starting 2013 to 2015 largely due to identified additional power
demands from existing customers and a special electrification program which tallies with
governments policy statement of connecting 30% of population by 2015.

Table 2-8 provides the corresponding peaks and evolution of the interconnected grid
system - to include all the isolated regions, while Table 2-9 presents peak and
generation requirements. Figures 2-3 to 2-5 visualize the sales, demand and generation
forecasts for the three cases considered. The forecast is based on actual data for 2010
and data for 2011 and 2012 were estimates. Furthermore the estimates were based on
unconstrained demand consumption.

27
 Table 2- 7: Detailed Forecast Results

Sales, Generation and Peak Forecast - Total Country Base Case

Actual Unconstrained
Region Unit 2010 2010 2011 2012 2013 2014 2015 2020 2025 2030 2035
Arusha GWh 305.3 305.3 322.7 343.5 488.2 685.2 853.7 1,608.8 2,472.8 3,179.9 4,091.6
Dar es Salaam GWh 2,202.3 2,202.3 2,261.5 2,349.0 2,713.0 3,360.3 3,936.6 5,792.4 6,936.6 8,332.3 10,070.5
Dodoma GWh 92.0 92.0 96.5 102.2 186.9 301.7 373.9 572.6 818.5 1,179.6 1,492.3
Iringa GWh 94.7 94.7 98.1 101.6 118.8 149.4 201.3 325.5 522.5 795.1 949.8
Kagera GWh 46.0 46.0 51.1 56.6 83.5 111.1 176.6 479.2 734.2 1,191.8 2,036.7
Kigoma GWh 12.4 12.4 14.3 15.0 18.6 33.6 55.5 459.8 583.1 749.0 980.8
Kilimanjaro GWh 137.9 137.9 141.7 146.9 172.0 196.8 223.2 375.8 440.4 505.4 571.0
Lindi GWh 14.9 14.9 15.8 16.8 28.2 40.5 76.9 432.4 568.5 739.5 953.7
Manyara (Included in Arusha ) - - - - -
Mara GWh 58.8 58.8 67.3 77.5 87.7 98.6 109.6 181.8 304.9 521.3 916.5
Mbeya GWh 144.0 144.0 151.8 160.6 179.8 207.2 232.2 463.3 746.3 1,159.2 1,697.7
Morogoro GWh 182.2 182.2 188.8 196.5 216.0 241.4 268.3 476.3 792.0 1,203.2 1,577.6
Mtwara GWh 29.1 29.1 33.3 36.0 73.4 167.4 289.5 731.1 954.9 1,226.8 1,554.2
Mwanza GWh 217.3 217.3 223.9 231.6 358.0 465.9 543.9 933.7 1,489.8 2,065.2 2,376.1
Rukwa GWh 17.5 17.5 18.4 19.5 30.7 41.4 61.6 174.6 282.9 450.0 710.9
Ruvuma GWh 21.3 21.3 20.4 19.8 26.8 33.3 39.1 125.3 186.1 278.9 400.5
Shinyanga GWh 286.9 286.9 322.2 359.3 391.7 538.3 730.5 1,368.1 2,390.6 3,776.4 5,622.8
Singida GWh 30.3 30.3 32.3 34.6 48.4 56.6 65.4 112.3 183.4 298.5 485.1
Tabora GWh 84.9 84.9 98.1 111.6 152.7 163.5 174.4 305.1 572.8 940.5 1,439.8
Tanga GWh 197.1 197.1 206.8 218.0 276.6 341.3 461.5 903.3 1,263.0 1,732.6 2,155.4

Total Sales GWh 4,175.0 4,175.1 4,364.9 4,596.7 5,651.1 7,233.4 8,873.8 15,821.4 22,243.5 30,324.9 40,083.0
Annual Growth Rate % 0.0% 4.5% 5.3% 22.9% 28.0% 22.7% 7.4% 6.6% 6.0% 5.5%

T1 GWh 2,024.1 2,024.1 2,126.2 2,258.4 2,661.1 3,094.3 3,548.7 6,016.5 9,318.0 13,642.0 18,827.5
T2 GWh 592.5 592.5 598.1 606.6 896.3 1,234.0 1,576.0 2,713.1 3,600.5 4,763.2 6,313.8
T3 GWh 1,558.5 1,558.5 1,640.6 1,731.7 2,093.7 2,905.1 3,749.1 7,091.7 9,325.0 11,919.7 14,941.8
LESS New loads GWh - - - - (459.0) (1,412.4) (2,400.3) (5,445.1) (6,599.3) (8,000.9) (9,703.3)
Total Sales GWh 4,175.0 4,175.1 4,364.9 4,596.7 5,651.1 7,233.4 8,873.8 15,821.4 22,243.5 30,324.9 40,083.0

Distribution Losses 1,027.3 1,074.0 992.7 1,111.0 1,286.5 1,575.8 2,588.8 3,338.5 4,147.7 4,960.9
Distribution Loss rate % 19.7% 19.7% 17.8% 16.4% 15.1% 15.1% 14.1% 13.1% 12.0% 11.0%
Generation required at S/S GWh 4,175.0 5,202.3 5,439.0 5,589.4 6,762.2 8,520.0 10,449.6 18,410.1 25,582.0 34,472.6 45,044.0
Recovered Loadshedding GWh 98.0 98.0 98.0 98.0 98.0 98.0 98.0 98.0 98.0 98.0
Transmission Losses GWh 290.8 305.9 331.0 391.1 480.8 574.6 882.7 1,160.3 1,570.7 2,056.7
Transmission Loss rate % 5.2% 5.4% 5.3% 5.2% 5.1% 4.5% 4.3% 4.3% 4.3%
Net Generation GWh 4,175.0 5,591.2 5,842.9 6,018.5 7,251.3 9,098.8 11,122.2 19,390.9 26,840.3 36,141.3 47,198.7

Station Use GWh 62.19 64.99 66.94 80.65 101.20 123.71 215.67 298.53 401.98 524.96
Fraction of Station Use % 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1%
Gross Generation GWh 4,175.0 5,653.4 5,907.9 6,085.4 7,331.9 9,200.0 11,245.9 19,606.6 27,138.8 36,543.3 47,723.6
Annual Growth Rate 4.5% 3.0% 20.5% 25.5% 22.2% 7.0% 6.4% 5.7% 5.2%

Sum of Peak Demands (MW) MW 836.3 1,061.9 1,117.0 1,138.9 1,364.6 1,704.1 2,088.5 3,573.3 4,724.3 6,084.6 7,644.8

Coincident Peak (MW) MW 832.6 1,054.2 1,108.9 1,130.7 1,354.7 1,691.8 2,073.3 3,547.3 4,690.0 6,040.5 7,589.4
Annual Growth Rate % 33.2% 2.0% 19.8% 24.9% 22.6% 5.9% 5.4% 4.8% 4.9%

Overal Electrification Levels % 14.0% 14.0% 15.0% 18.0% 21.0% 24.0% 37.0% 51.0% 66.0% 78.0%

28
Table 2- 8: Regional Peak Demand Forecast
Non-coincident Peak Demand Forecast - Interconnected Grid Base Case
Actual Unconstrained
MW 2010 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030 2035

Arusha 53.83 68 72 74 103 142 176 204 231 259 289 322 481 603 751

Dar es Salaam 373 472.61 485.09 490.14 554.38 672.2 783.66 921.33 1023.86 1054.58 1086.46 1119.53 1304.8 1526.05 1801.61

Dodoma 18.07 23 24 25 44 69 85 97 104 111 118 125 173 240 295

Iringa 22.6 29 30 30 34 41 55 59 64 69 75 81 121 171 188

Kagera 12 15.95 16.91 17.86 25.09 32.03 49.55 78.05 99.34 108.98 114.27 121.37 170.47 255.08 402.64

Kigoma 5.69 7.65 8.70 8.92 10.04 16.42 25.25 78.11 140.36 165.09 158.77 158.6 162.83 175.06 193.79

K'Manjaro 35.76 45.31 46.52 46.15 52.01 57.37 63.72 69.85 75.8 82.45 89.24 96.46 102.74 107.88 114.98

Lindi 1.28 1.72 3.71 3.84 6.18 8.63 16.17 25.51 34.58 82.11 83.99 88.63 115.09 147.89 188.49

Manyara

Mara 20.2 25.6 29.24 31.5 33.78 36.01 38.63 41.19 43.65 46.87 50.3 53.97 78.01 116.88 183.93

Mbeya 30 38.01 40.04 40.86 44.48 49.83 55.17 65.66 75.13 85.52 93.9 102.79 155.58 227.75 320.79

Morogoro 39.07 49.5 51.29 51.31 54.65 59.16 64.73 69.99 74.67 84.76 94.99 105.47 162.14 228.91 281.7

Mtwara 10.71 14.41 15.24 15.33 28.44 60.12 99.12 146.31 179.45 202.85 200.7 204.72 226.07 250.84 285.3

Mwanza 42 53 55 55 83 106 123 139 155 170 187 205 318 428 477

Rukwa 6.08 6.688 8.08 8.04 11.73 14.86 21.15 30.18 35.55 45.25 47.62 50.19 70.32 98.32 140.61

Ruvuma 5.77 7.77 7.87 8.58 10.86 12.71 14.41 16.66 27.33 36.42 37.09 38.66 50.17 66.6 79.41

Shinyanga 74.3 94.14 105.52 112.6 118.34 156.46 207.75 243.18 255.5 286.75 318.28 350.13 555.74 803.17 1128.12

Singida 7 9.37 9.98 10.17 13.74 15.62 17.8 19.92 22.02 23.97 26.09 28.39 43.29 66 97.35

Tabora 19.61 25 29 31 42 43 46 48 50 58 66 74 130 201 289

Tanga 59.3 75.14 78.79 78.61 94.92 111.72 146.38 169.5 206.48 231.17 236.98 247.34 304.02 371.18 426.12
836.3 1061.868 1116.98 1138.91 1364.64 1704.14 2088.49 2522.44 2897.72 3203.77 3373.68 3573.25 4724.27 6084.61 7644.84

System Peak Demand 832.6 1,054.17 1,108.88 1,130.65 1,354.75 1,691.78 2,073.35 2,504.15 2,876.71 3,180.54 3,349.22 3,547.34 4,690.02 6,040.50 7,589.41
Growth 33.2% 2.0% 19.8% 24.9% 22.6% 20.8% 14.9% 10.6% 5.3% 5.9% 5.4% 4.8% 4.9%

Overall Electrification Rate 13.75% 14.46% 15.23% 18.31% 21.28% 24.14% 26.91% 29.59% 32.05% 34.63% 37.34% 50.75% 65.78% 78.17%

29
 Table 2- 9: Peak Demand and Generation Forecasts
Sum of Peak Gross
Year MW Coincidental Peak MW Generation GWh

2010-Unconstrained 1,061.9 1054.17 5,653

2011 1,117.0 1108.88 5,908

2012 1,138.9 1130.65 6,085

2013 1,364.6 1354.75 7,332

2014 1,704.1 1691.78 9,200

2015 2,088.5 2073.35 11,246

2016 2,522.4 2504.15 13,520

2017 2,897.7 2876.71 15,494

2018 3,203.8 3180.54 17,194

2019 3,373.7 3349.22 18,322

2020 3,573.3 3547.34 19,607

2021 3,780.7 3753.31 20,943

2022 4,008.7 3979.63 22,424

2023 4,252.9 4222.11 24,000
2024 4,482.8 4450.34 25,514
2025 4,724.3 4690.02 27,139
2026 4,979.2 4943.10 28,860
2027 5,247.6 5209.56 30,689
2028 5,531.0 5490.90 32,635
2029 5,806.0 5763.93 34,560

2030 6,084.6 6040.50 36,543

2031 6,377.5 6331.25 38,646
2032 6,678.8 6630.38 40,836
2033 6,978.6 6927.98 43,030

2034 7,290.2 7237.37 45,359

2035 7,644.8 7589.41 47,724

Source:Team Compilation

30
 Figure 2- 3: Electricity Sales Forecast: 2011 - 2035
50,000

45,000

40,000

35,000

30,000
GWh

25,000

20,000

15,000

10,000

5,000

-
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035
High-GWh Base-GWh Low-GWh

Source:Team Compilation

31
Figure 2- 4: Gross Generation Forecast: 2011 - 2035

60,000

50,000

40,000
GWh

30,000

20,000

10,000

-
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035
High-GWh Base-GWh Low-GWh

Source Source:Team Compilation

32
 Figure 2- 5: Peak Demand Forecast: 2011 - 2035
9,000

8,000

7,000

6,000

5,000
MW

4,000

3,000

2,000

1,000

-
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035
Years

High-MW Base-MW Low-MW

Source:Team Compilation

33
2.7 Derivation of global energy sales forecast
Introduction
This sub-section derives forecasts of electricity at the national level using econometric
principles as opposed to the trend analysis approach used in the previous section. The
two approaches are then compared.

The econometric method consists of estimating causal relationships between energy

sales or consumption (the dependent variable) and factors influencing consumption (the
independent variables). From a conceptual point of view, there are three issues in a load
forecast that need particular care:

Both sides of the equation need to be compatible. As mentioned earlier, it is

inappropriate to consider variables reflecting conditions in an entire nation with a variable
reflecting only a part of the nation (e.g., sales for a region compared to GDP of the
country as a whole);
An econometric analysis is only appropriate on large populations. It should not be used
on consumer categories where there are a relatively small number of customers, each
with a very high consumption. In such a case, decisions by a small number of consumers
can have a significant impact on the utility load. Econometric analyses are not equipped
to handle such situations.

It should be noted that this approach implicitly assumes that conditions in the past will
continue in the future. Significant changes such as accelerated electrification and rapid
expansion of the mining, industries, and other identified loads must therefore be
considered as additions to this method.

Econometric method
The econometric method consists of two steps.
Step 1: Plot the Sales vs. economic and/or demographic indicators, i.e. fit via a
regression analysis an equation of the form:

Sales (t) = + (demographic indicators, t) + (economic indicators, t)

Where at time t:
Sale = Sales in GWh (Sales could be T1 Sales, T2 Sales, T3 Sales or Country Sales),
Demographic indicators = Population, housing, etc.
Economic indicators = GDP, or subset thereof,
and = constant, and are the (estimated) coefficients.

34
Step 2: It consists of:
Assuming that, in time, the relationship established in Step 1 between Sales and the
other variables --demographic, economic-- will hold true; and

On the basis of reasonable assumptions as to the evolution in the future of these

(independent5) variables, which evolution is usually measured in terms of growth rates 6
(in percent), obtaining the forecast values of the Sales, at a future time t, by substituting
the forecast values of the independent variables into the equation obtained in step 1.

The available historical data consists of: GDP components (Agriculture, Industry, and
Services sectors) and Demography (Population). These variables or a Combination of
them are the explaining or independent variables of the model. The explained or
dependent variable is Sales (global sales or sales by customer category).
Its process is illustrated below.
Figure 2- 6: Econometric Modelling Forecast

Explained (Dependent) variable: Sales

(T1, T2, T3, Global)
Step 1 Historical Data
Explaining (Independent ) variable(s):
Population, GDPs, Combination

Regression
Analysis

Model Equation:
Sales = f(independent vars)

Future Values of
Step 2 Independent variables

Forecasted
Sales = f(future independent
vars)

A key element of the econometric process is the selection of the independent variables
or combination of independent variables to be used in the equation to explain the
dependent variables. A certain number of criteria are generally used to select the
combination of independent variables. These selection criteria are:

5
The term independent variable is used to designate an explanatory factor as opposed to explained or forecasted
variable in this case, Sales or Consumption which is also termed as the dependent variable.
6
By way of Population and Economic forecasts

35
Eligibility: if a combination yields a fitted coefficient other than the Intercept that is
negative, it is ineligible. It is absurd to consider that, for example, the Sales would
decrease when a predictor (e.g. Industry GDP or the Services GDP) increases.

Economic Argument: Between eligible combinations, the next applied criterion is

economic and/or common sense. For example, to explain T1, Agriculture GDP was
found to be eligible. However, T1 customers that include residential, commercial, light
industry and street lighting straddle the three GDP sectors (Agriculture, Industries, and
Services). Besides, the low electrification rate of the population whose majority lives off
agricultural livelihood does not designate the Agriculture GDP alone as a prime
independent variable to explain the T1 sales.

Statistical Goodness of Fit: the statistical test criteria seek to answer two questions:
(1) do the variables included in the equation belong there? and (2) is the relationship as
a whole using these variables valid?

Two test statistics are usually retained: the Student t-statistic and the correlation
coefficient R2. The two statistics are provided by Stata package in its output. To be
acceptable the t-statistic should be at least one in value and R2, which is between 0 and
1, and it should be at least 0.6. Moreover, to break a tie between two or more equally
good combinations of predictors, one also uses the F-statistic in conjunction with the t-
statistic and R2. More details on these statistical criteria are provided in footnote7.

In line with this method, T1, T2, T3 and the Global Sales were, each, plotted against a
series of combinations of independent variables or predictors. The ensuing results
obtained after applying the above criteria are as follows:

Forecast for Category T1

Category T1 is composed of residential, commercial, light industry and street lighting
customers. A series of relationships between sales to T1 customers and a number of

7
The first test, using the Student's t-statistic, is calculated by Stata package, to test if a coefficient is zero (that is, if the
variable does not belong in the equation). If the t-statistic exceeds one in magnitude, it is at least two thirds likely
that the true value of the coefficient is not zero. If the t-statistic exceeds two in magnitude it is at least 95percent
likely that the coefficient is not zero. Thus, a t-statistic greater than 2 indicates strongly that the variable used does
belong in the relationship.
2
For testing the validity of the relationship, the R-squared (R ) ratio is used. The R-squared measures the success of
the equation in predicting the values of the dependent variable (sales of energy). The R-squared is unity if the
equation provides a perfect fit and zero if it fits no better than the simple mean of the dependent variable. Usually,
to be meaningful, R-squared is required to be at least 60percent, depending on the homogeneity of the historical
data.
The F Value or F ratio is the test statistic used to decide whether the model as a whole has statistically significant
predictive capability, that is, whether the regression SS is big enough, considering the number of variables
needed to achieve it. F is the ratio of the Model Mean Square to the Error Mean Square.
The F-value can be used in conjunction with R2 and t-statistics as another criterion when one has to decide between
several combinations of variables as predictors. Larger values of F tend to support better predictive capability.

36
combinations of various economic and demographic parameters were examined. The
regression equation is given by:
T1 Sales as function of Total GDP

The details of this relationship are as follows:

. regress t1 gdp

Source SS df MS Number of obs = 32

F( 1, 30) = 115.14
Model 5613662.24 1 5613662.24 Prob > F = 0.0000
Residual 1462701.61 30 48756.7205 R-squared = 0.7933
Adj R-squared = 0.7864
Total 7076363.85 31 228269.802 Root MSE = 220.81

t1 Coef. Std. Err. t P>|t| [95% Conf. Interval]

gdp .000118 .000011 10.73 0.000 .0000955 .0001404

_cons 16.9954 96.33279 0.18 0.861 -179.7424 213.7332

That is:
T1 = 16.9954 + 0.000118 x GDP
Where T1 is expressed in GWh and the Total GDP is in TSh million (constant 2001
prices).

Forecast for Category T2

Category T2 includes low voltage commercial, service and industrial supply. A series of
relationships between sales to T2 customers and a number of combinations of various
economic and demographic parameters were examined. The equation is given by:
T2 Sales as a function of the sum of industry and services GDPs
The details of this relationship are as follows:

37
. regress t2 indservices

Source SS df MS Number of obs = 32

F( 1, 30) = 41.30
Model 297313.7 1 297313.7 Prob > F = 0.0000
Residual 215966.801 30 7198.89336 R-squared = 0.5792
Adj R-squared = 0.5652
Total 513280.501 31 16557.4355 Root MSE = 84.846

t2 Coef. Std. Err. t P>|t| [95% Conf. Interval]

indservices .0000271 4.21e-06 6.43 0.000 .0000185 .0000357

_cons 191.2547 24.27003 7.88 0.000 141.6887 240.8207

That is:
T2 Sales = 191.2547 + 0.0000271 x (Industry +Services GDPs)
Where T2 is expressed in GWh and the Industry Plus Services GDP is in TSh million
(constant 2001 prices).

Forecast for Category T3

Category T3 includes high voltage supply, agricultural and National Urban Water
Authority (NUWA) and mining load customers. A series of relationships between sales
to T3 customers and a number of combinations of various economic and demographic
parameters were examined.

The best relationship found was:

Sales to T3 customers as a function of sum of Agriculture and Industry GDPs alone
The details of this relationship are as follows:

. regress t3 agrindust

Source SS df MS Number of obs = 32

F( 1, 30) = 287.25
Model 6389607.16 1 6389607.16 Prob > F = 0.0000
Residual 667314.806 30 22243.8269 R-squared = 0.9054
Adj R-squared = 0.9023
Total 7056921.97 31 227642.644 Root MSE = 149.14

t3 Coef. Std. Err. t P>|t| [95% Conf. Interval]

agrindust .000251 .0000148 16.95 0.000 .0002208 .0002813

_cons -422.0447 65.23152 -6.47 0.000 -555.2652 -288.8241

That is:
T3 Sales = -422.0447+0.000251 x (Agric + Industry GDPs)
Where T3 is expressed in GWh and the Agriculture plus Industry GDP is in TSh million
(constant 2001 prices).
Forecast of total sales using a global equation

38
The Total Sales can be derived by taking the sum of the sales to the individual
categories or by directly regressing it by the socioeconomic variables. As in the
preceding section, the (direct) fitting of the Total (or Global) Sales is carried out by
examining a series of relationships between Total Sales and various economic and
demographic variables.
Hence, the best relationship found was:
Total sales as a function of total GDP

The details of this relationship are as follows:

. regress eneconsp gdp

Source SS df MS Number of obs = 32

F( 1, 30) = 398.27
Model 29235888.7 1 29235888.7 Prob > F = 0.0000
Residual 2202212.23 30 73407.0744 R-squared = 0.9300
Adj R-squared = 0.9276
Total 31438100.9 31 1014132.29 Root MSE = 270.94

eneconsp Coef. Std. Err. t P>|t| [95% Conf. Interval]

gdp .0002692 .0000135 19.96 0.000 .0002416 .0002967

_cons -291.516 118.2023 -2.47 0.020 -532.9173 -50.11476

That is:
Global Sales = -291.516 + 0.00026928 x GDP
Where Total Sales is expressed in GWh and the Total GDP is in TSh million (constant
2001 prices).

2.7.1 Forecast Results

Figure 2-7 provides a forecast of the loads for each of the categories described above for
the sum of the three Categories and for the global forecast (supporting data table is also
provided below in Table 2-10). The figure indicates a close agreement between the sum
of the three categories and the global forecast

39
Figure 2- 7: Econometric Forecast Sum of Three Categories versus Global
25,000.0

20,000.0

15,000.0
GWh

10,000.0

5,000.0

sum(T1+T2+T3) Global

40
 Table 2- 10: Sales Forecast (GWh) by Econometric Method
YEAR T1 T2 T3 T1+T2+T3 Global
2010 2,187.0 599.8 1,604.4 4,391.2 4,391.2
2011 1,444.4 413.7 1,192.7 3,050.8 3,050.8
2012 2,140.1 560.5 1,736.7 4,437.3 4,552.1
2013 2,272.2 586.1 1,876.1 4,734.5 4,853.4
2014 2,413.1 613.5 2,026.0 5,052.6 5,174.9
2015 2,563.6 643.0 2,187.0 5,393.5 5,518.1
2016 2,725.3 674.5 2,362.5 5,762.3 5,887.0
2017 2,896.8 708.4 2,548.9 6,154.1 6,278.4
2018 3,080.1 744.7 2,749.4 6,574.2 6,696.5
2019 3,276.0 783.7 2,965.4 7,025.0 7,143.3
2020 3,485.3 825.5 3,198.0 7,508.8 7,620.9
2021 3,709.1 870.4 3,448.7 8,028.2 8,131.5
2022 3,978.1 925.4 3,741.9 8,645.4 8,745.1
2023 4,268.2 985.0 4,060.8 9,314.0 9,407.0
2024 4,581.3 1,049.7 4,407.6 10,038.6 10,121.4
2025 4,919.3 1,119.7 4,785.1 10,824.1 10,892.5
2026 5,284.4 1,195.6 5,196.1 11,676.1 11,725.2
2027 5,678.7 1,278.0 5,643.8 12,600.4 12,624.8
2028 6,104.8 1,367.3 6,131.7 13,603.7 13,596.8
2029 6,565.3 1,464.2 6,663.6 14,693.1 14,647.5
2030 7,063.3 1,569.3 7,243.9 15,876.4 15,783.6
2031 7,601.9 1,683.4 7,877.0 17,162.2 17,012.3
2032 8,184.6 1,807.2 8,568.0 18,559.8 18,341.7
2033 8,815.2 1,941.7 9,322.6 20,079.6 19,780.4
2034 9,498.0 2,087.6 10,147.0 21,732.6 21,337.9
2035 10,237.3 2,246.2 11,047.7 23,531.2 23,024.6
Source: Team Compilation

Trend of Electricity Share per Customer Tariff Category Looking at the trend of share
categories as illustrated in Table 2-12, it is apparent that projections of tariff aimed at
facilitating Tanzania to become a middle income country characterised by semi-industrial
activities. Notwithstanding, a large contribution of T1 category in overall sales, its share
is gradually declining reaching 43.5% in 2035 from a highest share observed in 2012.
Similarly, T2 share is declining slowly reflecting graduation of T2 category into T3
category (agriculture and Industry). Comparably, T3 categories despite of their lower
share in the early years of projections, their trend is increasing from 39.1% in 2011 to
46.9% surpassing T1 category mainly on account of expected increase and expansion of
industrial and mining activities.

41
 Table 2- 11: Trend of Electricity Share per Customer Tariff Category
T1 T1 T2 T3
2011 47.3% 13.6% 39.1%
2012 48.2% 12.6% 39.1%
2013 48.0% 12.4% 39.6%
2014 47.8% 12.1% 40.1%
2015 47.5% 11.9% 40.5%
2016 47.3% 11.7% 41.0%
2017 47.1% 11.5% 41.4%
2018 46.9% 11.3% 41.8%
2019 46.6% 11.2% 42.2%
2020 46.4% 11.0% 42.6%
2021 46.2% 10.8% 43.0%
2022 46.0% 10.7% 43.3%
2023 45.8% 10.6% 43.6%
2024 45.6% 10.5% 43.9%
2025 45.4% 10.3% 44.2%
2026 45.3% 10.2% 44.5%
2027 45.1% 10.1% 44.8%
2028 44.9% 10.1% 45.1%
2029 44.7% 10.0% 45.4%
2030 44.5% 9.9% 45.6%
2031 44.3% 9.8% 45.9%
2032 44.1% 9.7% 46.2%
2033 43.9% 9.7% 46.4%
2034 43.7% 9.6% 46.7%
2035 43.5% 9.5% 46.9%
Source: Team Compilation

2.8 Sensitivity
Because of the uncertainties inherent in forecasting, the load forecast should be
considered as a band of probable loads above and below a base forecast as opposed to
a single value for each year. A range of values for various components of GDP have
been used to forecast band using econometric principles. Figure 2-8 illustrates the load
forecasts for each set of assumptions. The graphs suggest that the low scenario grows
about one percentage points less on average than the base case. Conversely, the high
scenario grows at 1.1 percentage point faster than the base case.

42
Figure 2- 8: Econometrics Forecast Scenarios

Source: Team Compilation

2.9 Comparison of Trend Analysis and Econometric Analysis

Table 2-13 provides a comparison of the econometric results with the trend line results.
The econometric relationship applied to Global Sales was used for this comparison as it
was, by far, the strongest econometric relationship. As seen in the table, the difference
between the forecast using the two approaches reveal that trend analysis approach
provide higher estimates (taking into account assumptions of programs etc) than
econometric approach. In this context and in the absence of policy interventions 8, the
two approaches to the forecast energy would essentially derive comparable forecast
results

Table 2- 12: Forecast Comparison: EconometricGlobal vs Trend -Total in GWh

Year Global - Econometric Trend Difference: with Difference:
Forecast_ Global (percent)
Total
2012 4,552.1 4,596.7 44.6 1.0%
2015 5,518.1 8,873.8 3,355.7 60.8%
2020 7,620.9 15,821.4 8,200.4 107.6%
2025 10,892.5 22,243.5 11,351.0 104.2%
2030 15,783.6 30,324.9 14,541.3 92.1%
2035 23,024.6 40,083.0 17,058.5 74.1%
Source: Team Compilation

8
The policy intervention means special program initiated by the government to be implemented such as special rural electrification
program which results in strong demand growth in the early years of the forecast.

43
The difference of the forecast in terms of average growth rate over the planning horizon
remains large as the trend approach reveals more GWh compared to econometric
methods. The reason is mainly attributable to the connection of 1.25 million customers
under electrification program in early years of the forecast. Thereafter, the growth rates
of trend approach grow at a sustainable rate necessary to achieve overall objective of
electrifying 75% of population by 2036. As such the growth using the trend line averages
9.7 percent while the growth using the econometric approach averages 7,5 percent.

44
 CHAPTER THREE

3 GENERATION
Generation plan presents an assessment of generation sequencing that meet demand
for the forecast period. A number of generation technologies have been evaluated to
attain the recommended plans for development of power sector in the country. In
identifying new power projects, the plan evaluate new power generation technologies,
including a review of capital investment, project lead time, fuel costs and their availability,
both locally and imported. In addition, confirmatory studies such as environmental
assessment and project financing arrangement are key elements of the projects
preparations and signals on the possibility of success for the identified projects. The
generation plan considers the following power sources namely hydro, gas, coal, wind,
geothermal, among others.

3.1 Existing Generation Plants

Table 3-1: Existing Hydro Plant Characteristics

Nyumba ya New Pangani Lower

Mtera Kidatu Hale Mwenga
Mungu Falls Kihansi

Max. supply level (m.a.s.l.) 698.50 450.00 688.91 342.44 177.50 1146.00 1127

Min. supply level (m.a.s.l.) 690.00 433.00 679.15 342.44 176.00 1141.00 1126

Recommended min. operational level (m.a.s.l.) 690.00 437.00 683.76 N/A 176.50 1143.00 1126
3
Storage vol. at max. level (mill. m ) 3750.00 167.00 1118.11 0.00 1.31 1.62 0.0024

Storage vol. at min. level (mill. m 3) 563.00 40.00 246.71 0.00 0.50 0.62 0.0019
3
Active storage volume (mill. m ) 3187.00 127.00 871.40 0.00 0.81 1.00 N/A - Run of River
2
Surface area at max. vol. (km ) 604.96 9.62 148.52 0.00 0.75 0.27 0.003
101.0 169.7 852.75 62
Gross head at max. level (m) 175.0 (Francis) 25.2 (Francis) 70.0 (Francis)
(Francis) (Francis) (Pelton) (Francis)
Gross head at min. level (m) 92.00 160.00 20.60 70.00 168.00 847.75 58.5
3
Energy equivalent (kWH/m ) 0.23 0.42 0.05 0.13 0.42 2.06 N/A - Run of River

Firm energy generation GWh 6 GWh per annum

Average energy GWh 363.00 964.00 35.00 88.00 323.00 662.00 24 per annum

Avg. generation for each m3/s (MW/(m3/s) 0.846 1.5 0.2 0.5 1.5 7.4 0.5
3
Rated turbine discharge (total plant) (m /s) 97.50 132.00 42.50 45.00 45.00 23.76 8

Kidatu storage level restrictions (control curve) :-

During wet periods January to May level is supposed to be maintained =or<445.0 m.a.s.l
During dry periods June to December level is supposed to be maintained =or>449.5 m.a.s.l

45
Thermal plants

The interconnected grid system is composed of several power plants, among those
seven are gas fired plants, three are Heavy Fuel Oil (HFO) plants, two are Biomass
plants, two are Diesel and one Industrial Diesel Oil.

Thermal power plants on average have an economic life span of twenty (20) years
however; the life span can be extended by proper maintenance and interim replacement
of major parts. Characteristics of the existing thermal power plants are shown in table 3-
2.

46
 Table 3- 2: Existing Thermal Plants
Net Year Retirement
Installed Available FOR Combined Maximum Available Installad Nominal Year
Station Available
Plant Fuel Units Capacity Capacity % Outage Plant Energy Service Life
service % Capacity
MW MW Rate % Factor % GWh (Jan) Years (Dec)
MW
IPP UNITS
Songas 1 Gas 2 42.00 38.30 1.60 37.69 5 13 80 251 2004 20 2023
Songas 2 Gas 3 120.00 110.00 1.60 108.24 5 13 80 721 2005 20 2024
Songas 3 Gas 1 40.00 37.00 1.60 36.41 5 13 80 242 2006 20 2025
Tegeta IPTL HFO 10 103.00 100.00 1.60 98.40 8 18 75 595 2002 20 2021
TPC Biomass 17.00 17.00 1.60 16.73 5 13 50 70 2011 20 2030
TANWAT Biomass 2.70 2.40 1.60 2.36 5 13 50 10 2010 20 2029
Subtotal 324.70 304.70 299.82 1888

TANESCO
Ubungo I Gas 12 102.00 100.00 1.60 98.40 5 13 80 655 2007 20 2026
Tegeta GT Gas 5 45.00 43.00 1.60 42.31 5 13 80 282 2009 20 2028
Ubungo II Gas 3 105.00 100.00 1.60 98.40 5 13 80 655 2012 20 2031
Zuzu D IDO 1 7 5.00 1.60 4.92 5 18 75 31 2014
Subtotal 259.00 248.00 244.03 1623

RENTAL UNITS (IPP's)

Symbion Ubungo Gas/Jet A1 5 120 113.79 1.60 112.00 5 13 80 746 2011 2 2013
Aggreko (Ubungo) GO 50 50 1.60 50.00 8 18 85 674 2011 1 2012
Aggreko (Tegeta) GO 50 50 1.60 50.00 8 18 85
Symbion Dodoma HFO 55 55.00 1.60 54.12 8 18 85 371 2012 2 2014
Symbion Arusha HFO 50 50.00 1.60 49.20 8 18 85 337 2012 2 2014
Subtotal 325 318.79 315.32 2127
TOTAL 908.70 871.49 859.18 5638.23
Available energy (MWh) = Available capacity (MW) * 8.76*(100-FOR)*max plant factor/100
Small diesels assumed to stay in service to December 2012 as reserve
FOR = Forced outage rate
47
Retirement of Existing Plant
In the scheduling of new generation, existing generating units were assumed to be
retired at the end of their normal economic service life except for hydroelectric plants
which were assumed to remain in service. Assumed retirement dates are shown in Table
3-3.

Table 3- 3: Existing Plant Retirement Dates (Interconnected System)

Nominal Installation Retirement

Plant name Capacity Normal service year year
MW life years
January December
HYDRO
Mtera 80 50 1988 2038
Kidatu 204 50 1975 2025
Hale 21 50 1967 2017
Kihansi 180 50 2000 2050
Pangani Falls 68 50 1995 2045
Nyumba Ya Mungu 8 50 1968 2018
Mwenga 4 15* 2012 2017
THERMAL
SONGAS I (2 units) 40 20 2004 2024
SONGAS II (3 units) 120 20 2005 2025
SONGAS III (1 units) 40 20 2006 2026
Tegeta IPTL 100 25 2002 2027
Tegeta GT 45 20 2009 2029
Ubungo I 100 20 2010 2030
Symbion 112 112.5 2* 2011 2013
Symbion Dodoma 55 2* 2011 2013
Symbion Arusha 50 2* 2012 2014
Ubungo II 105 20 2012 2032
Tanwat 2.7 20 2010 2029
Zuzu Diesel 7.44 20** 1980 2014
TPC 17 20 2011 2030
Source: TANESCO

*Contractual period
** Rehabilitated
48
3.2 Future Generation Options

3.2.1 Hydroelectric power

3.2.1.1 Hydrology and Hydro System Capability

The availability of reliable generation sequences at each candidate hydroelectric project
is of major importance. It is important that updated hydrologic data is used for each
PSMP update, and that the simulations reflect the optimum use of hydroelectric
resources, taking into account the use of reservoirs in a mixed hydro-thermal system. In
this Power System Master Plan Update, the energy generation of all new candidate
hydroelectric projects, and existing plants, was re-estimated using revised and updated
flow records. The re-estimate of generation values was made in two steps, updated
hydrology and new generation simulations.

3.2.1.2 Hydrological Data Update

The Tanzania Power System Master Plan requires consideration of existing and potential
power development options. Since many of these options are hydropower projects, a
clear assessment of the hydrology and hydropower system capability is unavoidable.
Hydropower generation capability is determined by simulating generation from historical
flows over a sufficient long period. The period should be long enough to cover observed
natural variations and should include most recent data to reflect new developments.

Therefore, availability of representative sample (reference hydrology) of river flows is the

key to reliable assessment of the generation potential of hydroelectric system. A
reference hydrology consists of complete set of recorded or estimated stream flows
during a specified period of time.

Observed historical stream flows has always been the favoured source of representative
time series for hydropower simulation. River flow data collection is the responsibility of
Ministry of Water and its integrity of dataset has always been subject to budgetary and
other constraints. Uninterrupted datasets spanning many years are difficult to find thus
reconstitution of historical flow records has always been a prerequisite to hydropower
generation simulations.

This study employed datasets developed during preparation of 2008 Power System
Master Plan and later updated in 2009 when intensive analysis was carried out.
TANESCO is currently working with Ministry of Water to update relevant datasets for
future analyses. The data will also indicate recent trends.

3.2.1.3 Hydro generation simulations

The simulation model is used to determine the generation capability of new hydro
options. This study utilised simulation results as implemented during 2009 update
following establishment of new set of reference hydrology.
49
3.2.1.4 Existing Hydroelectric Power Plants
The interconnected grid system is composed of several power plants, among those
seven hydro power plants have a capacity of more than 1MW connected to the grid.

Table 3- 4: Existing Hydroelectric Power Plants

Average Firm Age in 2012
Capacity Installation
Plant name energy energy
MW year (years)
GWh GWh
Mtera 80 429 195 1988 25
Kidatu 204 1111 601 1975 38
Hale 21 93 55 1967 46
Kihansi 180 694 492 2000 13
Pangani Falls 68 341 201 1995 18
Nyumba Ya Mungu 8 36 20 1968 45
Mwenga 4 28.51 0 2012 1
TOTAL 565 2,820.5 1,564

Hydro power plants on average have an economic life span of fifty (50) years however;
the life span can be extended by proper maintenance and interim replacement of major
parts. This PSMP Update assumes that existing hydro plants remains operational during
the period of this plan. Characteristics of the existing hydro power plant are shown in
Table 3.4

Plan Strategies
There are three major development strategies for generation planning. This update
borrows some strategies used in the preparation of the 2008 Master Plan, and
subsequent 2009 Update study. The Plan is guided by Overall Power Development
Strategy which is explained in Table 3-5. The specific strategies are illustrated more in
Tables 3.7.

50
 Table 3- 5: Overall Power Development Strategy

Element Why?
To take account of all identified new industrial
Base case load forecast loads, including background load growth, and to
target a 75% electrification rate by 2035.
To the extent that it is economic and feasible to do
Interconnect isolated regions so, in order to promote social and economic
development
Install all new generation options that
To eliminate risk of load shedding in early years of
are feasible in the short term
the plan
regardless of unit cost
Use judicious mix of hydro and non- To avoid over-reliance on hydro with attendant risk
hydro generation options of power shortages during dry periods
Accept limited amounts of firm To balance low cost of power and energy self-
imports/exports sufficiency
Schedule new generation so that To improve the economics of system expansion by
sufficient reserve margin is provided developing revenue potential, while also providing
to allow for future pool power trading improved security of energy supply

Short-Term Power Development Strategy

a) The generation projects shown in Table 3.6 forms the short-term plan (2013 2017)
for both public and private sector. The projects are either under construction,
committed stage, and/or they have short lead time and can be developed under a
fast-track arrangement. Aggreko and Dowans power plants are expected to retire
following end of contract periods. In addition, there are private sector companies
which have shown up an interest to invest in short term projects as outlined in the
table below. The projects include 200 25MW Gas based Combined Cycle Power
Project (Zinga - Bagamoyo) for the purpose of facilitating development of industrial
area (EPZ). The captive power requirement within the EPZ is estimated to be 75MW
while the surplus power will be supplied to the grid. Other projects are Mkuranga
250MW, Mtwara 400MW and Somanga Fungu 320MW (phase I & II).

51
 Table 3- 6: Power Generation Projects for Short Term Expansion Plan
Project Description Reasons Date On-line

a) Mwanza 60MW, Diesel fired a. They are committed plants,

b. Meet background growth in demand in

Tanzania,
Early 2013
c. These are the only resources identified as
capable of being ready at this short time.

a) Kinyerezi I, 150MW GTs plant i. Meet background growth in demand Early 2014
ii. They are the only resources identified as
capable of being ready at this time

b) Somanga Fungu (TANESCO) i. Meet background growth in demand Early 2015

8MW
ii. Generation mix, to include renewable wind
c) Somanga Fungu 210MW
power
d) Kinyerezi II, 240MW GTs plant
e) 200 25MW Gas based iii. They are the only resources identified as
Combined Cycle Power Project capable of being ready at this time
(Zinga - Bagamoyo)
f) Mkuranga 250MW
g) Renewable - Cogen (Mufindi)
30MW
h) Renewable Cogen (Sao Hill)
10MW
a) Kinyerezi III, 300MW GTs plant i. Meet background growth in demand Early 2016
b) Kinyerezi IV, 300MW GTs Plant
ii. They are the only resources identified as
c) Mtwara (18), 400MW
capable of being ready in the short time
d) Kiwira I 200MW Coal fired,
Mbeya iii. Generation mix, to include more renewable
e) Somanga Fungu, 110MW wind power
f) Wind I, 50MW
iv. Build base for possible power trading
g) Solar I, 60MW
h) Import (Kenya/Ethiopia), 200MW
a) Wind II, 50MW, i. Meet background growth in demand
b) Ngaka-I 200MW, coal fired
ii. Import from Ethiopia through Tanzania Kenya Early 2017
Ruvuma
interconnector.
c) Hale, 11MW
d) Interconnector

Source: Team Compilation

Mid to Long-Term Power Development Strategy

Strategies shown in Table 3.7 were considered in the preparation of the mid to long-term
plan (2018 2035). It is assumed that most of the projects are committed while others
are in feasibility study or at early preparatory stages.

52
 Table 3- 7: Mid to Long-Term Strategies

Element Why?

Work with IPPs/PPPs to Identify and study It is a renewable energy whose costs are being
additional sites for renewable power generation lowered through ongoing research world-wide

Implement the Demand Side Management It is cheaper to implement energy efficiency program
Program as per energy efficiency study report. than building a new plant

Work with the Ministry of Energy and Minerals,

It is a relatively low-cost indigenous fuel with relatively
and the private sector to continue studies to
few negative environmental and social impacts
prove up additional quantities of natural gas
It is a relatively low-cost indigenous fuel although it
The government to harmonize the acceleration has significant negative environmental and social
of coal usage for power generation impacts. With new technology can be considered as
base load resource.
Hydro is of key importance as an indigenous resource,
Develop and implement a program of project and indicative costs are lower than thermal power.
preparation studies, including environmental and
social assessments, for all hydro sites included Adequate basic information is required to encourage
in this PSMP generation plan. private investors to submit proposals for project
implementation
Work with the Ministry of Energy and Minerals to
develop a long term policy on possible use of
nuclear power, and support studies to prove the It may be a relatively low-cost indigenous fuel that has
availability and capacity of uranium resources few immediate environmental and social impacts.
and study the opportunities for the development
of nuclear generation
On the one hand, it is a relatively low cost power
Complete studies on Stieglers Gorge hydro
development with few negative environmental and
development to the point where a decision can
social impacts. On the other hand, it is located in a
be made on whether or not it can be
Game Reserve which makes it difficult to obtain
implemented
international financing
Jointly with Malawi, carry out further studies on On the one hand, it is a relatively low cost power
Songwe hydro cascade development to the development with few negative environmental and
point where a decision can be made on the social impacts. On the other hand, it is located in a
optimum development of the river from the river bordering Tanzania and Malawi and it has been
points of view of all potential users in both studied more from the point of view of uses other than
affected countries hydro power

Interconnection strategies
Apart from development strategies that are aimed at utilizing local sources of generation,
the PSMP extend more strategy that includes export and import of power to and from
neighbouring countries. Based on the recent climatic change it is risky to depend on the
internal sources of power generation implying the need for countries moving immediately
towards interconnecting their Grid systems. Table 3-8 shows expected interconnection
projects.

53
 Table 3 - 8: Interconnection Projects
Countries Generation Why? When?
Ethiopia via Kenya To improve energy security with power From 2016
purchases
- do

Zambia and
Kenya, - do
Inter-connector

Tanzania and mid term

Mozambique - do

The rest of EAC

countries.

Comments: Interconnection would facilitate integrated power resource planning that have
environmental and social risks and would strengthen the transmission networks of each country.

Generation Planning Criteria

The 2012 PSMP update use the following criteria:-
Reserve Margin: This study update assumes a reserve margin of 15 to 40 percent of
the system installed capacity.

Generation Mix: This study update assumes a hydro to thermal generation mix of 40:60
of the system installed capacity.

Loss of Load Expectation: The plan maintains the use of a maximum loss of load
expectation (LOLE) of 5 days per year as established in the 2008 PSMP. The LOLE
values are based on a hydropower during a low flow period with a return period of 1: 30
years, or 97percent probability of exceedance.

Outage rates: The plan assumes that there will be planned and forced outages at the
generating plants. The Combined Outage Rates per year is a result of scheduled
maintenance and forced outages. Table 3-9 below outlines the selected outage rates
based on different technologies.

54
 Table 3 - 9: Selected Outage Rates for Generation Planning in PSMP

Scheduled Forced outage in Combined

Generation type maintenance in percent of time outage rate
weeks per year per year percent
Coal steam thermal 6 8 20
Oil steam thermal 4 7 15
Gas turbine 4 5 13
Combined cycle gas 3 5 11
turbine
Medium speed diesel 5 8 18
Cogeneration steam plant 4 7 15
Hydroelectric 4 0 8

Plant service lives: The following service lives were used in determining average unit
generation costs for preliminary comparisons, and for determining retirement dates for
existing and future plants in the development of generation plans:

Table 3- 10: Plant service lives

Generation type Normal service life years

Gas turbines 20
Combined cycle gas turbines
20

Medium speed diesel 20

Low speed diesel 25
Coal and oil steam plants
25

Hydroelectric plant 50 *

* Normally extended by major equipment replacement and maintenance

Operation and maintenance and other costs: Unit generation costs include allowances
for operation and maintenance, interim replacement, and insurance. For thermal plants,
the operation and maintenance cost is separated into fixed and variable costs, while for
hydroelectric plants, O&M cost is considered as fixed cost. Interim replacement is an
annual allowance to cover periodic replacement of major equipment items that have a
shorter service life than the overall project, such as turbines in a hydroelectric project.

For the 2012 PSMP update, the allowances used by the Tanzania system are as shown in
Table 3-11.

55
 Table 3- 11: Selected operation and maintenance, and other annual costs
Fixed Variable Interim
Unit size Insurance
Plant type O&M O&M Replacement
MW percent
US$/kW/yr US$/kWh percent
Coal steam thermal 100 62 0.0075 0.35 0.25
Coal steam thermal 50 87 0.0075 0.35 0.25
Oil steam thermal 100 44 0.0063 0.35 0.25
Oil steam thermal 50 44 0.0063 0.35 0.25
Gas turbine 60 9 0.0056 0.35 0.25
Combined cycle gas 3x60 7 0.003 0.35 0.25
turbine
Medium speed 50 29 0.0150 0.35 0.25
diesel
Cogeneration steam 40 43 0.00642 0.35 0.25
Hydroelectric All 16 0 0.25 0.10
Notes:
a) The O&M values are from the TANESCO 2003 PSMP update + 25 percent to adjust
to 2012 price levels.
b) The interim replacement rates and insurance are normal industry practice and are
expressed as a percent of the capital cost.

Lead times: A critical issue in determining the possible scheduling of new projects is the
minimum lead-time that would be required to complete the project implementation
process up to commercial operation date. A major consideration in the estimate of
minimum lead-time is the level of preparation of the project (Pre-feasibility, feasibility,
bankable document etc.).

The following guidelines are to be used to assist in the definition of an appropriate

minimum lead-time. Earliest on-power dates for the current update were based on lead
time after January 2013.

Table 3-12 below shows the generic times for each of the individual activities leading up
to implementation and on-power may be used to assess an appropriate minimum lead
time.

56
Table 3- 12: Plant overall implementation schedule
Activity Time in
months

Prefeasibility study, following a reconnaissance level project identification 6-12

Feasibility study (including consultant selection) 12-24

Feasibility study update (where required) 6-12

Environmental study and approval 12

Preparation of IPP process and tendering (where applicable) 12

Project financing (IPP or public ownership) 12

Final design (including consultant selection) depending on 12-18

size/complexity

Tendering 6-12

Construction (depending on size/complexity) 36-72

Actual times will vary considerably, depending on environmental approval process,

private or public ownership, commitment of the government, financially feasibility, size
and complexity of the project, and the extent to which activities may be fast tracked (i.e.,
carried out in parallel, such as final design and preparation of the EIA).

Lead times for hydroelectric

Overall implementation times used in this assessment for each hydroelectric candidate
are based on the following minimum timeframes, expressed in years.

57
 Table 3- 13: Minimum on-power lead times for hydroelectric plants (years)
Present project status Project preparation Tender/Construct Total
Reconnaissance/
Preliminary
less than 70 MW 3 4 7
70 to 150 MW 4 5 9
More than 150 MW 4 6 10
Prefeasibility
less than 70 MW 2 4 6
70 to 150 MW 3 5 8
More than 150 MW 3 6 9
Feasibility
less than 70 MW 2 4 6
70 to 150 MW 2 5 7
More than 150 MW 2 6 8
Design/tender documents
less than 70 MW 1 4 5
70 to 150 MW 1 5 6
More than 150 MW 1 6 7
Source: Team Compilation

These values allow no margin for delays between successive development stages. They
also do not provide for additional delays for approval and financing activities. At least one
year should be added to the above values for any project that is not being fast tracked.
Lead times for thermal plants
Overall implementation times used in this assessment for each thermal plant candidate
are based on the following minimum timeframes, expressed in years.

Table 3- 14: Minimum On-Power Lead Times (Years) for Thermal Plants

Technology Project preparation Tender/Construct Total

Coal steam 3 3 6
Oil steam 3 3 6
Conventional diesel 1 1 2
Gas fired engines 2 1 3
Combined cycle gas 2 2 4
turbine

58
Generation Candidates
Hydropower Resources
The new hydroelectric options considered in this PSMP update and their generation
capabilities are listed in Table 3-15.

Table 3- 15: New Hydro Options and Generation

Installation Average energy Firm energy

Plant/site River
GWh
MW GWh

Kakono 53 404 335 Kagera

Mpanga 144 955 646 Rufiji

Masigira 118 664 492 Ruhuhu

Ruhudji 358 1928 1333 Ruhudji

Rumakali 520 1475 2520 Rumakali

Rusumo (80MW)
26.7 148 129 Kagera
26.7 for Tanzania (1)

Songwe (3 plants) 340 (170 Tanzania) 1669 1045 Songwe

Steiglers Gorge 1200 (to Phase 3) 5259 3247 Rufiji

Ikondo 340 1832 1316 Mnyera

Taveta 145 850 622 Mnyera

Malagarasi Stage
44.8 186.7 21.44 Malagarasi
(Igamba III) - (2)

(1) Capacity and energy values are 33 % of the total, ie Tanzania portion
(2) Igamba III values from current studies

The detailed plant characteristics for new hydro projects are shown in Table 3-16.

59
 Table 3- 16: New Hydro Plant Characteristics
Songwe Songwe Songwe
Kakono Rusumo Ruhudji Rumakali Masigira Mpanga Kihansi Malagarasi Stieglers 1 Stieglers 2 Stieglers 3 Ikondo Taveta
Bipugu Sofre Manolo

Generation
Installed capacity MW 34 157 149 53 30 358 520 118 144 248 45 300 600 300 340 145
Average energy GWH 153 736 780 404 148 1928 1475 664 955 69 187 2230 1506 1523 1,842 850
Firm energy GWH 101 456 488 335 129 1333 2520 492 646 99 21 1908 855 464 1,316 622

Powerhouse
Number of units 3 3 3 3 3 4 3 2 2 2 3 4 4 3 4 2
Gross head at max. level (m) 80 315 253 26 35 765 1295 238 374 846.5 100 100 128 405 155
Gross head at min. level (m) 55 285 173 24 30 765 1265 237 350 832.5 99 99 99 400 150
Tailwater level (m.a.s.l) 1165 825 527 1156 1290 59 59 59
Rated turbine discharge(total) (m3/s) 50 59 69 240 207 54.4 19.1 57.0 45.0 353 706 277 100 125
MW/(m3/s) based on calc Qmax 0.67 2.66 2.13 0.22 0.30 6.6 11.7 2.1 3.2 7.14 0.84 0.84 1.08 3.4 1.16

Reservoir
Max. supply level (m.a.s.l.) 1245 1140 780 1182 1325 1478 2055 938 734 159 159 187 1070
Min. supply level (m.a.s.l.) 1230 1110 700 1180 1320 1440 2025 937 710 158 158 158 1030
Full supply level (m.a.s.l) 1245 1140 780 1182 1325 1478 2055 938 734 174 187 187 1070
Recommended min. operational level (m.a.s.l.) 1230 1110 700 1180 1320 1367 2025 937 710 843 158 158 158 1030
3 350 440 260 27 1250 300 280 24 75 457,000 13000 13000 34000 800 475
Storage vol. at max. level (mill. m )
Storage vol. at min. level (mill. m3) 100 80 0 0 0 31.3 24 23 7 427,000 12000 12000 12000 20 470
3 250 360 260 27 1250 269.3 256 2 68 457,000 1000 1000 22000 780 5
Active storage volume (mill. m )
2
Surface area at max. vol. (km ) 30 15 11 14 390 14 13 3 2.5 169,000 1250 1250 N/A 38
Rusumo energy values are 1/3 of the total, as project will be shared with Burundi and Rwanda
Kihansi is Upper Kihansi storage + addition of 2 x 60 MW units at Lower Kihansi. Cost is for storage dam + E/M for Lower Kihansi addition
Songwe based on package 4 ie - 3 dams with powerhouses, priority for power, storage for flood control at Sofwe and Manolo
Stieglers capital costs are increments for each phase.
Q= MW*1000/9.81/0.866/Gross Head

60
Thermal resources

There are three categories of conventional new thermal options:

a) Identified /evaluated specific projects using indigenous fuel like natural gas, coal
and biomass.
b) Generic projects/technologies using indigenous fuel.

c) Generic project/technologies using imported fuel.

Other potential sources such as nuclear and geothermal are covered in this chapter.

The list of identified projects will change with each master plan update. For example the
possibility of gas-fired generation at Mnazi Bay appeared in the 2008 PSMP for the first
time. However the situation has changed and now this generation will be at Kinyerezi
after construction of a natural gas pipeline from Mtwara to Dar es Salaam.

Similarly the availability of indigenous fuel will change with time as more reserves are
identified, evaluated and reserves confirmed. This is the case for the current update,
which reflects identified large coal resources in the south-west part of the country.

The 2012 update Study includes more thermal plants based on Tanzanian fuels (gas
,Coal etc.) to meet the forecast load demands up to the end of the planning period (i.e.
2035).

The initial step in the planning process is to develop or update a catalogue of candidate
thermal new power options, covering the above three categories. In this case, the first
step is to refer to previous PSMPs, which have already considered known options
(specific projects and generic), and update this with current information.

Specific and committed thermal projects

Except for changed timing for the on-line dates for these resources, the current PSMP
update has retained the committed and identified future specific projects using
indigenous fuels that were considered in the previous study as per Table 3-17.

61
Table 3- 17: New Thermal Options

Installation
Plant/site Technology Fuel source
Capacity (MW)

COAL FIRED PLANT

Coast Coal 500 Steam Local Coal
Kiwira I 200 Steam Local Site Coal
Kiwira II 200 Steam Local Site Coal
Local Coal I 100 Steam Local Site Coal
Local Coal II 200 Steam Local Site Coal
Local Coal III 400 Steam Local Site Coal
Local Coal IV 400 Steam Local Site Coal
Local Coal V 400 Steam Local Site Coal
Mchuchuma I 300 Steam Local Site Coal
Mchuchuma II 400 Steam Local Site Coal
Mchuchuma III 300 Steam Local Site Coal
Ngaka I 200 Steam Local Site Coal
Ngaka II 200 Steam Local Site Coal
SUB TOTAL I 3800

GAS/HFO PLANT
Kinyerezi I 150 GTs - Gas Local Gas
Kinyerezi II 240 CCGT Local Gas
Kinyerezi III 300 CCGT Local Gas
Kinyerezi IV 300 GT Local Gas
Mkuranga 250 250 CCGT Local Gas
Mtwara 400 400 CCGT Local Gas
Mwanza MS Diesel 60 MSD HFO/Dual Imported/Local Gas
Somanga Fungu 320 320 CCGT Local Gas
Somanga TANESCO 8 GT Local Gas
Zinga 200 200 CCGT Local Gas
TOTAL 2228

Source: Team Compilation

62
It is worth noting that the current plan for plants using natural gas (existing and future
plants) have assumed a total proven reserve of about 880 billion cubic feet from
Songosongo and 262 BCF from Mnazi bay respectively.

Renewable Projects
Renewable power projects are among the sources of power generation plan. Currently,
there are potential sources with capacity of generating 260MW in the country.
Renewable power projects include biomass, solar and wind. Table 3-18 identifies the
following power projects that can be developed in the short term.

Table 3- 18: Candidates Renewable Projects

Installation
Plant/site Technology Fuel source
Capacity (MW)
Mufindi (Cogen) 30 Steam Local Biomass
Sao Hill (Cogen) 10 Steam Local Biomass
Solar I 60 Solar Local
Solar II 60 Solar Local
Wind I 50 Wind Local
Wind II 50 Wind Local
TOTAL 260

Source: Team Compilation

Indigenous Fuels
Coal
The 2012 PSMP update has assumed that 3,800MW of new local coal would be
developed from presently proven reserves from Lake Nyasa area (that includes the
Mchuchuma, Katewaka, Ngaka and Kiwira coal fields).Table 3-19 shows the usage of
coal reserve in the country.

The 400 MW Ngaka coal fired plant being proposed by TANCOAL, has a quoted coal
price of US$ 65.00/ton as proposed by TANCOAL Depending on the coal calorific value,
the corresponding fuel cost would be in the order of US$ 2.5/GJ, or 2.5c/ kWh. Proven
reserve on this site is estimated to be 251 million metric tonnes with Calorific value of
6200 kcal/Kg.

The Mchuchuma project is now considered as multipurpose project (Colliery, power

plant and Smelter), the power plant component has two phases; Phase one of the
project to supply the smelter, and a second phase is planned to power supply to
TANESCO grid. No coal prices (or PPA sales prices) have been proposed. However,
the proposed coal price for the Mchuchuma site of US$ 55.00/t as proposed by the NDC
and the Chinese developer. Depending on the coal calorific value, the corresponding fuel
63
cost would be in the order of US$ 2.6/GJ. It is estimated that the site has a total reserve
amounting to 445 million metric tonnes out of which, the proven reserve is 125 million
metric tonnes and indicative reserve is 328 million metric tonnes. The corresponding
Calorific value is 5200kcal/kg.
The Kiwira coal fired plant has also been committed for 200 MW installations, with a
possible further addition of 200 MW. The project has now been restructured with
government stepping in to split the project where the colliery will be transferred to
STAMICO while the responsibility of developing a power plant has been transferred to
TANESCO. The site has total reserve of about 86.31 million metric tonnes with calorific
value of 4200 kcal/kg.

Table 3- 19: Coal Resources Utilization for future generation

Coal Resources Proven (MT) Reserve (MT)

NGAKA 251.00
MCHUCHUMA 125.30 454.10
KIWIRA 86.31
KATEWAKA 33.50 81.70
Total 496.11
INSTALLED SPECIFIC PLANT LIFE TIME TOTAL COAL
CONSUMPTION
YEAR PLANT CAPACITY CONSUMPTION PER YEAR CONSUMPTION
[MW] [GJ/MWh] [MT] [YEARS] [MT]

2016 Kiwira I 200 9.24 0.72 25 18.00

2017 Coastal Coal 300 9.73 0.80 25 19.90
2017 Ngaka I IPP 200 9.73 0.53 25 13.27
2018 Mchuchuma I IPP 300 8.99 0.74 25 18.48
2018 Kiwira II IPP 200 9.24 0.72 25 18.00
2019 Ngaka II IPP 200 9.73 0.72 25 18.00
2021-2024 Mchuchuma II IPP 400 8.99 1.13 25 28.29
2026-2028 Mchuchuma III IPP 300 8.99 0.85 25 21.22
2029 Local Coal I 200 9.73 0.05 25 1.33
2030 Local Coal II 400 9.73 1.33 25 33.17
2031 Local Coal III 400 9.73 1.33 25 33.17
2033 Local Coal IV 400 9.73 1.06 25 26.53
2034 Local Coal V 300 9.73 0.80 25 19.90
TOTAL 3800 222.81

Source: Team Compilation

Natural Gas
Tanzania has eleven natural gas discoveries namely: Songo Songo, Mnazi Bay,
Mkuranga, Kiliwani, Ntorya and Deep Sea eight discoveries (Chaza, Jodari, Zafarani,
Pweza, Mzia, Chewa, Papa 1 and Lavani1). Among the discoveries, Songo Songo and
Mnazi Bay have proven commercial quantities of gas and are operational while others
still have to undergo commercial appraisal.

64
In ensuring there is enough gas for power generation, the government through TPDC is
constructing a pipeline from Mtwara to Dar es Salaam. The project will involve the
construction of two expandable Natural Gas Processing Plants at Mtwara 210 mmscfd
and Songo Songo 140 mmscfd together with a 36 Pipeline from Mtwara to Dar es
Salaam with a 24 subsea spur line from Songo Songo to tie in at Somanga Fungu,
Kilwa Region. Upon completion, the pipeline infrastructure will have a capacity to
transport up to 784 mmscfd of natural gas without compression. However, this capacity
will be reached gradually from 181 mmscfd in 2014 to 724 mmscfd in 2024 and up to
1002 mmscfd in 2030 as shown in the table below. Assuming 70 percent of amount of
delivery gas is used for power generation this translates into 2744 MW in 2024.

Table 3- 20: Expected Gas Delivered and Power Generation as per Mtwara Dar es
Salaam Pipeline
Amount of 70 percent of the Possibe Power
Gas Delivered Amount Generation
Year
(mmscfd) (mmscfd) MW
2014 181 127 634
2015 306 214 1071
2016 470 329 1645
2017 475 333 1663
2018 500 350 1750
2019 669 468 2342
2020 769 538 2692
2021 - 2025 784 549 2744
2026 - 2028 914 640 3199
2029 - 2030 958 671 3353
2031 1002 701 3507
Source: TPDC and TANESCO

The SongoSongo gas field with estimated reserve of 880 TC is a primary source for
natural gas for power generation in Dar es Salaam. The reserve would be equivalent to
about 15,513 MW-years of generation at 70percent CF, and the upper value of about
1000 Tcf would be equivalent to about 17,000 MW-years. This in turn corresponds
approximately to 500 MW of generation over 20 years (the assumed economic life of a
gas turbine or combined cycle plant).

For this plan the cost of natural gas is estimated to be as shown below:

a) US$ 0.68/GJ for protected gas supply to Ubungo

b) 3.18 US$/GJ for additional gas
65
The availability of Songo Songo gas depends on the delivery infrastructure, which
consists of the wells, the gas processing facilities on Songo Songo Island (SSI), and the
pipeline to Ubungo. The current pipeline capacity is 105 mmscfd which has been related
from initial capacity of 90mmscfd.

The Mnazi Bay gas with estimated proven reserve of 262TCF primary source for natural
gas for power generation in Dar es Salaam, equivalent to about 4506.4 MW-years of
generation at 70percent CF. This in turn corresponds approximately to 365 MW of
generation over 20 years (the assumed economic life of a gas turbine or combined cycle
plant). For this plan the cost of natural gas is estimated to be at price of US$ 4.74/GJ.

The assumed use of available gas resource for existing plants and future projects in the
2012 PSMP is shown in table 3-21 below. This table indicates an inadequate gas supply
to meet the present gas plants until 2014 when the Mtwara to Dar es Salaam pipeline will
be available. It is assumed that all the available gas resource is confined for use in
power generation implying that industrial gas needs remains at current level.

Table 3- 21: Use of Natural Gas (SS, M-Bay, Mkuranga, Deep Sea)
Existing/committed Thermal

Source: Team Compilation

In addition it is assumed that more indigenous coal and gas will be identified in the long
term, as noted above.
66
3.3 Development costs
Capital costs for all candidate power plants are based on benchmarking of generic plants
around the world, original capital costs from the 2008 PSMP study, and proposed
developers prices. These costs were then escalated from original sources to obtain
costs on a common basis. Schedules of costs during construction, including pre-
construction costs, and estimated lead times for project preparation and construction for
both hydro and thermal are summarized in Table 3-22 and Table 3-23 respectively.

67
Table 3- 22: Schedule of construction costs for hydroelectric projects
Capital cost
Construction Annual expenditure as % of total capital cost
PLANT Units $M no IDC / Pre const-ruction
(months)
2011 1 2 3 4 5 6 7 8 9 10 TOTAL

Ruhudji 1 *1220 66 4.00 7.00 8.00 20.00 30.00 20.00 10.00 1.00 100.00

Rumakali 1 *740 84 4.00 7.00 8.00 11.00 15.00 24.00 20.00 8.00 2.00 1.00 100.00

Masigira 1 224.41 54 4.00 6.00 16.00 35.00 23.00 14.00 2.00 100.00

Mpanga 1 267.73 63 4.00 8.00 9.00 20.00 30.00 18.00 10.00 1.00 100.00

Upper Kihansi 1 116.71 45 4.00 14.00 30.00 37.00 14.00 1.00 100.00

Stieglers Phase 1 1 938.49 108 4.00 7.00 4.00 7.00 7.00 11.00 18.00 16.00 12.00 9.00 5.00 100.00

Stieglers Phase 2 Addition 1 334.36 36 3.00 38.00 40.00 8.00 8.00 3.00 100.00

Stieglers Phase 3 Addition 1 274.09 24 3.00 30.00 60.00 5.00 1.00 1.00 100.00

Kakono 2 96.86 36 5.00 25.00 40.00 30.00 0.00 100.00

Malagarasi (Igamba III) 2 153.24 40 5.00 25.00 40.00 30.00 0.00 100.00

Rusumo 2 **339 36 5.00 25.00 40.00 30.00 0.00 100.00

Songwe Bipugu 2 90.41 36 5.00 25.00 40.00 30.00 0.00 100.00

Songwe Sofre 2 274.28 60 5.00 10.00 20.00 20.00 35.00 10.00 100.00

Songwe Manolo 2 278.88 48 5.00 20.00 30.00 30.00 15.00 0.00 100.00

Ikondo 2 665.84 72 5.00 7.00 8.00 20.00 30.00 20.00 10.00 0.00 100.00

Taveta 2 251.13 60 5.00 10.00 25.00 25.00 35.00 0.00 100.00

After on-power 1 Schedule of costs from the EAPMP 2005

2 Schedule of costs from planning criteria
* Developer's price
** Cost to be equally shared by three countries

68
Table 3- 23: Schedule of construction costs for thermal projects
Capital cost Annual expenditure as % of total capital cost
PLANT
MW (net) $M no IDC /
2011 1 2 3 4 5 TOTAL

COAL FIRED PLANT

Coastal coal 500 1,150.00 15 30 30 25 100
Kiwira I 200 413.80 15 30 30 25 100
Kiwira II 200 413.80 15 30 30 25 100
Local Coal I 100 287.00 15 30 30 25 100
Local Coal II 200 574.00 15 30 30 25 100
Local Coal III 400 1,148.00 15 30 30 25 100
Local Coal IV 400 1,148.00 15 30 30 25 100
Local Coal V 400 1,148.00 15 30 30 25 100
Local Coal VI 300 861.00 15 30 30 25 100
Mchuchuma I 300 366.58 15 30 30 25 100
Mchuchuma II 300 366.58 15 30 30 25 100
Mchuchuma III 300 366.58 15 30 30 25 100
Ngaka I 200 620.60 15 30 30 25 100
Ngaka II 400 868.80 15 30 30 25 100

GAS/HFO PLANT
Kinyerezi I 150 207.00 40 60 100
Kinyerezi II 240 331.00 40 60 100
Kinyerezi III 300 330.00 40 60 100
Kinyerezi IV 300 200.00 15 50 35 100
Mkuranga 250 250 200.00 40 60 100
Mtwara 400 551.67 15 50 35 100
Mwanza MS Diesel 60 51.00 30 45 25 100
Somanga Fungu IPP 320 365.00 15 50 35 100
Somanga Fungu TANESCO 320 365.00 15 50 35 100
Zinga 200 200 276.20 40 60 100

NB: This table of cost excludes cost of mine development and transmission
Costs were escalated by applying the ratio of the index for January 2010 and that for the
year of the last estimate.

3.3.1 Generation Costs

Hydro and Thermal Generation Unit Costs
For the purpose of comparing alternative new generation options for initial screening, the
unit capacity (US$/kW) and energy costs are estimated. The capital cost includes
interest during construction, which is a function of the scheduling of capital expenditures
during construction, the length of the construction period and the discount rate. The unit
cost of capacity is estimated from the capital cost, including interest during construction,
and the nominal plant installed capacity. Note that the firm capacity of the plant,
especially for run-of-the-river hydroelectric projects may be significantly low.

Unit energy costs (US$/kWh) are calculated from capital charges and variable operation
and maintenance costs, and fuel costs. For hydroelectric projects, unit costs are
calculated for both estimated average annual and firm energy. The calculation of energy
costs takes into account the service lives attributable to each technology.

69
The total cost of energy generation is a function of plant capacity factor and combines
the fixed annual capacity component (US$/kW-year/hours of operation) with the variable
energy component (US$/kWh). In the case of the hydroelectric option the plant capacity
factor, and thus average hours of operation, is defined.

The calculations of the unit generation costs for candidate new hydroelectric and thermal
options are shown in Table 3 -24 and Table 3 -25 respectively

70
Table 3- 24: New hydro Costs
Songwe Songwe Songwe Upper Stieglers
Bipugu Sofre Kakono Rusumo Ruhudji Rumakali Masigira Mpanga Stieglers 1 Stieglers 2 Ikondo 1 Taveta 3 Malagarasi
Manolo Kihansi 3
Installed capacity MW 34 157 149 53 80 358 520 118 144 120 300 600 300 340 145 44.8
Average annual energy GWH 153 736 780 404 477 1928 1475 664 955 124 2230 1506 1523 1,842 850 186.7
Firm energy GWh 101 456 488 335 413 1333 908 492 646 11 1908 855 464 1,316 622 21.44
Capital costs
Latest capital cost $ Million 59.00 179.00 182.00 67.50 92.00 384.00 351.00 157.00 191.00 81.20 654.00 233.00 191.00 464 175 149.5
Year of estimate 2002 2002 2002 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 1984 1984 2011
Source Norplan Norplan Norplan SSEA SSEA EAPMP EAPMP EAPMP EAPMP EAPMP EAPMP EAPMP EAPMP Norconsult Norconsult ESBI
Multipurpose use cost factor 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Additional mitigation costs $ Million 2.95 8.95 9.10 3.38 4.60 19.20 17.55 7.85 9.55 4.06 32.70 11.65 9.55 23.20 8.75 7.48
Adjusted cost $ Million 61.95 187.95 191.10 70.88 96.60 403.20 368.55 164.85 200.55 85.26 686.70 244.65 200.55 487.20 183.75 156.98
Cost index estimate year 236 236 236 252 252 252 252 252 252 252 252 252 252 252 252 252
Escalated cost (2011) Index 344 90.41 274.28 278.88 96.86 339.00 1220.00 740.00 225.30 274.09 116.52 938.49 334.36 274.09 665.84 251.13 153.24
IDC calculation
% cost year -10 9.5 2.473 0.04
% cost year -9 8.5 2.248 0.04 0.07
% cost year -8 7.5 2.044 0.07 0.04
% cost year -7 6.5 1.858 0.04 0.08 0.04 0.07
% cost year -6 5.5 1.689 0.07 0.11 0.04 0.08 0.07 0.00 0.04
% cost year -5 4.5 1.536 0.05 0.05 0.00 0.00 0.08 0.15 0.06 0.09 0.04 0.11 0.03 0.03 0.06
% cost year -4 3.5 1.396 0.05 0.10 0.20 0.05 0.05 0.20 0.24 0.16 0.20 0.14 0.18 0.38 0.30 0.16 0.05
% cost year -3 2.5 1.269 0.25 0.20 0.30 0.25 0.25 0.30 0.20 0.35 0.30 0.30 0.16 0.40 0.60 0.35 0.25 0.25
% cost year -2 1.5 1.154 0.40 0.20 0.30 0.40 0.40 0.20 0.08 0.23 0.18 0.37 0.12 0.08 0.05 0.23 0.40 0.40
% cost year -1 0.5 1.049 0.30 0.35 0.15 0.30 0.30 0.10 0.02 0.14 0.10 0.14 0.09 0.08 0.01 0.14 0.30 0.30
%cost on/power year 0.00 0.10 0.00 0.00 0.00 0.01 0.01 0.02 0.01 0.01 0.05 0.03 0.01 0.02 0.05 0.00
Total 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Cost with IDC 105.16 292.93 345.84 112.67 394.32 1364.42 703.50 262.75 304.41 141.14 803.41 421.41 354.79 776.54 274.58 178.25
Cost $/kW 3093 1866 2321 2126 4929 3811 1353 2227 2114 1176 2678 702 1183 2284 1894 3979
Fixed annual cost
Fixed annual cost (capital + interest UAP) 11.16 31.07 36.69 11.95 41.83 144.74 74.63 27.87 32.29 14.97 85.23 44.70 37.64 82.37 29.13 18.91
Interim replacement and insurance
0.35 % 0.32 0.96 0.98 0.34 1.19 4.27 2.59 0.79 0.96 0.41 3.28 1.17 0.96 2.33 0.88 0.54
Fixed O and M $M 10 0.34 1.57 1.49 0.53 0.80 3.58 5.20 1.18 1.44 1.20 3.00 6.00 3.00 3.40 1.45 0.45
Total fixed annual cost 11.81 33.60 39.15 12.82 43.82 152.59 82.42 29.84 34.69 16.58 91.51 51.87 41.60 88.11 31.46 19.89
Unit cost of energy
Average energy $/kWh 0.0772 0.0457 0.0502 0.0317 0.0919 0.0791 0.0559 0.0449 0.0363 0.1337 0.0410 0.0344 0.0273 0.0478 0.0370 0.1065
Firm energy $/kWh 0.1169 0.0737 0.0802 0.0383 0.1061 0.1145 0.0908 0.0607 0.0537 1.5073 0.0480 0.0607 0.0896 0.0670 0.0506 0.9278

Upper Kihansi Consists of storage dam plus 2 units addition at lower Kihansi
Songwe based on package 4 ie - 3 dams with powerhouses, priority for power, storage for flood control at Sofwe and Manolo
Stieglers capacity and energy values from EAPMP / Generation after addition of Phase 4 units not known
Stieglers capital costs are increments for each phase. Cost for Phase 4 addition is not known
Rusumo energy and capital costs from LNC LAVALIN report (Sept. 2011). These costs are to be equally shared with Tanzania, Burundi and Rwanda
Ikondo and Taveta project costs re-estimated for this PSMP update

71
Table 3- 25: Thermal generation alternatives for Tanzania and screening
Mchuchuma Mchuchuma Mchuchuma Kiwira I Kiwira II Ngaka I Ngaka II Coastal Local I Local II Local III Local IV Local V Somanga MTWARA Kinyerezi I Kinyerezi II Kinyerezi III Kinyerezi IV Zinga Mkuranga Mufindi Sao Hill Solar Wind
` 10.0% Stage I Stage II Stage III Coal-Steam Coal-Steam Coal-Steam Coal-Steam Coal-Steam Coal-Steam CCGT (Gas) Gas GT(Gas) CCGT (Gas) Gas Gas Gas Gas Cogen Cogen
3x100 MW 4x100 MW 3x100 MW 4x50 MW 4x50 MW 4x100 MW 4x100 MW 3x100 MW 2x100 MW 4x100 MW 4x100 MW 4x100 MW 3x100 MW 2x115 1x110 4x100 MW 3x50 MW 2x60 2x60 3x100 MW 3x100 MW 2x100 MW 5x50 MW 30 MW 10 MW 60 MW 50 MW
Installed capacity MW 324 432 324 216 216 216 216 324 216 432 432 432 324 328 406 152 179 305 305 203 254 31 10 61 51
Station service % 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 2.35 1.60 1.60 2.35 1.60 1.60 1.60 1.60 2.4 2.40 2.4 2.40
Net capacity MW 300 400 300 200 200 200 200 300 200 400 400 400 300 320 400 150 240 300 300 200 250 30.0 10 60.0 50
Unit availability
Scheduled maintenance wks per unit 6 6 6 6 6 6 6 6 6 6 6 6 6 4 4 4 3 4 4 4 4 3 3 3 3
Forced outage rate % 8 8 8 8 8 8 8 8 8 8 8 8 8 5 7 5 5 5 5 5 5 5 5 5 5
Combined outage rate % 20 20 20 20 20 20 20 20 20 20 20 20 20 11 15 13 11 13 13 13 13 11 11 11 11
Net capacity available MW 244 326 244 163 163 163 163 244 163 326 326 326 244 281 343 132 215 263 263 175 219 20 10 20 10
(after derating for outage)

Earliest on-power date Yr 2033 2034 2018 2019 2017 2019 2019 2016 2026 2029 2030 2031 2033 2015 2016 2014 2016 2017 0 2015 2015 2016 2016 2016 2016

Service life Yrs 25 25 25 25 25 25 25 25 25 25 25 25 25 20 25 20 20 20 20 20 20 20 20 20 20

O&M
Fixed O & M $/kW 50 50 50 70 70 50 50 50 50 50 50 50 50 7.5 7.5 7.5 6 7.5 7.5 7.5 7.5 40 40 40 40
Variable O & M $/kWh 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0025 0.0050 0.0045 0.0030 0.0045 0.0045 0.0045 0.0045 0.0030 0.0030 0.0030 0.0030
Interim replacement % of capital 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35
Insurance % of capital 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025
Total capital cost with IDC
Unit capital cost US $/kW 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 1141.0 1220.0 1220.0 1808.3 1808.3 1808.3 1808.3 1808.3 3860 3860 4692 2438
Capital costs Stage 1 US $ x 106 645.8 861.0 645.8 430.5 430.5 430.5 430.5 645.8 430.5 861.0 861.0 861.0 645.8 374.2 500.2 187.6 444.8 556.1 556.1 370.7 463.4 118.7 39.6 288.6 124.9
Capital cost Stage 2 US $ x 106 141.0
Transmission US $ x 106 0.0 0.0 0.0 0.0 0.0 200.0 200.0 0.0 0.0 0.0 0.0 0.0 0.0 85.0 100.0 0.0 0.0 1.0 1.0 1.0 1.0 0.0 0.0 0.0 0.0
Capital cost US $ x 106 645.8 861.0 645.8 430.5 430.5 630.5 630.5 645.8 430.5 861.0 861.0 861.0 645.8 365.0 600.2 187.6 444.8 557.1 557.1 371.7 464.4 118.7 39.6 288.6 124.9
Avg capital cost per available capacity $/kW avail 2644.8 2644.8 2644.8 2644.8 2644.8 3873.6 3873.6 2644.8 2644.8 2644.8 2644.8 2644.8 2644.8 1300.7 1747.9 1426.0 2070.5 2117.5 2117.5 2119.4 2118.2 5934.8 3956.5 14427.9 12494.8
Annual fixed cost $/kW avail 71.4 71.4 71.4 95.9 95.9 76.0 76.0 71.4 71.4 71.4 71.4 71.4 71.4 13.4 15.3 13.9 14.5 16.5 16.5 16.5 16.5 82.3 54.8 174.1 246.9
Cashflow in year prior to on-power -7 % of capital
-5 % of capital
-4 % of capital 15 15 15 15 15 15 15 15 15 15 15 15 15
-3 % of capital 30 30 30 30 30 30 30 30 30 30 30 30 30 15 15 15 15 15 15
-2 % of capital 30 30 30 30 30 30 30 30 30 30 30 30 30 50 40 40 50 40 40 40 40 50 50 50 50
-1 % of capital 25 25 25 25 25 25 25 25 25 25 25 25 25 35 60 60 35 60 60 60 60 35 35 35 35
0 % of capital 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Avg total cost at on-power $/kW avail 3022.1 3022.1 3022.1 3022.1 3022.1 4426.1 4426.1 3022.1 3022.1 3022.1 3022.1 3022.1 3022.1 1406.7 1817.8 1483.0 2239.3 2202.1 2202.1 2204.1 2202.9 6418.4 4279.0 15603.8 13513.1
Annuity over economic life (year-end) $/kW avail 332.9 332.9 332.9 332.9 332.9 487.6 487.6 332.9 332.9 332.9 332.9 332.9 332.9 165.2 200.3 174.2 263.0 258.7 258.7 258.9 258.8 753.9 502.6 1832.8 1587.2
Total annual fixed cost $/kW avail 404.3 404.3 404.3 428.9 428.9 563.6 563.6 404.3 404.3 404.3 404.3 404.3 404.3 178.7 215.6 188.1 277.5 275.2 275.2 275.4 275.3 836.2 557.4 2006.9 1834.1
Fuel cost calculation
Fuel type Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Natural gas Natural gas Natural gas Natural gas Natural gas Natural gas Natural gas Natural gas Biomass Biomass Solar Wind
Fuel price $/GJ 3.31 3.40 3.40 3.82 3.82 3.48 3.31 5.02 5.02 5.02 5.02 5.02 5.02 4.74 4.74 4.74 4.74 4.74 4.74 4.74 4.74 1.03 1.03 N/A N/A
Heat rate kJ/kWh 9,730 9,730 9,730 9,243 9,243 9,730 9,730 9,730 9,730 9,730 9,730 9,730 9,730 7,800 7,840 10,900 7,840 10,900 10,900 10,900 10,900 11500 11500 N/A N/A
Fuel cost $/kWh 0.03225 0.03306 0.03306 0.03535 0.03535 0.03386 0.03223 0.04883 0.04883 0.04883 0.04883 0.04883 0.04883 0.03697 0.03716 0.05167 0.03716 0.05167 0.05167 0.05167 0.05167 0.01185 0.01185 N/A N/A
Total fixed cost $/kW avail. 404.3 404.3 404.3 428.9 428.9 563.6 563.6 404.3 404.3 404.3 404.3 404.3 404.3 178.7 215.6 188.1 277.5 275.2 275.2 275.4 275.3 836.2 557.4 2006.9 1834.1
Total variable cost $/kWh avail. 0.03825 0.03906 0.03906 0.04135 0.04135 0.03986 0.03823 0.05483 0.05483 0.05483 0.05483 0.05483 0.05483 0.03947 0.04216 0.05617 0.04016 0.05617 0.05617 0.05617 0.05617 0.01485 0.01485 0.22000 0.13000

Source: Team Compilation

72
Fuel costs
The assumption of fuel prices for planning study comparisons is of critical importance,
except for projects being evaluated under a PPA tariff arrangement.

Indigenous fuel Costs

Cost information related to indigenous fuel resources were obtained from potential
developers/suppliers. Thus, for the 2012 PSMP, fuel prices for Songo Songo, Mnazibay,
Mchuchuma, Ngaka and Kiwira were available. Songo Songo supply costs are at a
contractual level, while the coal prices can only be considered as indicative. Fuels prices
are considered at the plant, i.e., include delivery charges.

Imported fuel costs

For the imported fuels such as HFO, LNG and coal, market information on offshore
(FOB) prices is available from sources such as Platts Oil and Gas Journal, US
Department of Energy etc. From such sources representative long-term average
constant dollar prices have been estimated. HFO prices are based on the reference-
selected cost for crude oil. Fuel prices have to be adjusted to take into account handling
and delivery charges.Table 3-26 outlines the basis for the fuel prices for fuel oil as
proposed for this 2012 PSMP update.

Table 3- 26: Proposed Fuel Oil Costs

Fuel type bbl/Mt Price at US$ 110 /bbl
Heavy fuel oil (No. 6) 6.45 749.03 US$/Mt
Heavy fuel oil (No.6) 17.51 US$/GJ
Industrial diesel industrial diesel (No. 2) 7.46 838.73 US$/Mt
Industrial diesel (No. 2) 21.22 US$/GJ
Source: Team computation

3.4 Plant Data and Operating Costs

To complete the catalogue of thermal new power options it is necessary to prepare a
data base of plant data or characteristics, schedules of disbursement for the calculation
of IDC, and plant operating costs. The two tables overleaf summarize the planning data
that has been updated from the 2009 PSMP update report. Table 3-27 provides the
basic information on each candidate plant, including ratings, station service, outage
rates, service lives and minimum lead time to on-power. Table 3-28 provides fuel costs,
fixed and variable operation and maintenance costs, interim replacement and insurance.

73
Table 3- 27 New thermal plants earliest time
FOR Combined Maximum Available Nominal Minimum Earliest on
Net Available
Plant Fuel Installed Station service % Outage Plant Factor Energy Service Life lead time power year
Capacity MW
Capacity MW % Rate % % GWh Years years (Jan)
(after station
use)
COAL FIRED PLANT
Coast Coal Coal 500 8.00 460 8 20 80 2966 25 6 2019
Kiwira I * Coal 200 8.00 184 8 20 80 1186 25 6 2017
Kiwira II * Coal 200 8.00 184 8 20 80 1186 25 6 2019
Local Coal I Coal 100 8.00 92 8 20 80 593 25 6 2026
Local Coal II Coal 200 8.00 184 8 20 80 1186 25 6 2029
Local Coal III Coal 400 8.00 368 8 20 80 2373 25 6 2030
Local Coal IV Coal 400 8.00 368 8 20 80 2373 25 6 2031
Local Coal V Coal 400 8.00 368 8 20 80 2373 25 6 2033
Local Coal VI Coal 300 8.00 276 8 20 80 1779 25 6 2034
Mchuchuma I Coal 300 8.00 276 8 20 80 1779 25 5 2018
Mchuchuma II Coal 300 8.00 276 8 20 80 1779 25 6 2019
Mchuchuma III Coal 300 8.00 276 8 20 80 1779 25 6 2019
Ngaka I Coal 200 8.00 184 8 20 80 1186 25 6 2019
Ngaka II Coal 400 8.00 368 8 20 80 2373 25 6 2019

HFO/Gas/IDO FIRED PLANT

Kinyerezi I GTs - Gas 150 2.35 146 4 11 80 1051 20 1 2014
Kinyerezi II CCGT 240 2.35 234 4 11 80 1682 20 3 2016
Kinyerezi III CCGT 300 2.35 293 4 11 80 2102 20 4 2017
Kinyerezi IV GTs - Gas 300 2.35 293 4 11 80 2102 20 4 2017
Mkuranga 250 CCGT 250 3.00 243 4 11 75 1643 20 4 2015
Mtwara 400 CCGT 400 3.00 388 4 11 75 2628 20 4 2016
Mwanza MS Diesel MSD 60 2.00 59 8 18 75 394 20 1 2014
Somanga Fungu HFO/Dual
CCGT 320 2.00 314 4 11 75 2102 20 3 2016
Zinga 200 CCGT 200 3.00 194 4 11 75 1314 20 4 2015
TOTAL 6420 6028 39932

* Project may come earlier as some of preparatory activities are done in advance

74
Table 3- 28: New Thermal Plant Operating Costs
Plant Fixed Variable
Interim
Installed Fuel price Plant heat Fuel cost operating operating Insurance
Fuel Units replace -
Capacity MW $/GJ rate kJ/kWh $/kWh cost /kW- cost %
ment %
year $/kWh

COAL FIRED PLANT

Coastal coal Coal 3 300 5.019 9730 0.0488 50 0.0060 0.350 0.025
Kiwira I Coal 3 200 3.824 9243 0.0353 70 0.0060 0.350 0.025
Kiwira II Coal 2 200 3.824 9243 0.0353 70 0.0060 0.350 0.025
Local Coal I Coal 1 100 5.019 9730 0.0488 50 0.0060 0.350 0.025
Local Coal II Coal 2 200 5.019 9730 0.0488 50 0.0060 0.350 0.025
Local Coal III Coal 4 400 5.019 9730 0.0488 50 0.0060 0.350 0.025
Local Coal IV Coal 4 400 5.019 9730 0.0488 50 0.0060 0.350 0.025
Local Coal V Coal 4 400 5.019 9730 0.0488 50 0.0060 0.350 0.025
Local Coal VI Coal 3 300 5.019 9730 0.0488 50 0.0060 0.350 0.025
Mchuchuma I Coal 3 300 3.315 9730 0.0323 50 0.0060 0.350 0.025
Mchuchuma II Coal 3 300 3.398 9730 0.0331 50 0.0060 0.350 0.025
Mchuchuma III Coal 3 300 3.398 9730 0.0331 50 0.0060 0.350 0.025
Ngaka I Coal 2 200 3.480 9243 0.0322 50 0.0060 0.350 0.025
Ngaka II Coal 2 200 3.824 9243 0.0353 50 0.0060 0.350 0.025

GAS/HFO PLANT
Kinyerezi I GTs - Gas 1 150 4.740 10900 0.0517 7.5 0.0045 0.350 0.025
Kinyerezi II CCGT 4 240 4.740 7840 0.0372 6 0.0030 0.350 0.025
Kinyerezi III CCGT 3 300 4.740 10900 0.0517 7.5 0.0045 0.350 0.025
Kinyerezi IV CCGT 3 300 4.740 10900 0.0517 7.5 0.0045 0.350 0.025
Mtwara CCGT 4 400 4.740 7840 0.0372 7.5 0.0050 0.350 0.025
Zinga 200 CCGT 2 200 4.740 7840 0.0372 7.5 0.0050 0.350 0.025
Mkuranga 250 CCGT 4 250 4.740 7840 0.0372 7.5 0.0050 0.350 0.025
Mwanza MS Diesel MSD HFO/Dual 1 60 21.220 8216 0.1743 8 0.0050 0.350 0.025
Somanga Fungu IPP CCGT 3 320 4.740 7800 0.0370 7.5 0.0025 0.350 0.025

75
3.5 Import Options - The Zambia-Tanzania-K Inter-connector
The 2008 PSMP and the subsequent 2009 Update included the options of power imports
from Zambia via the proposed Zambia-Tanzania-Kenya inter-connector, and from
Ethiopia via Kenya. In both cases an import amount of 200MWs at 85 percent load factor
was assumed for the generation plans. Both these options would be take or pay, i.e. with
a fixed charge corresponding to an energy tariff, with supply of 200MW at 85 percent
load factor.

These potential future import options are still expected to be available. The supply from
Ethiopia is considered to be more advanced, as Ethiopia Electric Power Co (EEPCo) has
signed Power Purchase Agreement with Kenya Power and Lighting Co (KPLC) on
supplies to Kenya, while Tanzania Electric Supply Company Limited (TANESCO) is in
direct discussion with EEPCo which are taking into account possible supplies to
Tanzania at Arusha. It is assumed that supply from Ethiopia could be available as of
January 2016.

Information on the ZTK interconnector is provided in the Project Information

Memorandum9 that has been prepared for the Governments of Zambia, Tanzania and
Kenya to solicit funding for the development of the longest part of the proposed 1,600 km
HVAC power interconnector which will start in Serenje, Zambia and end in Nairobi,
Kenya.

Currently, the line is divided into three development parts under the umbrella of ZTK
Interconnector Project, namely Zambia (Kasama) Tanzania (Mbeya); reinforcement of
Tanzania transmission backbone (Iringa Singida); and Tanzania (Singida-Arusha)
Kenya (Nairobi) interconnection.

Construction of Tanzania Backbone transmission line Project (Iringa Shinyanga via

Dodoma and Singida) to start early 2013, feasibility study for Tanzania Kenya
interconnector has been completed, feasibility study for Iringa Mbeya has been
concluded and NBI through NELSAP has secured funds from Norway to carry out
feasibility study for Mbeya (Tanzania) to Kasama (Zambia).

9
Zambia Tanzania Kenya Power Transmission, May 2007, Fieldstone and Scott Wilson

76
The proposed ZTK interconnector scheme will have to be modified if further supply to
Kenya is displaced by the Ethiopia supply to Kenya. This supply from Zambia is
assumed to be available before 2021. Information on these options is summarized
below. This information is unchanged from that included in the 2008 PSMP, and is
included for reference purposes. Ethiopia has extensive hydro resources with more than
1100MW currently under construction (Takese - 300MW, Gilgel II - 420MW Anabeles
460MW) 10. A further committed and under construction project is Gilgel III, 1870MW.
This project was to be the source for exports to Kenya in 2012, however construction is
delayed and current planning is to provide export power from Gilgel II.11 Information on

HYDROELECTRIC RESOURCES IN ETHIOPIA

A: EXISTING HYDRO MW

Tis Abbay 80
Finchaa IV 34
Gilgel I 184
Total 298

B: COMMITTED HYDRO MW Year

Takese 300
Gilgel II 420 2009
Anabeles 460 2009
Gilgel III 1870 2013
Total 3050

C: LIST OF ETHIOPIA HYDRO PROJECTS IN NBI PRELIMINARY BASIN STUDY DATA BASE

Installation Average energy Firm energy

MW GWh GWh
Halele Worabesa 422 2,245 2,030
Chemoga-Yeda 280 1,348 1,348
Aleltu East 186 800 780
Aleltu West 265 1,050 983
Baro 1 and 2 + Genji 900 4,409 2,857
Geba 1 and 2 372 1,788 1,788
Gojeb 153 520 364
Genale 3 and 4 514 2,210 2,439
Awash 4 38 160 144
Karadobi 1,600 9,700 9,300
Mabil 1,200 5,300 5,300
Mandaya (option 1) 2,000 12,300 11,600

Total 7,930 41,830 38,933

future potential hydro sites suggests that there may be a further 8000MW or hydro that
could be developed in Ethiopia12. The available current committed and identified hydro
resources are summarized in the table below:

10
Hydropower projects to generate megawatts and foreign currency in Ethiopia - www.globalinsight.com, July 2007
11
Authority plans power export to Kenya from Gibe II, www.addisfortune.com, July 6, 2008
12
SNC-Lavalin Preliminary Basin Wide Study, May 2008, for NBI Regional Power Trade Project

77
At this time it is clear that Ethiopia will have large surplus of hydro capability, with project
implementation only being limited by financing and off-take agreements. Present
information suggests that the cost delivered to Nairobi would be in the order of 7 US
cents/kWh, to which the cost of wheeling power to Arusha has to be added, however,
actual prices will be determined by the PPA. A possible delivery date is now 2016. It is
worth noting that the interconnection will be used for trading within both the SAPP and
EAPP power pools.

3.6 Security of supply from Zambia through ZTK interconnector

A key issue that could affect either the on-power date, or supply during the commercial
life of the interconnector is the availability of supply from Zambia or SAPP. The PIM
notes that Zambia is predicting a deficit in generation capacity in the years 2010-2012, ie
during the commissioning of the first phase of the project13. The PIM then states that
ZESCO is considering the construction of additional hydro such as Lower Kafue Gorge,
Kalungwishi, and Itezhi Tezhi. Current information published by ZESCO14 refers to the
following initiatives:

Itehzi Tezhi 120 MW : This would be the addition of a powerhouse to an existing

storage dam. An MOU has been signed with TATA, and investigations are underway.
Such a project would take 4 years to implement including an EPC contracting period.

Lower Kafue Gorge - 750 MW: This is a major project, to be constructed downstream of
the existing Kafue Gorge hydro plant (900 MW). This project is still at the planning stage
and would have minimum lead-time to on-power in the order of 6 years. It may be noted
that there has been discussion about these projects for at least 15 years, without
significant change to their status or level of preparedness. Reference is also made to the
addition of two units at Kariba North - 360 MW, however this would not add any energy,
as there is virtually no spillage at Kariba.

Rehabilitation also includes Victoria Falls (108 MW completed), and Kafue Gorge
additional 90 MW. However presumably these will not add any firm energy to the
Zambian capability. The supply situation in the area (SAPP) is improving with the
ZESCO Zaire interconnection, the full operation of Caborra Bassa (2000 MW) which is
supplying to ESKOM etc. However it is noted that in the short term ESKOM is not
supplying to other countries.

However security of supply from Zambian system will carry some risk until Lower Kafue
is constructed, unless ZESCO has firm supplies from other SAPP members.

13
The ZESCO profile on their web site indicates a 200-300 MW deficit by 2012.

14
www.zesco.co.zm

78
The total hydro generation capability in Zambia (2004), as taken from the Scott Wilson
report, was as follows:

Installed capacity 1646 MW

Average energy 11141 GWh
Firm energy 9375 GWh
No firm information is available to estimate a probable Zambia supply cost. Zambia has
suggested a price of 10 cents/kWh. A more probable value would be in the order of 6
cents/kWh.

3.7 Other power interchanges

Present cross border interconnection between Tanzania and neighbouring countries are
limited to:

With Uganda:
Supply from Uganda into the Kagera area in North West Tanzania (10 MW), which is
presently not connected to the main grid.

With Zambia:
Interconnection between Mbala in Zambia to Sumbawanga in Tanzania at 66 kV (5 MW),
to supply the presently isolated system in the Rukwa area Interconnection from Nakonde
to the TANESCO grid at Mbozi at 33 kV (7 MW)

With Kenya:
Interconnection between Tanga in Tanzania and Lungalunga in Kenya at 33 kV and
Interconnection between Namanga in Kenya and Namanga in Tanzania at 33kV.

Reference has also been made to potential power inter-connector projects, which
include:
Tanzania Kenya (400 kV) feasibility study has just been completed.
Tanzania Uganda (220 kV) - feasibility study has just been completed.
Mozambique-Tanzania (220 kV), of up to 45MW of power from Tanzanian.

79
3.8 Renewable
The information on other supply options for 2012 PSMP Update is still based on 2008
PSMP; however, additional renewable sources have been included as supply sources in
the development of generation plans as shown in Table 3-29 and Table 3-30 below.

Table 3- 29: New Renewable Plants Earliest Time

Installed Nominal Service Minimum lead Earliest on

Plant Fuel
Capacity MW Life Years time years power year (Jan)
RENEWABLES
Mufindi (Cogen) Biomass 30 20 3 2015
Sao Hill (Cogen) Biomass 10 20 3 2015
Solar I Solar 60 20 3 2016
Solar II Solar 60 20 3 2017
Wind I Wind 50 20 3 2016
Wind II Wind 50 20 3 2017
TOTAL 260
Source: TANESCO

Table 3- 30: New Renewable Plant Operating Costs

Fixed Variable
Installed Interim
Fuel price Plant heat Fuel cost operating operating Insurance
Plant Fuel Units Capacity replace -
$/GJ rate kJ/kWh $/kWh cost /kW- cost %
MW ment %
year $/kWh
RENEWABLES
Mufindi (Cogen) Biomass - 30.00 1 10900 0 40 0.01 0 0.025
Sao Hill (Cogen) Biomass - 10.00 1 7000 0 40 0.01 0 0.025
Solar I Solar - 60.00 N/A N/A 0 40 0.01 0 0.025
Solar II Solar - 60.00 N/A N/A 0 40 0.01 0 0.025
Wind I Wind - 50.00 N/A N/A 0 40 0.00 0 0.025
Wind II Wind - 50.00 N/A N/A 0 40 0.00 0 0.025
Source: TANESCO

Biomass
Limited information is available on significant biomass operations in the country;
including sugar mills which generates up to 12 MW, and delivering several MW of power
to TANESCO. Potential fuel quantities also exist from sources such as wood waste from
barking operations (resulting in waste of 70,000 t/year), palm oil, coconut and other
waster or residue sources.

80
However, the rural electrification study15 has identified a number of major potential
biomass sources in Mufindi area. These include the Sao Hill Plantation/Sawmill, the
Mufindi Wood poles Plant and Timber Ltd, and the Southern Paper Mill. The report refers
to a total potential in the order of 75-100 MW, assuming significant future developments
in the sawmill plants. By 2015 Sawmill plants are expected to generate 30MW from
Mufindi and 10MW from Sao Hill. However, such development would require significant
additional electricity supplies, which would use some of the potential generation addition.
The report also notes the complexity in planning and developing such integrated timber
industry and generation projects. It should be noted that electricity generation is not the
core objective of the timber industries. To be able to generate electricity requires
massive investment for these industries to be able to generate enough by-products on a
sustainable basis without jeopardising the environment. The study therefore proposed
further feasibility studies to explore the possibility of taking advantages of these
potentials.

Wind Energy Conversion Systems

Wind energy is now being recognized as a potential new power option in the East Africa
Region. Wind speed has to be greater than 4 meters per second (m/s) to start producing
energy, but a more acceptable amount of energy is produced when the wind speed is
greater than 6 m/s. Most economic operation requires wind velocities in the order of
15 m/s. Economic viability of a wind generator also depends on wind distribution with
time. Normally a plant has to be able to generate at a plant factor of 25 percent to 30
percent to be viable, and many wind farms are located where plant capacity factors of 35
percent to 40 percent can be achieved.
In Tanzania, studies have been under way for a number of years including the following:
a) An investigation program, sponsored by the Ministry of Energy and Minerals,
TANESCO, Tanzania Traditional Energy Development and Environment
Organization (TaTEDO) with technical and financial support from Denmark
National Laboratory (RISO), and DANIDA. This program resulted in a final report
issued in 200316.
b) The rural electrification master plan study 2005: As part of this study, three sites
were selected for measurement programs, and measurements were initiated in
2005. There were Makambako Town, Iringa region; Mgagau Village, Mwanga
district, Kilimanjaro region and Singida, near Singida town.

When the study report was issued, measurements had been taken for on high wind
season. The results were very promising for Makambako and Singida, with average wind
speeds of 10-11 m/s.
Wind Power Projects

15
Tanzania Rural Electrification Study, Draft Feasibility Studies and other Tasks of Phase 2, summary Report - Decon
and SWECO, African Development Bank Group, November 2005
16
Danida. RISO (Denmark) Wind Measurements and Wind Power Feasibility at Selected Sites in Tanzania 2000-
2003 Final Report

81
Currently, there are two potential Wind power projects capable to generate between 50
and 100MW at Singida. These projects compliment the government efforts to accelerate
the usage of renewable energy. The 2012 PSMP assumed two separate 50 MW wind
projects.

Geothermal
Geothermal is another potential source of power in the country. Currently, there are
about 50 geothermal potential sites in the country, with an estimated geothermal
potential of more than 650MW. There are three most promising sites proposed for more
detailed investigations. The sites are:
a) Lake Natron in Arusha region
b) Songwe river basin in Mbeya region
c) Luhoi Spring site, with potential of 50 100MW located in Lower Rufiji Valley,
Utete district.
There is insufficient information to consider geothermal option in the generation
expansion plan under the current PSMP review. However, given the importance of using
Tanzanian resources, the coming comprehensive PSMP update could include up to
100MW geothermal plant as a candidate starting 2025 in anticipation that confirmatory
studies will have been completed.
Energy Efficiency
Due to generation shortages in the region, a number of countries have taken or are
planning Demand Side Management (DSM) initiatives to reduce demand and thus
generation requirements. Over the recent years, TANESCO has embarked on a number
of initiatives to address the issue of energy efficiency, which includes a Demand Side
Management program. A study by TANESCO to improve capacity factors in industrial
plants came up with proposals to reduce power demand in Tanzania. Table 3-31 shows
the potential reduction in energy and power for each component of the program.

82
Table 3- 31: Energy Efficiency Program - Energy and Peak Reduction
Program Description 2011 2012 2013 2014

CFL GWh 0 19.4 38.2 38.2

Motors and VSD GWh 0 9.5 22.6 39.5
Awareness GWh 0 80 120 140
AC GWh 0 0 2.3 5.8
Beverage Vending Machines GWh 0 0 0 1.1
Power Factor Correction GWh 0 0 0 0
Refrigerators GWh 0 0 0 2
Industrial GWh 0 0 28.7 57.4
Total GWh 0 108.9 211.8 284

CFL MW 0 12.4 24.4 24.4

Industrial Motors, Variable Speed Drive MW 0 0.9 2.2 3.8
Awareness, Information dissemination MW 0 14 21.1 24.6
Commercial, Inst. Air Conditioner MW 0 0 1.8 4.7
Refrigerators, Beverage Vending Machines MW 0 0 0 0.1
Audit Incentives (Power Factor Correction) MW 0 0 0.5 1.4
Refrigerators MW 0 0 0 0.3
Industrial MW 0 0 5 10
Total GWh 0 27.3 55 69.3

Source: Team Compilation

Though the above programs were set to begin on January 2012, their implementation
has not started; as a result, this PSMP has not taken into consideration the DSM
programs.
In the context of the Tanzania PSMP, and particularly taking into account the present
supply deficit, the impacts of DSM initiatives was not considered for the 2012 PSMP
update as a realistic option, at least in the medium term to get the benefits of reduced
capacity needs i.e. to displace about 20 to 30 MW. The program has significant impact
not only in Tanzania but even in other neighbouring countries. Kenya has taken similar
initiatives which provide an opportunity for TANESCO to borrow such experiences when
the project materialise and eventually affect the supply-demand balance in Tanzania.
Another option to reduce power demand is to reduce technical losses (reduction in non-
technical losses will not reduce demand). Investment in loss reduction may be more
economic. Losses in Tanzania are moderately high, at about 12 percent, and this
suggests that a loss reduction program could provide benefits. However the potential
benefits were not considered sufficient to include this option in the 2012 PSMP update.

3.8.1 Nuclear
The potential for uranium deposits in Tanzania was identified in a countrywide airborne
geophysical survey in the 1970s. Further exploration between 1978 and 1982 resulted
in the identification of surface mineralization and recognition of the potential for uranium
deposits in Tanzania. Currently, there are about 20 companies engaged in exploration
for uranium in Tanzania. Significant mineralization or deposits have been identified in the
Dodoma area at Handa and Bahi North (Mantra Resources), in the Ruhuhu area near
83
Lake Nyasa (Uranium Hunter, Atomic Minerals, and Western Metals). Nuclear
generation could become an option, particularly when other indigenous resources are
fully committed.

This technology has not been considered in this PSMP update because it is considered
that nuclear generation could only be selected when:
a. The Government has finalized the policies on uranium and nuclear generation.
b. Human Capacity building on nuclear technology and other related matters.
It is considered that this resource would have been developed in Tanzania and available
for power generation by 2030s subject to further studies and familiarization with this
technology.
3.8.2 Solar Photo Voltaic (PV)
Contemporary solar PV technology is done at small scale level. Application of solar
power technology in Tanzania at large scale is not well established. However, in this
update solar power was considered, with a potential to undertake pilot project before
engaging many players.

3.9 Generation Plan Results

Development of Comparative Expansion Plans
The development of alternative expansion generation plans covered the three scenarios
following three cases of load forecast. The scheduling of projects in each plan (high,
base and low case) observes a reserve margin on firm capacity in the order of 15 - 40
percent, hydro thermal mix of 40:60 and export/import of not more than 25 percent of
total available capacity. The purpose of these relatively high reserve margins is to have
a robust generation capability in the event of failures and the possibility for power trading
with the neighbouring countries.

The 2012 Update generation expansion plan retains the base case scenario as a
recommended power generation expansion plan for the country. The plan reflects the
most likely growth of power demand. Overall and as shown in Table 3-32, the Base
Case Plan has a total installed capacity of 8990MW by 2035 consisting of 3304 MW
hydro, 995MW gas-fired generation, 3800MW-Coal, 100MW-Solar, 120MW-Wind,
40MW- Biomass/Cogen, and some export limited to 250MW of total available generation.
This plan fulfills all assumptions and results which were assumed and obtained in the
load forecast respectively.

84
Table 3- 32: Generation Plan Base Case
EXPANSION PLAN Retirements January 1
LOAD FORECAST CASE BASE On power January
Thermal additions are net MW
ADDITION TOTAL SUPPLY DEMAND SURPLUS (DEFICIT) Reserve Margin Generation Mix
Capacity Energy % HYDRO Power Pool Trading

YEAR PLANT FUEL TYPE MW GWH MW GWH MW GWH MW GWH % % Capacity Energy MW GWH
FIRM FIRM
2011 All existing plants 1103 5310 1103 5310 833 4485 270 825 32 18 33 55 (145) (152)
- - 1103 5310
2012 Aggreko (Ubungo) FUEL GO 50 242 1153 5551
Aggreko (Ubungo) FUEL GO (50) -81 1103 5471
Symbion 112 GAS GT (75) -161 1028 5310
Symbion 112 GAS GT 75 484 1103 5793
Symbion 112 FUEL Jet- A1 (37) -80 1066 5714
Symbion 112 FUEL Jet- A1 37 239 1103 5952
Ubungo II Gas GT 105 338 1208 6291
Aggreko (Tegeta) FUEL GO 50 242 1258 6532
Aggreko (Tegeta) FUEL GO (50) -81 1208 6452
Mwenga Hydro Hydro Hydro 4 2 1212 6453
Symbion 205 DODOMA FUEL GO 55 355 1267 6808
Symbion 205 ARUSHA FUEL GO 50 215 1317 7023 1139 6085 178 937 16 15 28 42 (7) (25)
2013 Mwanza MS diesel FUEL Diesel 60 290 1377 7313
Ubungo II Gas GT 105 677 1482 7990
Ubungo II Gas GT (105) (338) 1377 7651
Aggreko (Ubungo) FUEL GO (50) (242) 1327 7410
Aggreko (Tegeta) FUEL GO (50) (242) 1277 7168
Symbion 205 DSM FUEL GO 100 645 1377 7813
Mwenga Hydro Hydro Hydro 4 6 1381 7819
Mwenga Hydro Hydro Hydro (4) -2 1377 7817
Symbion 112 FUEL Jet- A1 75 242 1452 8059
Symbion 112 FUEL Jet- A1 37 119 1489 8178
Symbion 112 FUEL Jet- A1 (112) (722) 1377 7456
- - 1377 7456 1365 7332 12 124 1 2 27 40 192 976
2014 1377 7456
Somanga Tanesco Gas GE 8 48 1385 7504
Symbion 205 ARUSHA FUEL GT 50 215 1435 7719
Symbion 205 ARUSHA FUEL GT (50) (355) 1385 7365
Retire Symbion 205 DODOMA FUEL GT (55) (355) 1330 7010
Kinyerezi I Gas GT 150 967 1480 7977
Somanga Fungu (320) Gas GT 210 677 1690 8654
Mwanza MS diesel Fuel Diesel (60) (315) 1630 8339
Mwanza MS diesel FUEL Diesel 60 387 1690 8726
Retire Symbion 112 FUEL Jet- A1 (112) (361) 1578 8365 1704 9200 (127) (835) (7) -9 23 35 382 2,215
2015 Kinyerezi II Gas CCGT 240 1682 1818 10047
Retire Symbion 205 ARUSHA FUEL GO (50) (215) 1768 9832
Retire Symbion 205 DSM FUEL GO (100) (645) 1668 9187
Somanga Fungu (320) Gas GT (210) (677) 1458 8510
Zinga 200MW Gas CCGT 200 1,289 1658 9799
Somanga Fungu (320) Gas GT 210 1,354 1868 11153
Mkuranga 250MW Gas CCGT 250 1,612 2118 12765
Renewable - Cogen (Sao Hill) Biomass Cogen 10 84 2128 12849
Renewable - Cogen (Mfindi) Biomass Cogen 30 210 2158 13059 2088 11246 69 1813 3 16 22 23 244 (126)
2016 Kinyerezi III Gas GT 300 1934 2458 14993 -
Somanga Fungu (320) Gas CC 110 709 2568 15703
Interconnector (Ethiopia/Kenya) Import Import 200 1,402 2768 17104
Kiwira I Coal Steam 200 1,402 2968 18506
Mtwara 400MW Gas CCGT 400 2,579 3368 21085
- 3368 21085
Solar I Solar Solar 60 210 3428 21295
Renewable - Wind I Wind Wind 50 201 3478 21496 2522 13520 955 7976 38 59 12 14 (577) (5,948)
- - 3478 21496 - -
2017 Renewable - Wind II Wind Wind 50 175 3528 21672
Ngaka I Coal Steam 200 1,289 3728 22961
- 3728 22961
Hale Hydro Hydro 11 28 3738 22989
Coastal Coal Coal Steam 300 1,934 4038 24923
- 4038 24923 2898 15494 1140 9429 39 61 11 12 (706) (7,105)
2018 Rusumo Falls Hydro Hydro 27 148 4065 25071 - -
Mchuchuma I Coal Steam 300 1,934 4365 27005
Kiwira II Coal Steam 200 1,289 4565 28295
Solar II Solar Solar 60 210 4625 28505
Interconnector - Rwanda/Burundi export export (50) (350) 4575 28154
Interconnector - Mozambique export export (100) -645 4475 27510
Interconnector - I (Zambia) export export (100) (701) 4375 26809 3204 17194 1171 9614 37 56 10 11 (690) (7,035)
2019 4375 26809 - -
Kakono Hydro Hydro 53 335 4428 27144
Ngaka II Coal Steam 200 1,402 4628 28545
- 4628 28545 3374 18322 1254 10223 37 56 11 10 (748) (7,475)
2020 4628 28545 - -
Mchuchuma II-1 Coal Steam 100 701 4728 29246
Malagarasi Hydro Hydro 45 187 4773 29433 3573 19607 1199 9827 34 50 11 11 (663) (6,886)
2021 Ruhudji Hydro Hydro 358 1,333 5131 30766 - -
- 5131 30766
5131 30766 3781 20943 1350 9823 36 47 18 10 (783) (6,682)
2022 Mpanga Hydro Hydro 144 646 5275 31412 - -
5275 31412
Mchuchuma II-2 Coal Steam 100 701 5375 32113
- - 5375 32113 4009 22424 1366 9689 34 43 20 9 (765) (6,325)
2023 Retire Tegeta IPTL Fuel HFO (100) (701) 5275 31412 - -
Stieglers Gorge I Hydro Hydro 300 1908 5575 33320
Songwe Bupigu Hydro Hydro 34 101 5609 33421
- 5609 33421
5609 33421 4253 24000 1356 9422 32 39 26 9 (718) (5,822)
2024 Masigira Hydro Hydro 118 492 5727 33913 - -
Mchuchuma II-3 Coal Steam 200 1,402 5927 35315
5927 35315 4483 25514 1444 9801 32 38 27 8 (771) (5,974)
2025 Rumakali Hydro Hydro 520 2,520 6447 37835 - -
6447 37835
- 6447 37835
Retire Songas 1+2+3 Gas GT (187) (1,310) 6260 36524
- 6260 36524
- 6260 36524 4724 27139 1535 9386 33 35 34 8 (827) (5,315)
2026 6260 36524 - -
Songwe Sofre Hydro Hydro 157 456 6417 36980
6417 36980
Mchuchuma III-1 Coal Steam 100 701 6517 37681 4979 28860 1537 8821 31 31 35 8 (791) (4,492)
2027 6517 37681 - -
- 6517 37681
Ikondo - Mnyera Hydro Hydro 340 1,316 6857 38997 5248 30689 1609 8308 31 27 33 11 (822) (3,705)
2028 6857 38997 - -
Mchuchuma III-2 Coal Steam 200 1402 7057 40399
Songwe Manolo Hydro Hydro 149 488 7206 40887 5531 32635 1675 8252 30 25 37 8 (845) (3,357)
2029 Taveta - Mnyera Hydro Hydro 145 622 7351 41509 - -
Local Coal I Coal Steam 200 1402 7551 42910 5806 34560 1745 8351 30 24 39 7 (874) (3,167)
2030 Retire Ubungo GT Gas GT (100) (701) 7451 42210 - -
- 7451 42210
Local Coal II Coal Steam 400 2803 7851 45013
0 7851 45013 6085 36543 1766 8469 29 23 37 7 (853) (2,988)
2031 Retire Tegeta GT Gas GT (41) (287) 7810 44725 - -
- - 7810 44725
Local Coal III Coal Steam 400 2803 8210 47529
8210 47529
- - 8210 47529 6377 38646 1832 8883 29 23 36 6 (876) (3,086)
2032 Retire Mwanza Ms Diesel Fuel Diesel (60) (420) 8150 47108 - -
Retire Ubungo EPP Gas GT (100) (701) 8050 46407
Retire Cogen Biomass Steam (40) (280) 8010 46127
- - 8010 46127
- - 8010 46127
Stieglers Gorge II Hydro Hydro 600 855 8610 46982
0 8610 46982 6679 40836 1931 6146 29 15 41 6 (929) (21)
2033 Local Coal IV Coal Steam 400 2,579 9010 49561 - -
- 9010 49561
- 9010 49561
- - 9010 49561
9010 49561
- 9010 49561 6979 43030 2031 6531 29 15 39 6 (984) (77)
2034 - - 9010 49561 - -
- - 9010 49561
Local Coal V Coal Steam 300 1,934 9310 51495
9310 51495
- 9310 51495 7290 45359 2019 6136 28 14 38 6 (926) 668
2035 Stieglers Gorge III Hydro Hydro 300 464 9610 51959 7645 47724 1965 4236 26 9 37 7 (818) 2,923
9610 51959
TOTAL ADDITIONS 2011-2035 9610 51959 19219 103918

85
3.10 Ranking on costs of new power options
The previous sections provided information and procedures on the cost and availability
of new power options. The ordering of projects for the generation plan was based in part
on a ranking of projects based on cost and availability.

3.11 Basic technical screening

Conventionally, in selecting candidate new power options, an initial screening is made to
exclude projects not to be considered in the generation planning program. A project may
be excluded during screening process due to the following reasons:

a. Insufficient data for analysis: projects without pre-feasibility studies. (although

some such sites may be recommended for further study);
b. Socially or environmentally unacceptable: sites with significant social or
environmental risk which cannot be mitigated;
c. Too expensive: sites with indicated unit energy cost above 10 USD cents/kWh for
firm energy, as this threshold is significantly above available thermal options; and
d. Too small: sites with identified capacities less than 20MW, because they would
have no impact on the planning process. However, such size of plants have been
considered if are developed by private investors for instance Mwenga 4MW hydro
power project.

3.12 Project Ranking and Availability

The ranking of projects to be included in generation expansion plan is based on unit cost
of production. For thermal plants unit costs are based on 75 percent annual capacity
factor. The ranking of hydro plants is based on cost of firm energy generation. Overall,
the availability of a given plant is based on present level of preparation, project size, and
consequent minimum lead times as shown in Table 3-33.

86
Table 3- 33: Ranking of hydro and thermal options
Name ENERGY GENERATION COST Earliest
TOTAL COST INSTAL. CAP AV FIRM Average Firm Tech. STATUS installation date 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
$ MILLION (MW) (GWh) (GWH) $/kWh $/kWh $/kW (January)
Sao Hill (Cogen) 39.57 10 66 - 0.0148 0.0148 3,956.50 Thermo Committed 2016 10
Mufindi (Cogen) 118.70 30 197 - 0.0148 0.0148 3,956.50 Thermo Committed 2016 30
Mchuchuma Coal I 645.75 300 1,971 1,971 0.0383 0.0383 2,152.50 Thermo Committed 2018 300
Kakono (High) 96.86 53 404 335 0.0317 0.0383 1,827.55 Hydro Candidate 2018 53
Mchuchuma Coal II 861.00 400 2,628 2,628 0.0391 0.0391 2,152.50 Thermo Candidate 2019 400
Mchuchuma Coal III 645.75 300 1,971 1,971 0.0391 0.0391 2,152.50 Thermo Candidate 2019 300
Somanga Fungu(210+120), CC 365.00 320 2,102 2,102 0.0395 0.0395 1,140.63 Thermo Committed 2015 320
Ngaka coal I 630.50 200 1,314 1,314 0.0399 0.0399 3,152.50 Thermo Committed 2019 200
Kinyerezi II 444.84 240 1,577 1,577 0.0402 0.0402 1,853.51 Thermo Committed 2016 240
Kiwira I - coal steam 430.50 200 1,314 1,314 0.0413 0.0413 2,152.50 Thermo Committed 2017 200
Kiwira II - coal steam 430.50 200 1,314 1,314 0.0413 0.0413 2,152.50 Thermo Committed 2019 200
Ngaka coal II 630.50 200 1,314 1,314 0.0413 0.0413 3,152.50 Thermo Committed 2019 200
Mtwara 600.20 400 2,628 2,628 0.0422 0.0422 1,500.50 Thermo Committed 2015 400
Stiegler Gorge Phase 1 938.49 300 2,230 1,908 0.0410 0.0480 3,128.30 Hydro Candidate 2022 300
Taveta 251.13 145 850 622 0.0370 0.0506 1,731.90 Hydro Candidate 2021 145
Mpanga 274.09 144 955 646 0.0363 0.0537 1,903.37 Hydro Candidate 2021 144
Coastal coal 645.75 500 3,285 3,285 0.0548 0.0548 1,291.50 Thermo Candidate 2019 500
Local Coal I 430.50 100 657 657 0.0548 0.0548 4,305.00 Thermo Candidate 2026 100
Local Coal II 861.00 200 1,314 1,314 0.0548 0.0548 4,305.00 Thermo Candidate 2029 200
Local Coal III 861.00 400 2,628 2,628 0.0548 0.0548 2,152.50 Thermo Candidate 2030 400
Local Coal IV 861.00 400 2,628 2,628 0.0548 0.0548 2,152.50 Thermo Candidate 2031 400
Local Coal V 645.75 400 2,628 2,628 0.0548 0.0548 1,614.38 Thermo Candidate 2033 400
Kinyerezi I 187.58 150 986 986 0.0562 0.0562 1,250.50 Thermo Committed 2014 150
Kinyerezi III 557.05 300 1,971 1,971 0.0562 0.0562 1,856.84 Thermo Committed 2017 300
Zinga 276.20 200 1,314 1,314 0.0562 0.0562 1,381.00 Thermo Committed 2015 200
Mkuranga 200.00 250 1,643 1,643 0.0562 0.0562 800.00 Thermo Committed 2015 250
Masigira 225.30 118 664 492 0.0449 0.0607 1,909.28 Hydro Candidate 2021 118
Stiegler Gorge Phase 2 addition 334.36 600 1,506 855 0.0344 0.0607 557.26 Hydro Candidate 2022 600
Ikondo 665.84 340 1,842 1,316 0.0478 0.0670 1,958.35 Hydro Candidate 2021 340
Songwe Sofre 274.28 157 736 456 0.0457 0.0737 1,747.00 Hydro Candidate 2022 157
Songwe Manolo 278.88 149 780 488 0.0502 0.0802 1,871.65 Hydro Candidate 2021 149
Stiegler Gorge Phase 3 addition 274.09 300 464 464 0.0273 0.0896 913.62 Hydro Candidate 2022 300
Rumakali 740.00 520 1,475 908 0.0559 0.0908 1,423.08 Hydro Committed 2020 520
Rusumo Falls (Full) 33% Tanzania 339.20 27 148 129 0.0919 0.1061 12,720.00 Hydro Committed 2018 27
Ruhudji 1,220.00 358 1,928 1,333 0.0791 0.1145 3,407.82 Hydro Committed 2019 358
Songwe Bipigu 90.41 34 153 101 0.0772 0.1169 2,658.97 Hydro Candidate 2019 34
Wind 272.00 100 408 - 0.1300 0.1300 2,720.00 Wind Committed 2016 100
Solar 288.56 300 1,971 - 0.2200 0.2200 961.86 Thermo Candidate 2016 300
Malagarasi (Igamba III) 153.24 45 187 21 0.1065 0.9278 3,420.54 Hydro Committed 2018 45
Upper Kihansi 116.52 120 69 99 0.1337 1.5073 971.02 Hydro Candidate 2020 120

Source: Team Compilation

87
3.13 Detailed Generation Costs and Screening Tables
The development of alternative generation plans and their comparisons use comparative
costs for alternative technologies. These are presented in a screening table showing
generation cost as a function of plant capacity factor.

The unit cost of generation is based on:

a. Fixed annual cost
b. Amortization of capitalized amount
c. Interim replacement
d. Insurance
e. Fixed operation and maintenance
Annual cost is split into:
a. Fuel cost
b. Variable operation and maintenance

The screening tables that compare unit generation costs as a function of plant factor are
shown in Table 3-34.

88
Table 3- 34: Thermal generation alternatives for Tanzania and screening tables (Sheet 1 of 2)
Thermal generation alternatives for Tanzania and screening tables 183 438
1.22 1.825
Mchuchuma Mchuchuma Mchuchuma Kiwira I Kiwira II Ngaka I Ngaka II Coastal Local I Local II Local III Local IV Local V Somanga MTWARA Kinyerezi I Kinyerezi II Kinyerezi III Kinyerezi IV Zinga Mkuranga Mufindi Sao Hill Solar Wind
` 10.0% Stage I Stage II Stage III Coal-Steam Coal-Steam Coal-Steam Coal-Steam Coal-Steam Coal-Steam CCGT (Gas) Gas GT(Gas) CCGT (Gas) Gas Gas Gas Gas Cogen Cogen
3x100 MW 4x100 MW 3x100 MW 4x50 MW 4x50 MW 4x100 MW 4x100 MW 3x100 MW 2x100 MW 4x100 MW 4x100 MW 4x100 MW 3x100 MW 2x115 1x110 4x100 MW 3x50 MW 2x60 2x60 3x100 MW 3x100 MW 2x100 MW 5x50 MW 30 MW 10 MW 60 MW 50 MW
Installed capacity MW 324 432 324 216 216 216 216 324 216 432 432 432 324 328 406 152 179 305 305 203 254 31 10 61 51
Station service % 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 2.35 1.60 1.60 2.35 1.60 1.60 1.60 1.60 2.4 2.40 2.4 2.40
Net capacity MW 300 400 300 200 200 200 200 300 200 400 400 400 300 320 400 150 240 300 300 200 250 30.0 10 60.0 50
Unit availability
Scheduled maintenance wks per unit 6 6 6 6 6 6 6 6 6 6 6 6 6 4 4 4 3 4 4 4 4 3 3 3 3
Forced outage rate % 8 8 8 8 8 8 8 8 8 8 8 8 8 5 7 5 5 5 5 5 5 5 5 5 5
Combined outage rate % 20 20 20 20 20 20 20 20 20 20 20 20 20 11 15 13 11 13 13 13 13 11 11 11 11
Net capacity available MW 244 326 244 163 163 163 163 244 163 326 326 326 244 281 343 132 215 263 263 175 219 20 10 20 10
(after derating for outage)

Earliest on-power date Yr 2033 2034 2018 2019 2017 2019 2019 2016 2026 2029 2030 2031 2033 2015 2016 2014 2016 2017 0 2015 2015 2016 2016 2016 2016

Service life Yrs 25 25 25 25 25 25 25 25 25 25 25 25 25 20 25 20 20 20 20 20 20 20 20 20 20

O&M
Fixed O & M $/kW 50 50 50 70 70 50 50 50 50 50 50 50 50 7.5 7.5 7.5 6 7.5 7.5 7.5 7.5 40 40 40 40
Variable O & M $/kWh 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0060 0.0025 0.0050 0.0045 0.0030 0.0045 0.0045 0.0045 0.0045 0.0030 0.0030 0.0030 0.0030
Interim replacement % of capital 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35
Insurance % of capital 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025 0.025
Total capital cost with IDC
Unit capital cost US $/kW 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 2100.0 1141.0 1220.0 1220.0 1808.3 1808.3 1808.3 1347.5 1808.3 3860 3860 4692 2438
6
Capital costs Stage 1 US $ x 10 645.8 861.0 645.8 430.5 430.5 430.5 430.5 645.8 430.5 861.0 861.0 861.0 645.8 374.2 500.2 187.6 444.8 556.1 556.1 276.2 463.4 118.7 39.6 288.6 124.9
6
Capital cost Stage 2 US $ x 10 141.0
Transmission US $ x 106 0.0 0.0 0.0 0.0 0.0 200.0 200.0 0.0 0.0 0.0 0.0 0.0 0.0 85.0 100.0 0.0 0.0 1.0 1.0 1.0 1.0 0.0 0.0 0.0 0.0
Capital cost US $ x 106 645.8 861.0 645.8 430.5 430.5 630.5 630.5 645.8 430.5 861.0 861.0 861.0 645.8 365.0 600.2 187.6 444.8 557.1 557.1 277.2 464.4 118.7 39.6 288.6 124.9
Avg capital cost per available capacity $/kW avail 2644.8 2644.8 2644.8 2644.8 2644.8 3873.6 3873.6 2644.8 2644.8 2644.8 2644.8 2644.8 2644.8 1300.7 1747.9 1426.0 2070.5 2117.5 2117.5 1580.7 2118.2 5934.8 3956.5 14427.9 12494.8
Annual fixed cost $/kW avail 71.4 71.4 71.4 95.9 95.9 76.0 76.0 71.4 71.4 71.4 71.4 71.4 71.4 13.4 15.3 13.9 14.5 16.5 16.5 14.5 16.5 82.3 54.8 174.1 246.9
Cashflow in year prior to on-power -7 % of capital
-5 % of capital
-4 % of capital 15 15 15 15 15 15 15 15 15 15 15 15 15
-3 % of capital 30 30 30 30 30 30 30 30 30 30 30 30 30 15 15 15 15 15 15
-2 % of capital 30 30 30 30 30 30 30 30 30 30 30 30 30 50 40 40 50 40 40 40 40 50 50 50 50
-1 % of capital 25 25 25 25 25 25 25 25 25 25 25 25 25 35 60 60 35 60 60 60 60 35 35 35 35
0 % of capital 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Avg total cost at on-power $/kW avail 3022.1 3022.1 3022.1 3022.1 3022.1 4426.1 4426.1 3022.1 3022.1 3022.1 3022.1 3022.1 3022.1 1406.7 1817.8 1483.0 2239.3 2202.1 2202.1 1644.0 2202.9 6418.4 4279.0 15603.8 13513.1
Annuity over economic life (year-end) $/kW avail 332.9 332.9 332.9 332.9 332.9 487.6 487.6 332.9 332.9 332.9 332.9 332.9 332.9 165.2 200.3 174.2 263.0 258.7 258.7 193.1 258.8 753.9 502.6 1832.8 1587.2
Total annual fixed cost $/kW avail 404.3 404.3 404.3 428.9 428.9 563.6 563.6 404.3 404.3 404.3 404.3 404.3 404.3 178.7 215.6 188.1 277.5 275.2 275.2 207.6 275.3 836.2 557.4 2006.9 1834.1
Fuel cost calculation
Fuel type Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Coal Natural gas Natural gas Natural gas Natural gas Natural gas Natural gas Natural gas Natural gas Biomass Biomass Solar Wind
Fuel price $/GJ 3.31 3.40 3.40 3.82 3.82 3.48 3.31 5.02 5.02 5.02 5.02 5.02 5.02 4.74 4.74 4.74 4.74 4.74 4.74 4.74 4.74 1.03 1.03 N/A N/A
Heat rate kJ/kWh 9,730 9,730 9,730 9,243 9,243 9,730 9,730 9,730 9,730 9,730 9,730 9,730 9,730 7,800 7,840 10,900 7,840 10,900 10,900 10,900 10,900 11500 11500 N/A N/A
Fuel cost $/kWh 0.03225 0.03306 0.03306 0.03535 0.03535 0.03386 0.03223 0.04883 0.04883 0.04883 0.04883 0.04883 0.04883 0.03697 0.03716 0.05167 0.03716 0.05167 0.05167 0.05167 0.05167 0.01185 0.01185 N/A N/A
Total fixed cost $/kW avail. 404.3 404.3 404.3 428.9 428.9 563.6 563.6 404.3 404.3 404.3 404.3 404.3 404.3 178.7 215.6 188.1 277.5 275.2 275.2 207.6 275.3 836.2 557.4 2006.9 1834.1
Total variable cost $/kWh avail. 0.03825 0.03906 0.03906 0.04135 0.04135 0.03986 0.03823 0.05483 0.05483 0.05483 0.05483 0.05483 0.05483 0.03947 0.04216 0.05617 0.04016 0.05617 0.05617 0.05617 0.05617 0.01485 0.01485 0.22000 0.13000

89
Table 3- 34: Screening tables - Unit energy costs ($/MWh) for thermal generation alternatives
Mchuchuma Mchuchuma Mchuchuma Kiwira I Kiwira II Ngaka Ngaka Coastal Local I Local II Local III Local IV Local V Somanga MTWARA Kinyerezi I Kinyerezi II Kinyerezi III Kinyerezi IV Zinga Mkuranga Mufindi Sao Hill Solar Wind
Stage I Stage II Stage III - - - - Coal-Steam Coal-Steam Coal-Steam Coal-Steam Coal-Steam Coal-Steam CCGT (Gas) Gas GT(Gas) CCGT (Gas) Gas Gas Gas Gas Cogen Cogen - -
Plant Factor 3x100 MW 4x100 MW 3x100 MW 4x50 MW 4x50 MW 4x100 MW 4x100 MW 3x100 MW 2x100 MW 4x100 MW 4x100 MW 4x100 MW 3x100 MW 2x115 1x110 4x100 MW 3x50 MW 2x60 2x60 3x100 MW 3x100 MW 2x100 MW 5x50 MW 30 MW 10 MW 60 MW 50 MW

5.0% 961.3 962.1 962.1 1020.5 1020.5 1326.6 1324.9 977.9 977.9 977.9 977.9 977.9 977.9 447.4 534.3 485.6 673.7 684.4 684.4 530.1 684.6 1923.9 1287.5 4802.0 4317.4
10.0% 499.8 500.6 500.6 530.9 530.9 683.2 681.6 516.4 516.4 516.4 516.4 516.4 516.4 243.4 288.2 270.9 356.9 370.3 370.3 293.1 370.4 969.4 651.2 2511.0 2223.7
15.0% 345.9 346.7 346.7 367.7 367.7 468.8 467.1 362.5 362.5 362.5 362.5 362.5 362.5 175.4 206.2 199.3 251.3 265.6 265.6 214.1 265.6 651.2 439.1 1747.3 1525.8
20.0% 269.0 269.8 269.8 286.1 286.1 361.5 359.9 285.6 285.6 285.6 285.6 285.6 285.6 141.4 165.2 163.5 198.5 213.2 213.2 174.6 213.3 492.1 333.0 1365.5 1176.9
25.0% 222.9 223.7 223.7 237.2 237.2 297.2 295.6 239.4 239.4 239.4 239.4 239.4 239.4 121.1 140.6 142.1 166.9 181.8 181.8 151.0 181.9 396.7 269.4 1136.4 967.5
30.0% 192.1 192.9 192.9 204.5 204.5 254.3 252.7 208.7 208.7 208.7 208.7 208.7 208.7 107.5 124.2 127.7 145.8 160.9 160.9 135.2 160.9 333.0 227.0 983.7 827.9
35.0% 170.1 170.9 170.9 181.2 181.2 223.7 222.0 186.7 186.7 186.7 186.7 186.7 186.7 97.7 112.5 117.5 130.7 145.9 145.9 123.9 145.9 287.6 196.7 874.6 728.2
40.0% 153.6 154.4 154.4 163.7 163.7 200.7 199.1 170.2 170.2 170.2 170.2 170.2 170.2 90.5 103.7 109.8 119.4 134.7 134.7 115.4 134.7 253.5 173.9 792.8 653.4
45.0% 140.8 141.6 141.6 150.1 150.1 182.8 181.2 157.4 157.4 157.4 157.4 157.4 157.4 84.8 96.8 103.9 110.6 126.0 126.0 108.8 126.0 227.0 156.3 729.1 595.3
50.0% 130.6 131.4 131.4 139.3 139.3 168.5 166.9 147.1 147.1 147.1 147.1 147.1 147.1 80.3 91.4 99.1 103.5 119.0 119.0 103.6 119.0 205.7 142.1 678.2 548.7
55.0% 122.2 123.0 123.0 130.4 130.4 156.8 155.2 138.7 138.7 138.7 138.7 138.7 138.7 76.6 86.9 95.2 97.8 113.3 113.3 99.3 113.3 188.4 130.5 636.5 510.7
60.0% 115.2 116.0 116.0 122.9 122.9 147.1 145.5 131.8 131.8 131.8 131.8 131.8 131.8 73.5 83.2 92.0 93.0 108.5 108.5 95.7 108.5 173.9 120.9 601.8 479.0
65.0% 109.3 110.1 110.1 116.7 116.7 138.8 137.2 125.8 125.8 125.8 125.8 125.8 125.8 70.8 80.0 89.2 88.9 104.5 104.5 92.6 104.5 161.7 112.7 572.5 452.1
70.0% 104.2 105.0 105.0 111.3 111.3 131.8 130.1 120.8 120.8 120.8 120.8 120.8 120.8 68.6 77.3 86.8 85.4 101.0 101.0 90.0 101.1 151.2 105.8 547.3 429.1
75.0% 99.8 100.6 100.6 106.6 106.6 125.6 124.0 116.4 116.4 116.4 116.4 116.4 116.4 66.7 75.0 84.8 82.4 98.0 98.0 87.8 98.1 142.1 99.7 525.5 409.2
80.0% 95.9 96.7 96.7 102.5 102.5 120.3 118.6 112.5 112.5 112.5 112.5 112.5 112.5 65.0 72.9 83.0 79.8 95.4 95.4 85.8 95.4 134.2 94.4 506.4 391.7
85.0% 92.5 93.4 93.4 98.9 98.9 115.5 113.9 109.1 109.1 109.1 109.1 109.1 109.1 63.5 71.1 81.4 77.4 93.1 93.1 84.0 93.1 127.1 89.7 489.5 376.3
90.0% 89.5 90.3 90.3 95.7 95.7 111.3 109.7 106.1 106.1 106.1 106.1 106.1 106.1 62.1 69.5 80.0 75.4 91.1 91.1 82.5 91.1 120.9 85.6 474.6 362.6

Sources: Team Compilations

90
3.14 Environmental and Social Impact Assessment
Environmental and social issues
There are two components to the planning process that take into account environmental
and social aspects.

Project environmental and social analysis: The system planning function provides the
mechanism to include environmental and social mitigation costs in the cost estimates for
candidate new power option, as these are a real project costs. Additionally, this task will
provide an assessment of the acceptability of new generation options on a project-by-
project basis.
Cumulative environmental and social analysis: This provides for an assessment of
potential impacts on a cumulative basis, referenced to a generation plan, and thus
combination of projects.
The procedures for making a combined assessment of project economic and
environmental/social parameters are described in Table 3-35. The table provides a list of
the parameters that are combined in the evaluation model for Multiple Criteria Analysis.

91
 Table 3- 35: Criteria and indicators used for comparison of power options
Criteria Indicators
Category: Cost
Economic Viability Unit cost of firm energy per kWh over the projected life of the
facility (US/kWh), taking into account:
- Direct investment plant
- Engineering and owners costs
- Interest during construction
- Operating and maintenance costs
- Environmental and social mitigation costs (included in the civil
works contingency amount)
- Multi-purpose benefits (irrigation, fisheries) treated by cost
sharing for the dam (unless a specific allowance has been
included in the estimates, in which case that estimate is used)
- Contingency allowance for uncertainties (e.g. technical,
financial and geological risks)
Category: Socio-economic
Impacts Due to Population Number of persons affected by project infrastructure and
Displacement ancillary facilities (People/GWh)
Promotion of Rural Electrification Number of rural persons living in a 10 km radius of the power
station and in a 10 km wide corridor along the transmission line
between the option and the main transmission grid
(People/GWh)
Socio-economic Impacts on the Number of persons living in a 1 km corridor along the river
Downstream Reaches stretch with altered flow downstream of the dam (People/GWh)
Land Issues Area required for project infrastructure, including reservoir and
transmission facilities (ha/GWh)
Category: Environment
Impact on Resource Depletion Energy payback ratio: ratio of energy produced during the
normal life span of the option divided by the energy required to
build, maintain and fuel the generation equipment. This indicator
is a measure of the global pressure of an option on the
environment
Impacts of Greenhouse Gas Net CO2 equivalent emissions over the life cycle of the project
Emissions (t/GWh)
Impacts of Air Pollutant SO2 equivalent emissions over the life cycle of the project
Emissions on Biophysical (t/GWh)
Environment
Land requirements Area required for project infrastructure, including reservoir and
transmission facilities (ha/GWh)
Waste Disposal Land area required for ash disposal (ha/GWh)
Environmental Impacts on the Length of river with altered flow downstream of the dam
Downstream Reaches (km/GWh)

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3.15 Status of environmental assessments
A review of the status of Environmental Impact Assessment (EIA) reporting of power
options was carried out as part of the East African Power Master Plan Study17. This
review indicated that EIAs are available only for a limited number of projects in the EAC
region:

a) Preliminary EIAs exist for Ruhudji and Rumakali (produced in 1998).

Environmental impact studies of the Stieglers Gorge Project were carried out in
the late 1970s and early 1980s but they do not meet current national and
international environmental and funding requirements.
b) A first EIA of the Mchuchuma Project was produced in 1997 by the National
Development Corporation of Tanzania (NDC) and it is believed that its report
conforms to Tanzania government and World Bank standards
In most cases, screening of projects with regards to environmental aspects and the
evaluation of the environmental performance of power options against criteria will be on
the basis of the following:
a) Environmental impacts known to occur in similar projects;
b) Information from government sources on environmental and socio-economic
characteristics at country, province or district levels; and
c) Information on technical characteristics of project components from reports.
There is no change in the status of the above EIA assessments.

3.16 Project Assessments in the Current PSMP

The current update on project assessment borrows information available from the 2009
PSMP Update report, except for 400kV transmission lines (Iringa Shinyanga, Iringa
Mbeya, and Nairobi Arusha - Singida), and 220kV Masaka Mwanza.

Adjustments for mitigation measures

Mitigation, compensation and enhancement measures are normally developed as part of
environmental impact assessment studies, socio-economic impact assessment studies
and resettlement plans. However, studies of this nature have been carried out on only
some of the considered options. In the cases where these measures and associated
costs are known, the exact figure and proposed mitigating measures may be used. In
other cases, it is assumed that internationally recognized standard mitigation measures
that have proven to be effective over the years would be applied in the implementation of
the project, with consequent additional project costs.

17
BKS Acres, 2003. East African Power Master Plan Study. Appendix H Review of Environmental Assessment and
Environmental Costs of Candidate Power and Transmission Line Projects

93
 CHAPTER FOUR

4 TRANSMISSION EXPANSION PLAN

4.1 Introduction
This section provides the update to the transmission plan based upon the load forecast
and the generation expansion plan presented in the previous chapters. Practically, the
overall logical planning process that was used for conceptual primary transmission
system planning update doesnt differ from that which was used in preparing the Power
System Master Plan of 2009.
An assessment of major power flows was conducted across widely separated
geographical areas over the planning period up to the year 2035 in order to plan for
reinforcement and new transmission lines. The assessment was done by calculating the
ranges of major interface flows for critical system conditions, at discrete intervals of five
years (including year 2010) throughout the study period for the base and for alternative
generation plans. These ranges of major interface power flows between geographic
subsystems are based on a generation planning sequence, grid station load forecast,
ranges of load levels and known operating constraints. This information led to a
conceptual update design of the transmission additions or changes where it appeared
necessary. Likewise, the information will help provide an early feedback of transmission
costs associated with the least cost generation update option.

After the simulation of load flow using generation data as an input to transmission plan,
the results provided detail information for transmission system expansion/additions.
Simulations were carried by an interval of 5 years starting from year 2010 as a base year
to 2035.

Objectives
The main objective of this process is to identify a definitive near to mid-term plan (to year
2020) and an indicative long-range plan (to year 2035) for the transmission system
expansion update. More specifically, transmission expansion plan objectives are:
a) Ensuring security of supply in the short term by coordinating electricity supply and
demand;
b) Ensuring security of supply in the medium and long term by developing the
National Grid;
c) Ensuring accessible transmission and distribution routes by means of good
maintenance practices;
d) Determining the location, capacity, and type of the required power transmission
development and upgrades over the planning horizon 2035;
e) Establishing the timing of the transmission upgrades across years 2015, 2020 and
2035; and
f) Estimating the capital cost and investment plan associated with the transmission
line development and system upgrades.
94
In the context of a master plan, the transmission expansion determines the system
upgrades that will allow the planned generation to serve the forecasted load.
Additionally, a corresponding investment plan is developed to estimate the cost of the
transmission expansion plan associated to the generation and sub-
transmission/distribution plans which provide the basic input to financial and economic
analysis.

The transmission plan chooses the system additions that are most economical, while
satisfying a pre-defined set of technical criteria. Such criteria composed a set of rules
that measure the system performance and compare several scenarios on a common
technical basis, ensure the adequate operation of the power system under both normal
and emergency conditions, once the infrastructure has been built.

Existing Grid System

TANESCO owns transmission and distribution lines of different voltage capacities all
over the country. The transmission system is comprised of 2,732 km of 220 kV, 1,538 km
of 132kV and 546 km of 66kV. The isolated centres away from the grid are served by
generating units with an aggregate nominal capacity of 81.5 MW. TANESCO imports
power from Uganda via 132kV and from Zambia through 66 and 33kV lines.

Simulation of the existing power system under peak load conditions revealed that the
following portions of line, the Iringa Dodoma Singida 220kV line, the Chalinze Hale
Arusha 132kV line and Ubungo Kunduchi Ras Kilomoni 132kV line and 132kV
marine cable from Ras Kilomoni (Mainland) to Ras Fumba (Zanzibar) had exceeded their
thermal limits therefore they could not transfer all the respective demanded power. This
has resulted in the introduction of the 400kV Iringa Shinyanga backbone project, the
400kV Dar es Salaam Tanga Arusha and the reinforcement of 132kV line to Ras
Kilomoni and 132kV marine cable to Zanzibar projects. All these projects have been
committed. The proposed increase of power generation in Mbeya, Iringa and Dar es
Salaam regions has necessitated the reinforcement of the 220kV lines to these areas so
that power can be evacuated to the load centres. To this effect, 400kV lines from Dar es
Salaam Morogoro Dodoma, Dar es Salaam Chalinze Tanga Arusha and Iringa
Makambako Mbeya are planned for construction.

95
Figure 4- 1: Existing Grid System

Source: TANESCO

96
Table 4- 1: Parameters of the Existing Transmission Line System

Source: TANESCO

97
Development of New Interconnectors
Transmission capacity to other countries is an integrated and important part of a main
grid that facilitates new renewable power generation and ensures security of supply
domestically. It is necessary to increase the exchange capacity with other countries, both
to ensure access through power trading.
The results from the operational experience in recent years lead to necessary
adjustments of the plans for establishing new interconnectors in the coming ten-year
period. The countries project portfolio for interconnectors comprising of six projects: The
new 400kV interconnector to Kenya, currently undergoing preparation phase, is
scheduled for entering into operation in 2016. The connection point in the Grid is
Singida. Tanzania is planning another connection to Zambia at 400kV which is currently
under preparation phase, scheduled to enter into operation in 2016 and the connection
point in the Grid is Mbeya. Uganda and Tanzania are planning for the 220kV Masaka
(Uganda) - Mwanza (Tanzania) interconnector, it is scheduled for operation by 2015.

Tanzania is also planning a new connection to Mozambique with a capacity of 220kV;

currently efforts to initiate discussions with the Mozambican counterparts are underway.
Tanzania, Rwanda and Burundi are planning a 63MW hydro power plant project at
Rusumo border with Rwanda and Burundi, the project will enable the National grids of
the three countries be interconnected through 220kV transmission line by 2016. The last
one involves Tanzania and Malawi, a total of 340MW hydro power plant project at
Songwe border is planned, the project will enable the National grids of the two countries
be interconnected through 220kV transmission line by 2021. By year 2035, the Grid
network (400kV and 220kV lines in red and yellow colours respectively) will look as
shown below;

98
Figure 4- 2: Generation and Transmission Plan Year 2035
Generation and Transmission Plan
Uganda Year- 2035
Rwanda/Burundi Kenya
G
Mwanza G
G Tanga
Rusumo Arusha G

Ubongo G Dar-2
Buly. Babati
G Shinyanga
Kakono
Singida G Kinyerezi
Geita
Nyakanazi G Morogoro
G
G
Kigoma Buzwagi Dodoma
S.Gorge
G
Mpanda G
Mtera Kidatu
Masigira Somanga G
Fungu
G G
Sumbawanga

Muf. Iringa G
Kiwira
G Mtwara
G
Kihansi
Ikondo
Mak.
Mbeya G Ruhudji Mpanga Tunduru
Ngaka-I G Mozambique
G
G
G
Rumk. Mchm. Ngaka - II G
Zambia G Thermal pt. 400kV
G

Madaba G Renewable pt. 220kV

Songea Namtumbo

Drivers for grid development:

(1) Security of supply is our top priority,

The Western, Northern and Lake Zones need new transmission capacity to secure a
satisfactory supply, the South-West and Dar es Salaam areas also need transmission
capacity to evacuate excess generated power to other load centers. In 2010, the
government initiated preparations for the 400kV transmission projects namely the
backbone project, South-West transmission project, Dar es Salaam Tanga Arusha
and Dar es Salaam Morogoro - Dodoma transmission projects and the 220kV
transmission projects namely the North-West Grid, Makambaku Songea, Dar es
Salaam Somanga Mtwara and Songea - Mtwara.
Lengthy preparation procedures have forced the government to increase focus on
preparedness in recent years, and in some cases have found it necessary to implement
special short-term preparedness measures in certain areas.
(2) Renewable energy requires more grid capacity,

The government is determined to achieve its goals regarding new renewable generation
in the most social economic efficient way. The government aims to contribute to at least

99
260MW of new renewable power generation being connected to the Tanzanian grid by
2016.
Since the potential for renewable in the country is great, it is important that all these
developments are balanced, so that new generation is harmonized and adjusted to the
implemented grid development plans as well as changes in consumption patterns. This
applies both nationally and regionally and that is why the plans for a reinforced main grid
include both domestic implementation measures and interconnector capacity to other
countries. An increase in the generation of renewable energy will further increase
variations in the grid power system between years with low precipitation and years with
high precipitation; this requires an increase in the exchange capacity between Tanzania
and other countries, both to secure access to energy in dry years, and ability to export
surplus power during wet years.
(3) Reliable grid creates value,

The government will facilitate value creation by securing the necessary transmission
capacity domestically, delivering power to the growing number of newly established
enterprises, as well as facilitating increased power exchange internationally. Generally,
in the entire country, the load forecast show that there will be high growth of power
demand mainly due to increase of industrial activities and in addition to that, the gas and
coal discoveries made in recent years, will lead to higher levels of energy consumption,
for example, the Mtwara EPZ alone will require not less than 200MW by 2016. It is
anticipated that the next generation main grid will comprise stronger connections
between all regions, and contribute to more uniform electricity prices across the country
during normal situations. This will provide producers and consumers alike with improved
predictability, and facilitate value creation all over Tanzania.
(4) The future of Tanzania is electric,

The governments policy is to attain electrification rate of 78% of its people by year 2035.
In addition to that, the expectation in the long term is that the transport sector will be
extensively electrified and industrial sector will grow up, in order to be able to facilitate
these objectives; sufficient grid capacity must be developed.

Transmission Planning Criteria

Planning methodologies and criteria used in the Power System Master Plan Update
Studies of 2009 were reviewed as appropriate and generally the same have been used
in this update study. The planning of the transmission grid considers the operation of a
power system under two possible situations, that is:

Normal operating conditions (N-0);

The transmission infrastructure is entirely available (no equipment has been forced out of
service).

Contingency operating conditions (N-1);

100
The main principal is that the main grid will be operated and scheduled based on the so
called N-1 criterion. This means that under normal system conditions a fault in one
single component (line, transformer or VAr compensator) will have no influence on the
general power supply. This criterion establishes security of supply as a stronger driving
force in grid development. In this chapter, the study has set as target to rectify all known
breaches of the planning criteria by 2035. The deadline has been predetermined to
ensure that we also have the capacity to carry out investment projects related to
additional priorities, therefore only outages of equipment rated at 220 kV or above will be
considered under the N-1 criteria. For each of these two operating conditions, the
following criteria are applied to the analyses.

System Voltage Criteria

The acceptable voltage range for operating the system based on factors such as
equipment limitations and motor operation under normal and contingency conditions is
as follows:
Condition Acceptable Voltage Range

Normal System Conditions 95% - 105%

Contingency Conditions 90% - 110%

It is important to note that from an operational standpoint, healthy systems usually target
a minimum voltage close to 1.0 per unit (pu) in the bulk system.

Equipment Thermal Loading Criteria

The transmission system shall be planned/designed to allow all transmission lines and
equipment to operate within the following limits for the following defined conditions:

Condition Thermal Loading Limit

Normal System Conditions Defined Normal Load Capacity
System Design Contingencies of Long
Duration (i.e. an outage involving the Defined Normal Load Capacity
failure of a transformer)
System Design Contingencies of Short Defined Emergency Load Capacity
Duration (i.e. not involving a (120% of normal rating for 10 hours
transformer) per year)

101
Transmission and Substation Costs

Transmission voltage options

It is expected that the present 132kV and 220kV system voltage levels and the proposed
400kV line will be the main transmission technology of choice for the internal
transmission expansion. Should a Direct Current (DC) voltage level be required, the
range of 330kV to 500kV voltage standard used in other African countries is the next
voltage above the 220kV voltage standard that will be considered in future. Series and
shunt capacitors and static variance compensators were used to improve the receiving
end voltages on long and heavily loaded lines. These devices are still considered to
delay or replace the need for new transmission lines where they appeared to be
economical and practical.

Transmission Unit Costs

Transmission line and substation costs have been derived from data compiled by a NSC
Lavalin International (CANADA) 2008, for recent planning studies and from actual
transmission line projects in a number of countries, including Canada, Ethiopia,
Tanzania, Kenya, Ghana, Thailand, Pakistan and Bangladesh. These costs are based
on international competitive bidding. Table 4-2 lists the updated transmission line unit
costs that were used in this update study. Unit costs for various substation components
are summarised in Table 4-3 Costs for new switching substations include circuit
breakers, disconnectors, switches, current and voltage transformers relay buildings,
structures and site preparation.

Table 4- 2: Unit Cost of Transmission Lines

Transmission Line Cost KUSD/km

Single Double Triple
132 KV 200.00
220 KV 220.00 245.85
400 KV 294.18 378.23 472.78

Table 4- 3: Unit cost of substation per bay18

Substation Cost MUSD/bay

132kV 220 kV 400 Kv

- 5.25 6.83

18
One bay consists of three circuit breakers (1 1/2 arrangement).

102
Grid Station Load Forecast
The grid substation load forecast updates are shown in Table 4-4. Individual existing and
future grid substations were modelled in the load flow simulations in particular intervals
of periods so that the corresponding total updated load forecasts in all regions were used
as one of the inputs.

103
 Table 4- 4: Grid Substation Load forecast
Substation Load Distribution along 2015/2020/2035
AREA Bus no Bus Name 2015 2020 2035
5203 Arush33 38.08 50.22 41.47
5582 Arush2 73.07 126.90 536.23
5580 Babat2 14.48 30.45 142.03
Arusha
5581 Babat66 7.24 4.35 3.59
5601 Mbulu 2.84 3.74 3.09
5602 Karatu 3.29 4.35 3.59
5189 Ubung2 - 321.32 646.36
5190 Ubung1 248.51 175.41 188.91
5205 Chlnz33 4.34 6.50 7.01
5207 Ilala33 75.49 113.22 121.93
5210 Mtoni 20.24 30.36 32.70
5217 Mlndz33 13.45 20.17 21.72
Dar es Salaam 5218 Ubung33 62.04 93.05 100.20
5247 Fzone1 124.74 51.40 55.36
5248 Fzone2 94.21 38.82 41.81
5250 Fzone3 32.36 13.34 14.37
5294 Kndch33 91.34 37.63 40.53
5709 Dar-2 126.53 436.55
5709 Dar-2 68.31 115.73
5181 Dodom2 64.45 105.99 324.03
Dodoma 5206 Dodom33 22.44 36.41 21.02
5600 Kondoa 16.11 8.60 4.96
5173 Madaba 1.30 1.21 0.39
5183 Iring2 6.72 8.18 26.16
5184 Mufnd2 25.18 20.52 65.43
Iringa 5193 Makambak o 44.76 85.12 109.03
5208 Iring33 3.35 6.06 3.03
5211 Mufnd33 15.69 25.90 12.96
5703 Nyakanazi 62.93 105.52 254.11
Kagera 5706 Rusumo 0.42
5717 Kyaka 1.66 1.53
7019 Kigoma 22.14 137.10 179.58
Kigoma
7020 Kibondo 17.71 34.27 35.92
5201 Kiyng33 44.35 67.94 83.81
K'Manjaro 5213 Same33 8.94 13.69 16.89
5290 Kiyng11 10.92 16.73 20.64
Lindi 11.91 24.23 59.63
174 Nyamongo 17.12 28.43 49.72
Mara 5212 Musom33 10.21 16.96 68.85
5241 Bunda33 3.41 5.65 9.89
5185 Mbeya2 33.29 66.23 311.46
Mbeya
5209 Mbeya33 23.49 41.28 31.94
5186 Kidat2 11.96 14.97 54.48
5187 Morgr2 31.90 60.17 218.17
Morogoro
5188 Morgr1 15.95 29.73 26.28
5223 Kidat33 5.50 8.36 7.40
Mtwara 5630 Mtwara 93.71 153.90 216.36
5176 Mwanz2 81.70 98.18 316.10
Mwanza 5204 Mwanz1 23.30 35.19 105.73
5702 Geita 18.63 21.17
7020 Mpanda 6.86 15.02 33.36
Ruk wa
7021 Sumbawanga 12.13 26.54 58.95
Ruvuma 5172 Songea 10.98 42.89 70.17
5177 Shnyn2 149.08 243.61 1,104.90
5178 Shnyn1 41.73 51.18 68.00
Shinyanga
5589 Bulyanhu 14.71 64.92 45.37
5701 Buzwagi 10.16 8.44 14.13
5180 Singd2 8.34 28.36 114.84
Singida 5214 Singd33 14.89 6.39 4.24
Tabora 5215 Tabor33 68.00 146.00 384.00
5197 Tanga1 90.89 188.29 118.12
5216 Tanga33 45.45 55.92 35.09
Tanga
5292 Songa33 5.04 6.94 4.36
5718 Tanga 357.49

104
Power Transfer Requirements
In order that transmission schemes could be devised, the range of power flows that
would be experienced between distant centres (of load or generation) was calculated
using the load forecast update and the updated generation expansion plan. The power
flows across the transmission network of the Grid system was simulated to see whether
or not; the generation dispatched in accordance to the generation expansion plan can
overload (stress) any part of the transmission system. Six major long-distance
transmission paths are identified as follows:
i. Iringa Singida Shinyanga;
ii. Singida -Arusha;
iii. Mbeya Makambako Iringa;
iv. Kidatu Morogoro Ubungo;
v. Chalinze Tanga Arusha;
vi. Dar Morogoro Dodoma

i. Iringa Singida Shinyanga;

This transmission path identifies the flows from the Southwest zone into the central and
northwest zone. This flow is positive (central bound into Mtera). Power transfer from
Iringa to Mtera is 177.3 MW in year 2010 and 17 MW in year 2015, 20 MW in year 2020
and 243 MW in year 2035. This flow pattern does not necessitate an additional
transmission line between Iringa and Mtera during the whole planning period.
The flow from Mtera to Dodoma increases with load growth in the West, Lake and North
Zones. Power transfer increases to 241.8MW in year 2010 and 53MW in year 2015, 90
MW in year 2020 and 303MW in year 2035.
The 220kV transmission line between Mtera and Dodoma has a thermal rating of about
220 MVA, (equivalent to 178 MW) but the transfer capability is much below this, because
of the technical difficulty of loading this line higher than about 125MW. Beyond this level
of power flow, additional 400kV line is proposed between Iringa, Mtera, Dodoma, Singida
and Shinyanga. This new line will be required before the year 2015 under this scenario.

ii. 220kV Kidatu Morogoro Ubungo line

The generation output from Kidatu is being supplied westward to support the generation
output from Kihansi and Mtera in supplying the load west of Kidatu and to the North. The
addition of Ruhudji plant in year 2025 reverses the direction of power flow.
Power in the order of 77MW flows westwards from Kidatu to Iringa in year 2012, it then
reduced to 38MW in year 2015 following the introduction of 400kV Dar es Salaam
Morogoro Dodoma line. It then increases to 52MW in year 2020 following the
introduction of Nairobi 100MW export from Arusha. In 2035, the direction of power flow is
reversed following the introduction of Ruhudji with a total of 80MW flow westward to
Kidatu. In year 2012, power flow from Morogoro to Kidatu is 48.6MW, in year 2015 the
flow pattern is reversed towards the direction of Morogoro with a power flow of 46MW, it
then increases to 111MW in year 2020 and 445MW in year 2035.
105
In year 2012, the flow of power between Ubungo and Morogoro is 230MW flowing in the
direction of Morogoro, in 2015 the flow from Ubungo to Morogoro is 58MW, in 2020 the
flow pattern is reversed, it now flows from Morogoro towards Ubungo and the power flow
is 18MW and in 2035 due to increase of demand in Coastal Zone, the power flow
increases to 50MW.

iii. 400kV Dar es Salaam Morogoro Dodoma line

The power flow from Dar es Salaam to Morogoro and further to Dodoma is 373 MW in
2015, in 2020 the flow pattern is reversed following the increase of demand in the
Coastal Zone, it now flows from Dodoma towards Ubungo and the power flow is 34MW.
In year 2035 the power flow pattern is reversed again, this time 430MW flow is from
Coastal Zone to Morogoro and further to Dodoma where it joins the 400kV backbone line

iv. 132kV Dar es Salaam Chalinze Morogoro line

In year 2012 the power flow from Dar es Salaam and Morogoro of 119.2MW and
27.5MW respectively flow through 132kV line towards Chalinze and 93.2MW further to
Hale. The thermal limit of this line is 74MW, additional 400kV line is proposed between
Dar es Salaam, Chalinze, Tanga, and Arusha. This new line will be required before the
year 2015 under this scenario. In year 2015, 40.2MW flow from Dar es Salaam through
Mlandizi to Chalinze where a total of 25.7MW is received. Here the power flow between
Chalinze and Morogoro is reversed and 10.3MW flow towards Morogoro while the flow
towards Hale is reduced to 10.7MW following the introduction of 400kV Dar es Salaam
Chalinze Tanga Arusha line.

v. 400kV Chalinze Tanga Arusha line

The power flow from Dar es Salaam to Chalinze and further to Tanga and Arusha is
358MW in 2015, in 2020 the flow pattern is reduced to 100MW and it increases to
1366MW in year 2035 following the increase of demand in the North Zone and increase
of generation in the Coastal Zone.

vi. 220kV Mbeya Makambako - Iringa

The flow from Iringa to Mbeya in year 2012 is 53MW; it then increases to 161MW in year
2015. In 2020 the flow pattern is reversed following the increase of generation in the
South-West Zone after the commissioning of Kiwira, Masigira and Rumakali power
plants, it now flows from Mbeya towards Iringa and the power flow is 97MW. In year
2035 the flow increases to 279MW.
vii. 400kV Mbeya Makambako Iringa
In year 2020, the power flow is flowing from Mbeya towards Iringa; the transfer of power
from the West to Iringa through this line is 502MW. It then increases to 1,712MW in year
2035.

106
 viii. 400kV Singida to Arusha
The flow from Singida to Arusha through the 400 kV line is 95MW, it then decreases to
58MW in year 2035 due to increases in power generation in the Coastal Zone.

Transmission System Additions - Least Cost Expansion Plan

Table 4- 5: Transmission System Additions from 2012 to 2015

107
Table 4- 6: Transmission System additions from 2016 to 2020

108
 Table 4- 7: Transmission Additions from 2021 to 2035

Distance In
Year Transmission System Additions
Km
2021 220KV Mtwara to Songea 656
2022 220KV Kakono Rusumo 150
2022 220KV Mpanga Kihansi 40
2023 400KV Stieglers Gorge Dar es Salaam 200
2024 220KV Masigira Makambako 180
2025 400KV Ruhudji Mufindi 100
2025 400KV Ruhudji Kihansi 150
2026 400 KV Local Coal to Dar es salaam 15
2027 220KV Ikondo (Mnyera) Mufindi 150
2027 220KV Taveta (Mnyera) Ikondo 5

Table 4- 8: 400kV and 220 kV Transmission line assumed parameters

Parameter 400kV 220KV Comments
Conductor ACCC: ACSR: Drake
Flint
Size (MCM/mm2) 714/375.4 795/468.6
No. of Cond. Per phase 4 2
Current/conductor
775 890
(Amp.)
R Per unit on 100MVA base
0.001718 0.007360
for 100km line
X 0.017723 0.072730
B 0.542608 0.022544
Normal Rating (MVA) 1720 540 80% of current rating
Emergency Rating 120% of normal rating
2064 650
(MVA)

Reactive compensation
Fixed capacitor banks were sized to ensure the adequacy of the system operating
conditions as given in the planning criteria. Static Var Compensators (SVCs) were
standardized at +50/-50 MVAr, only the SVC at Singida was sized at 200/-50 MVAr. No
bus shunt reactors were required.

Substation Arrangement
The number of circuit breakers for the 400 kV systems is based on the breaker and a
half scheme, as shown below. Each bay is composed of three (3) breakers and provides
two positions for transmission line, transformer or compensation equipment. Sub-
109
transmission switchgear has not been considered as it depends greatly on how many
positions will be needed, which in turn, depends on the local area planning.

Fig 4-3: Substation arrangement

Line Line Line Tx

Compensation Tx Line Line

4.2 Load flow analysis

The proposed Tanzanias transmission system is based on the load forecast and the
new power plants as presented in the previous sections. Four study years were
considered:
a. Y - 2012 existing peak load case;
b. Y-2015 peak load case;
c. Y-2020 peak load case; and
d. Y-2035 peak load case.

Each case has been analyzed under both normal (N-0) and contingency (N-1)
conditions. System reinforcements including transmission lines, transformers and
reactive power compensations were defined as appropriate.

4.2.1 Year-2012 case

In 2012, simulation of existing peak load revealed that the Iringa Dodoma Singida
220kV line, the Chalinze Hale 132kV line and Kunduchi Ras Fumba Zanzibar
132kV line had exceeded thermal limits, and therefore could not conduct all the
demanded power. These overloads have resulted in the introduction of the 400kV Iringa
110
 Shinyanga backbone project, the 400kV Dar es Salaam Chalinze - Tanga Arusha ,
the 400kV Dar es Salaam Chalinze Morogoro Dodoma, 400kV Iringa Mbeya, the
reinforcement of 132kV line to Zanzibar projects and introduction of 132 kV line from
Kinyerezi to Factory Zone II-Gongolamboto. All these projects have been committed.
The overloaded lines are confirmed by the branch loading simulation results shown
below;

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:18

2010- PEAK LOAD - BASE CASE, TANZANIA
2011 LOAD FORECASTBASE CASE

BRANCH LOADINGS ABOVE 100.0 % OF RATING SET A:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
5174 KIBAHA 132.00 61 5190 UBUNG1 132.00* 61 1 123.7 85.0 145.6
5174 KIBAHA 132.00* 61 5289 MLNDZ1 132.00 61 1 123.7 85.0 145.5
5180 SINGD2 220.00 61 5181 DODOM2 220.00* 61 1 259.5 233.0 111.4
5181 DODOM2 220.00 61 5182 MTERA2 220.00* 61 1 236.4 233.0 101.5
5186 KIDAT2 220.00 61 5219 KIDATG1 11.000* 61 1 105.6 60.0 176.0
5189 UBUNG2 220.00* 61 5190 UBUNG1 132.00 61 1 309.3 300.0 103.1
5189 UBUNG2 220.00* 61 5190 UBUNG1 132.00 61 2 309.3 300.0 103.1
5189 UBUNG2 220.00* 61 5650 UBUNG0 II 11.000 61 1 308.2 150.0 205.5
5189 UBUNG2 220.00* 61 5651 AGGREK-UBUNG11.000 61 1 294.1 100.0 294.1
5190 UBUNG1 132.00 61 5360 UBUNGOWATSIL10.900* 61 1 103.0 100.0 103.0
5190 UBUNG1 132.00 61 5649 SYMBION-112 11.000* 61 1 242.6 200.0 121.3
5192 CHLNZ1 132.00* 61 5195 HALE1 132.00 61 1 96.4 85.0 113.4
5192 CHLNZ1 132.00* 61 5205 CHLNZ33 33.000 61 1 17.0 10.0 170.1
5192 CHLNZ1 132.00* 61 5205 CHLNZ33 33.000 61 2 8.5 5.0 170.1
5192 CHLNZ1 132.00 61 5289 MLNDZ1 132.00* 61 1 106.1 85.0 124.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 11.4 10.0 114.0
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 11.4 10.0 114.0
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 1 8.0 5.0 160.8
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 2 8.0 5.0 160.8
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 3 11.0 10.0 110.5
5293 KNDCH1 132.00* 61 5295 RSFMB1 132.00 61 1 43.0 40.0 107.5
5293 KNDCH1 132.00* 61 5616 TEGETAWATSIL33.000 61 1 173.0 100.0 173.0
5603 TEGETA 132.00 61 5604 TEGETA1 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5605 TEGETA2 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5606 TEGETA3 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5607 TEGETA4 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5608 TEGETA5 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5609 TEGETA6 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5610 TEGETA7 11.000* 61 1 17.4 15.0 116.0

111
 5603 TEGETA 132.00 61 5611 TEGETA8 11.000* 61 1 17.4 15.0 116.0
5603 TEGETA 132.00 61 5612 TEGETA9 11.000* 61 1 17.4 15.0 116.0

4.2.2 Year-2015 case

The major additions by year 2016 consist in establishing two 400kV corridors. The first is
composed of the Dar es Salaam-Tanga-Arusha single-circuit lines, and the second is
composed of the Iringa-Dodoma-Singida-Shinyanga double-circuit lines.
For voltage considerations, one of the two 400kV circuits from Iringa to Shinyanga needs
to be switched off. The amount of power generated at each plant was adjusted to
maintain the load/generation balance. Under normal conditions (N-0), all bus voltages
are within the limits (0.95 -1.05 pu), as defined in the planning criteria. No voltage
violations are recorded in the bulk system (220 kV and above.). Transmission line power
flows are also below the line normal capacity (rating A). A summary of (N-0) results is
given below.

Year - 2015 (N-0)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:30

2015 - PEAK LOAD - BASE CASE, TANZANIA
2011 LOAD FORECAST

BUSES WITH VOLTAGE GREATER THAN 1.0500:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
174 NYAMONGO 132.00 61 1.1076 146.21 5172 SONGEA 220.00 61 1.0610 233.42
5173 MADABA 220.00 61 1.0567 232.47 5175 MUSOM1 132.00 61 1.1390 150.35
5200 KIYNG66 66.000 61 1.0892 71.889 5201 KIYNG33 33.000 61 1.1436 37.740
5203 ARUSH33 33.000 61 1.0897 35.960 5212 MUSOM33 33.000 61 1.0985 36.252
5240 BUNDA132 132.00 61 1.0912 144.03 5241 BUNDA33 33.000 61 1.0853 35.814
5288 NYUMB66 66.000 61 1.0571 69.767 5290 KIYNG11 11.000 61 1.1099 12.209
5291 ARUSH66 66.000 61 1.0572 69.775
BUSES WITH VOLTAGE LESS THAN 0.9500:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
2177 SHNYANGA 220.00 61 0.9487 208.72 5177 SHNYN2 220.00 61 0.9487 208.72
5178 SHNYN1 132.00 61 0.8543 112.76 5179 TABOR1 132.00 61 0.0000 0.000
5215 TABOR33 33.000 61 0.0000 0.000 5581 BABAT66 66.000 61 0.8389 55.366
5585 KONDOA 66.000 61 0.4356 28.749 5586 MBULU 66.000 61 0.8267 54.565
5587 KARATU 66.000 61 0.8220 54.251 5600 KONDOA 33.000 61 0.0013 0.044
5601 MBULU 33.000 61 0.8178 26.989 5602 KARATU 33.000 61 0.8192 27.033

112
Year - 2015 (On Rating A)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:31

2015 - PEAK LOAD - BASE CASE, TANZANIA
2011 LOAD FORECAST

BRANCH LOADINGS ABOVE 100.0 % OF RATING SET A:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
2177 SHNYANGA 220.00 61 5178 SHNYN1 132.00* 61 1 62.1 60.0 103.5
2177 SHNYANGA 220.00 61 5178 SHNYN1 132.00* 61 2 62.1 60.0 103.5
2177 SHNYANGA 220.00 61 5178 SHNYN1 132.00* 61 3 67.9 60.0 113.2
2190 UBONGO1 132.00 61 5293 KNDCH1 132.00* 61 1 91.2 85.0 107.3
2580 BABATI 220.00* 61 5581 BABAT66 66.000 61 1 22.4 20.0 112.0
2580 BABATI 220.00 61 5581 BABAT66 66.000* 61 2 26.9 20.0 134.4
5178 SHNYN1 132.00 61 5179 TABOR1 132.00* 61 1 155.2 85.0 182.6
5186 KIDAT2 220.00* 61 5219 KIDATG1 11.000 61 1 64.3 60.0 107.2
5196 NWPNG1 132.00* 61 5216 TANGA33 33.000 61 1 38.0 20.0 190.0
5197 TANGA1 132.00* 61 5216 TANGA33 33.000 61 2 31.2 20.0 156.1
5198 SAME1 132.00* 61 5213 SAME33 33.000 61 1 9.3 7.0 133.2
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 1 28.3 20.0 141.3
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 2 28.3 20.0 141.3
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 14.9 10.0 149.3
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 14.9 10.0 149.3
5226 NYUMBG1 11.000 61 5288 NYUMB66 66.000* 61 1 5.0 5.0 100.2
5227 NYUMBG2 11.000 61 5288 NYUMB66 66.000* 61 1 5.0 5.0 100.2
5585 KONDOA 66.000 61 5600 KONDOA 33.000* 61 1 21.8 5.0 435.1
5585 KONDOA 66.000 61 5600 KONDOA 33.000* 61 2 21.8 5.0 435.1
5624 SOMANGATANES33.000 61 5635 SOMAFUNG 220.00* 61 1 75.3 50.0 150.5

The overloading at Kinyerezi-220kV Substation is negligible and can be overlooked now

as it will be fixed after 2015 during additions of new generation plants at Kinyerezi
Substation.
Contingency analysis (N-1) for this case was performed and no voltage or overloading
problems were encountered in the bulk system. Under contingency conditions the
voltage check was based on the (0.9-1.1 pu) limits and the loading was based of the
transmission line/transformer emergency capacity (rating B). A summary of (N-1) results
is given below.

113
Year 2015 (N-1)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:33

2015 - PEAK LOAD - BASE CASE, TANZANIA
2011 LOAD FORECAST

BUSES WITH VOLTAGE GREATER THAN 1.1000:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
174 NYAMONGO 132.00 61 1.1076 146.21 5175 MUSOM1 132.00 61 1.1390 150.35
5201 KIYNG33 33.000 61 1.1436 37.740 5290 KIYNG11 11.000 61 1.1099 12.209
BUSES WITH VOLTAGE LESS THAN 0.9000:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
5178 SHNYN1 132.00 61 0.8543 112.76 5179 TABOR1 132.00 61 0.0000 0.000
5215 TABOR33 33.000 61 0.0000 0.000 5581 BABAT66 66.000 61 0.8389 55.366
5585 KONDOA 66.000 61 0.4356 28.749 5586 MBULU 66.000 61 0.8267 54.565
5587 KARATU 66.000 61 0.8220 54.251 5600 KONDOA 33.000 61 0.0013 0.044
5601 MBULU 33.000 61 0.8178 26.989 5602 KARATU 33.000 61 0.8192 27.033

Year 2015 (On Rating B)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:57

2015 - PEAK LOAD - BASE CASE, TANZANIA
2011 LOAD FORECAST

BRANCH LOADINGS ABOVE 120.0 % OF RATING SET B:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
5178 SHNYN1 132.00 61 5179 TABOR1 132.00* 61 1 155.2 85.0 182.6
5196 NWPNG1 132.00* 61 5216 TANGA33 33.000 61 1 38.0 24.0 158.3
5197 TANGA1 132.00* 61 5216 TANGA33 33.000 61 2 31.2 24.0 130.1
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 14.9 12.0 124.4
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 14.9 12.0 124.4
5585 KONDOA 66.000 61 5600 KONDOA 33.000* 61 1 21.8 6.0 362.6
5585 KONDOA 66.000 61 5600 KONDOA 33.000* 61 2 21.8 6.0 362.6

It should be noted that in most cases for this voltage class (220kV and above), the line
thermal capability is not the main limiting factor for the amount of power transferred.
Transfer limits are usually dictated by both steady state stability and voltage stability
concerns.

114
4.2.3 Year-2020 case
The major addition by this year is the expansion of the 400kV network. The Iringa-
Shinyanga corridor expanded south to include Mufindi, Makambako and Mbeya and
North to join Arusha through Babati. Other additions include interconnectors of 400kV
with Mozambique, Kenya, Zambia and Uganda. The 220 kV network has also expanded
with the integration of the Rumakali, Kinyerezi I (150MW), Kinyerezi II (240MW),
Kinyerezi III (300MW), Kinyerezi IV (300MW), Solar(120MW), Mchuchumas (600MW),
Somanga Fungu (320MW), Mtwara (200MW), Rusumo Falls (27MW), Kiwira (200MW),
Malagarasi(45MW), Ngaka (300MW), and Ruhudji (358MW) power plants .
Under normal conditions (N-0), all bus voltages are within limits (0.95 -1.05 pu), as
defined in the planning criteria. No voltage violations are recorded in the bulk system
(220 kV and above.). Transmission line power flows are also below the line normal
capacity (rating A). A summary of (N-0) results is given below.

Year 2020 (N 0)
--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:47

2020 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BUSES WITH VOLTAGE GREATER THAN 1.0500:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
5172 SONGEA 220.00 61 1.0845 238.59 5173 MADABA 220.00 61 1.0815 237.93
5223 KIDAT33 33.000 61 1.0677 35.235 5707 RUMAKALI 220.00 90 1.0500 231.00
5717 KYAKA 220.00 90 1.0540 231.88

BUSES WITH VOLTAGE LESS THAN 0.9500:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
174 NYAMONGO 132.00 61 0.8669 114.43 5175 MUSOM1 132.00 61 0.9415 124.28
5198 SAME1 132.00 61 0.7722 101.93 5199 KIYNG1 132.00 61 0.7300 96.359
5200 KIYNG66 66.000 61 0.4769 31.474 5201 KIYNG33 33.000 61 0.0000 0.000
5202 ARUSH1 132.00 61 0.8838 116.67 5203 ARUSH33 33.000 61 0.8259 27.255
5212 MUSOM33 33.000 61 0.9321 30.759 5213 SAME33 33.000 61 0.6118 20.189
5288 NYUMB66 66.000 61 0.7602 50.174 5290 KIYNG11 11.000 61 0.0000 0.000
5291 ARUSH66 66.000 61 0.6894 45.497 5600 KONDOA 33.000 61 0.9303 30.700

Year -2020 (On Rating A)

--------------------------------------------------------------------------------

115
 PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:52
2020 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BRANCH LOADINGS ABOVE 100.0 % OF RATING SET A:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
5184 MUFND2 220.00 61 5619 COGEN 33.000* 61 1 68.9 50.0 137.8
5184 MUFND2 220.00 61 5626 MWENGA 33.000* 61 1 62.2 10.0 621.6
5186 KIDAT2 220.00 61 5219 KIDATG1 11.000* 61 1 153.4 60.0 255.6
5198 SAME1 132.00* 61 5213 SAME33 33.000 61 1 22.2 7.0 316.6
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 1 62.0 20.0 309.8
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 2 62.0 20.0 309.8
5199 KIYNG1 132.00* 61 5202 ARUSH1 132.00 61 1 89.7 85.0 105.5
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 51.5 10.0 514.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 51.5 10.0 514.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 3 51.5 20.0 257.4
5200 KIYNG66 66.000* 61 5288 NYUMB66 66.000 61 1 52.9 23.0 230.2
5200 KIYNG66 66.000* 61 5290 KIYNG11 11.000 61 1 51.2 15.0 341.3
5200 KIYNG66 66.000* 61 5291 ARUSH66 66.000 61 1 29.6 23.0 128.9
5202 ARUSH1 132.00 61 5203 ARUSH33 33.000* 61 1 20.4 20.0 102.0
5202 ARUSH1 132.00 61 5203 ARUSH33 33.000* 61 2 20.4 20.0 102.0
5202 ARUSH1 132.00* 61 5203 ARUSH33 33.000 61 3 21.6 20.0 107.9
5203 ARUSH33 33.000* 61 5291 ARUSH66 66.000 61 1 14.7 10.0 147.5
5203 ARUSH33 33.000* 61 5291 ARUSH66 66.000 61 2 14.7 10.0 147.5
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 1 6.6 5.0 132.7
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 2 6.6 5.0 132.7
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 3 10.3 10.0 102.8
5226 NYUMBG1 11.000 61 5288 NYUMB66 66.000* 61 1 26.3 5.0 525.6
5227 NYUMBG2 11.000 61 5288 NYUMB66 66.000* 61 1 26.3 5.0 525.6
5293 KNDCH1 132.00* 61 5295 RSFMB1 132.00 61 1 44.6 40.0 111.4
5625 MALAGALAS 220.00 61 7019 KIGOMA 220.00* 61 1 46.3 15.0 308.8

There are no buses with Voltages above 1.05.Contingency analysis (N-1) for this case
was performed and no severe voltage or overloading problems were encountered in the
bulk system. Under contingency conditions the voltage check was based on the (0.9-1.1
pu) limits and the loading was based of the transmission line/transformer emergency
capacity (rating B). A summary of (N-1) results is given below.

Year - 2020 (N-1)

--------------------------------------------------------------------------------

116
 PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:54
2020 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BUSES WITH VOLTAGE GREATER THAN 1.1000:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)

* NONE *

BUSES WITH VOLTAGE LESS THAN 0.9000:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
174 NYAMONGO 132.00 61 0.8669 114.43 5198 SAME1 132.00 61 0.7722 101.93
5199 KIYNG1 132.00 61 0.7300 96.359 5200 KIYNG66 66.000 61 0.4769 31.474
5201 KIYNG33 33.000 61 0.0000 0.000 5202 ARUSH1 132.00 61 0.8838 116.67
5203 ARUSH33 33.000 61 0.8259 27.255 5213 SAME33 33.000 61 0.6118 20.189
5288 NYUMB66 66.000 61 0.7602 50.174 5290 KIYNG11 11.000 61 0.0000 0.000

There are no buses with voltages less than 0.9 in the bulk system. The 132kV buses at
Nyamongo and Tabora experience low voltage due to long distances.

Year 2020 (On Rating B)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 12:54

2020 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BRANCH LOADINGS ABOVE 120.0 % OF RATING SET B:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
5184 MUFND2 220.00 61 5626 MWENGA 33.000* 61 1 62.2 13.0 478.2
5186 KIDAT2 220.00 61 5219 KIDATG1 11.000* 61 1 153.4 60.0 255.6
5197 TANGA1 132.00* 61 5216 TANGA33 33.000 61 2 15.6 10.0 156.1
5198 SAME1 132.00* 61 5213 SAME33 33.000 61 1 22.2 7.0 316.6
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 1 62.0 20.0 309.8
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 2 62.0 20.0 309.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 51.5 10.0 514.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 51.5 10.0 514.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 3 51.5 20.0 257.4

117
 5200 KIYNG66 66.000* 61 5288 NYUMB66 66.000 61 1 52.9 23.0 230.2
5200 KIYNG66 66.000* 61 5290 KIYNG11 11.000 61 1 51.2 15.0 341.3
5200 KIYNG66 66.000* 61 5291 ARUSH66 66.000 61 1 29.6 23.0 128.9
5203 ARUSH33 33.000* 61 5291 ARUSH66 66.000 61 1 14.7 10.0 147.5
5203 ARUSH33 33.000* 61 5291 ARUSH66 66.000 61 2 14.7 10.0 147.5
5226 NYUMBG1 11.000 61 5288 NYUMB66 66.000* 61 1 26.3 5.0 525.6
5227 NYUMBG2 11.000 61 5288 NYUMB66 66.000* 61 1 26.3 5.0 525.6
5625 MALAGALAS 220.00 61 7019 KIGOMA 220.00* 61 1 46.3 18.0 257.3

There are no buses with loading outside the limit in the bulk system of 220kV and 400kV.

4.2.4 Year-2035 case

This case represents the ultimate load flow case for the Tanzanias power system.
Generally, the importance of such a case is to plan the system in the early years (e.g. in
Y-2015 and Y-2020) with an eye on the foreseen ultimate configuration.
Both the 400 kV and 220 kV networks were expanded as many power plants were
considered. Since the generation is mostly concentrated in the South and coastal areas
and there are substantial load centers at North, reactive power compensation played an
important role in reaching satisfactory operating conditions for the system developed.
Under normal conditions (N-0), all bus voltages are within the limits (1.0-1.05 pu), as
defined in the planning criteria. No voltage violations are recorded in the bulk system
(220 kV and above.). Transmission line power flows are also below the line normal
capacity (rating A). A summary of (N-0) results is given below.

Year 2035 (N 0)
--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 14:26

2033 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BUSES WITH VOLTAGE GREATER THAN 1.0500:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
5202 ARUSH1 132.00 61 1.1171 147.46 5203 ARUSH33 33.000 61 1.1847 39.094
5708 RUHUDJI 220.00 90 1.0500 231.00 5717 KYAKA 220.00 90 1.0540 231.88

BUSES WITH VOLTAGE LESS THAN 0.9500:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
174 NYAMONGO 132.00 61 0.0000 0.000 2185 MBEYA 220.00 61 0.9471 208.36
5175 MUSOM1 132.00 61 0.0000 0.000 5185 MBEYA2 220.00 61 0.9471 208.36
5198 SAME1 132.00 61 0.9300 122.76 5199 KIYNG1 132.00 61 0.9254 122.15
5212 MUSOM33 33.000 61 0.0000 0.000 5213 SAME33 33.000 61 0.8587 28.337

118
 5240 BUNDA132 132.00 61 0.4864 64.207 5241 BUNDA33 33.000 61 0.4391 14.489
5290 KIYNG11 11.000 61 0.9225 10.147 7020 MPANDA 220.00 61 0.7909 173.99
7021 SUMBAWANGA 220.00 61 0.6561 144.34

Year -2035 (On Rating A)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 14:28

2033 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BRANCH LOADINGS ABOVE 100.0 % OF RATING SET A:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
2176 MWANZA 220.00* 61 5204 MWANZ1 132.00 61 1 108.3 60.0 180.5
2176 MWANZA 220.00* 61 5204 MWANZ1 132.00 61 2 108.3 60.0 180.5
2582 ARUSHA 220.00* 61 5202 ARUSH1 132.00 61 1 78.7 75.0 104.9
2582 ARUSHA 220.00* 61 5202 ARUSH1 132.00 61 2 78.7 75.0 104.9
5175 MUSOM1 132.00* 61 5240 BUNDA132 132.00 61 1 170.9 85.0 201.1
5182 MTERA2 220.00 61 5183 IRING2 220.00* 61 1 243.4 233.0 104.5
5184 MUFND2 220.00 61 5619 COGEN 33.000* 61 1 101.6 100.0 101.6
5189 UBUNG2 220.00* 61 5190 UBUNG1 132.00 61 1 223.8 150.0 149.2
5189 UBUNG2 220.00* 61 5190 UBUNG1 132.00 61 2 223.8 150.0 149.2
5198 SAME1 132.00* 61 5213 SAME33 33.000 61 1 21.3 7.0 304.6
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 1 58.0 20.0 290.0
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 2 58.0 20.0 290.0
5199 KIYNG1 132.00* 61 5202 ARUSH1 132.00 61 1 102.1 85.0 120.1
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 34.2 10.0 341.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 34.2 10.0 341.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 3 34.2 20.0 170.9
5200 KIYNG66 66.000* 61 5290 KIYNG11 11.000 61 1 24.8 15.0 165.5
5202 ARUSH1 132.00 61 5203 ARUSH33 33.000* 61 3 20.1 20.0 100.4
5204 MWANZ1 132.00 61 5240 BUNDA132 132.00* 61 1 178.0 85.0 209.4
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 1 8.8 5.0 175.9
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 2 8.8 5.0 175.9
5217 MLNDZ33 33.000 61 5289 MLNDZ1 132.00* 61 3 11.3 10.0 113.2
5240 BUNDA132 132.00 61 5241 BUNDA33 33.000* 61 1 16.8 15.0 112.3
5293 KNDCH1 132.00* 61 5295 RSFMB1 132.00 61 1 42.4 40.0 105.9

Contingency analyses (N-1) for this case were performed and no voltage or overloading
problems were encountered in the bulk system. Under contingency conditions the
voltage check was based on the (0.9-1.1 pu) limits and the loading was based of the

119
transmission line/transformer emergency capacity (rating B). A summary of (N-1) results
is given below.

Year - 2035 (N-1)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 14:30

2033 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST

BUSES WITH VOLTAGE GREATER THAN 1.1000:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
5202 ARUSH1 132.00 61 1.1171 147.46 5203 ARUSH33 33.000 61 1.1847 39.094

BUSES WITH VOLTAGE LESS THAN 0.9000:

BUS# X-- NAME --X BASKV AREA V(PU) V(KV) BUS# X-- NAME --X BASKV AREA V(PU) V(KV)
174 NYAMONGO 132.00 61 0.0000 0.000 5175 MUSOM1 132.00 61 0.0000 0.000
5212 MUSOM33 33.000 61 0.0000 0.000 5213 SAME33 33.000 61 0.8587 28.337
5240 BUNDA132 132.00 61 0.4864 64.207 5241 BUNDA33 33.000 61 0.4391 14.489
7020 MPANDA 220.00 61 0.7909 173.99 7021 SUMBAWANGA 220.00 61 0.6561 144.34

Year 2035 (On Rating B)

--------------------------------------------------------------------------------

PTI INTERACTIVE POWER SYSTEM SIMULATOR--PSS/E THU, OCT 25 2012 14:28

2033 - PEAK LOAD - BASE CASE, TANZANIA
2009 LOAD FORECAST
BRANCH LOADINGS ABOVE 120.0 % OF RATING SET B:

X--------- FROM BUS ----------X X---------- TO BUS -----------X CURRENT(MVA)

BUS# X-- NAME --X BASKV AREA BUS# X-- NAME --X BASKV AREA CKT LOADING RATING PERCENT
2176 MWANZA 220.00* 61 5204 MWANZ1 132.00 61 1 108.3 60.0 180.5
2176 MWANZA 220.00* 61 5204 MWANZ1 132.00 61 2 108.3 60.0 180.5
5175 MUSOM1 132.00* 61 5240 BUNDA132 132.00 61 1 170.9 85.0 201.1
5189 UBUNG2 220.00* 61 5190 UBUNG1 132.00 61 1 223.8 150.0 149.2
5189 UBUNG2 220.00* 61 5190 UBUNG1 132.00 61 2 223.8 150.0 149.2
5198 SAME1 132.00* 61 5213 SAME33 33.000 61 1 21.3 7.0 304.6
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 1 58.0 20.0 290.0
5199 KIYNG1 132.00* 61 5200 KIYNG66 66.000 61 2 58.0 20.0 290.0
5199 KIYNG1 132.00* 61 5202 ARUSH1 132.00 61 1 102.1 85.0 120.1
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 1 34.2 10.0 341.8
5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 2 34.2 10.0 341.8

120
 5200 KIYNG66 66.000* 61 5201 KIYNG33 33.000 61 3 34.2 20.0 170.9
5200 KIYNG66 66.000* 61 5290 KIYNG11 11.000 61 1 24.8 15.0 165.5
5204 MWANZ1 132.00 61 5240 BUNDA132 132.00* 61 1 178.0 85.0 209.4

4.3 Transmission System Costs

The major 400kV and 220kV, transmission additions required for the above Least Cost
Expansion Plan are illustrated in Figure 4.2, the costs of the transmission additions are
listed in Table 4-9. The total transmission costs in the Least Cost Expansion Plan are
US$ 2,653.57million.

121
Table 4- 9: Phased transmission lines cost estimates
No. of Length Unit Cost Total Cost 2012 -- 2016 - 2021 -
From To Kv Comments
Circuits (km) k$/km M$ 2015 2020 2035
Shinyanga Singida 400 2 235.00 378.23 88.88 71.11 17.78 -
Singida Dodoma 400 2 245.00 378.23 92.67 37.07 55.60 -
Dodoma Iringa 400 2 175.00 378.23 66.19 26.48 39.71 -
Dar es salaam Tanga 400 2 283.50 378.23 107.23 32.17 75.06 -
Arusha Tanga 400 2 395.50 378.23 149.59 44.88 104.71 -
Mlandizi Zinga 220 1 48.00 220.00 10.56 10.56 - -
Mtwara S/S 200 Plant Station 220 1 20.00 220.00 4.40 3.30 1.10 -
Mkuranga Power Plant 220 1 10.00 220.00 2.20 2.20 - -
Kiwira Mbeya 220 2 120.00 245.85 29.50 - 23.60 5.90 out of plant line
Kinyerezi Ubungo 220 1 15.00 220.00 3.30 0.66 2.64 - out of plant line
Somanga Kinyerezi 220 1 198.00 220.00 43.56 34.85 8.71 -
Babati Arusha 400 2 162.00 378.23 61.27 30.64 30.64 -
Singida Babati 400 2 150.00 378.23 56.73 28.37 28.37 -
Arusha Kenya borders 400 2 113.30 378.23 42.85 21.43 21.43 -
Iringa Mufindi 400 1 175.00 294.18 51.48 - 25.74 25.74
Mufindi Makambako 400 1 73.00 294.18 21.48 - 10.74 10.74
Ubungo Stieglers 400 1 200.00 294.18 58.84 17.65 41.19 out of plant line
Mbeya Rumakali 220 1 150.00 220.00 33.00 - 23.10 9.90 out of plant line
Makambako Rumakali 200 1 200.00 220.00 44.00 - 30.80 13.20 out of plant line
Mufindi Ruhudji 220 1 100.00 220.00 22.00 - 6.60 15.40 out of plant line
Kihansi Ruhudji 220 1 150.00 220.00 33.00 - 9.90 23.10 out of plant line
Buly Geita 220 1 150.00 220.00 33.00 9.90 16.50 6.60
Nyakanazi Kigoma 220 1 280.00 220.00 61.60 18.48 30.80 12.32
Geita Nyakanazi 220 2 133.00 245.23 32.62 9.78 16.31 6.52
Nyakanazi Rusumo 220 1 50.00 220.00 11.00 - 9.35 1.65
Sumbawanga Mbeya 220 1 260.80 220.00 57.38 17.21 28.69 11.48
Mwanza Shinyanga 400 2 140.00 378.23 52.95 37.07 15.89
Mbeya Makambako 400 1 147.00 294.18 43.24 - 30.27 12.97
Makambako Mchuchuma 400 1 200.00 294.18 58.84 - 41.19 17.65 out of plant line
Mufindi Mchuchuma 400 1 220.00 294.18 64.72 - 45.30 19.42 out of plant line
Stieglers Dar-2 400 1 160.00 294.18 47.07 - - 47.07 out of plant line
Dar-2 Morogoro 400 2 179.00 378.23 67.70 - 54.16 13.54
Makambako Songea 220 1 250.00 220.00 55.00 33.00 22.00 -
Ubungo Dar-2 400 1 50.00 294.18 14.71 - - 14.71
Rusumo Kakono 220 1 150.00 220.00 33.00 - - 33.00
Rusumo Nyakanazi 220 1 168.00 220.00 36.96 - - 36.96
Masigira Makambako 220 2 180.00 245.85 44.25 - - 44.25 out of plant line
Taveta ikondo 220 2 5.00 245.85 1.23 - - 1.23 out of plant line
Ikondo Mufindi 220 2 150.00 245.85 36.88 - - 36.88 out of plant line
Kihansi Mpanga 220 2 40.00 245.85 9.83 - - 9.83 out of plant line
Masaka Mwanza 220 1 250.00 220.00 55.00 44.00 11.00
Arusha Kenya borders 400 2 414.40 378.23 156.74 62.70 94.04 - ZTK
Zambia bordersMbeya 400 2 120.00 378.23 45.39 - - 45.39 Interconnection
Wind Project Singida 220 1 10.00 220.00 2.20 - 2.20 -
Solar I Project Dodoma 220 1 10.00 220.00 2.20 - 2.20 -
Coastal Coal Tanga 220 1 10.00 220.00 2.20 - 2.20 -
Dar Morogoro 400 1 192.00 294.18 56.48 - 33.89 22.59
Morogoro Dodoma 400 1 259.00 294.18 76.19 - 45.72 30.48
Ngaka Makambako 400 1 200.00 294.18 58.84 - 47.07 11.77
Somanga Lindi/Mtwara 220 1 353.00 220.00 77.66 - 38.83 38.83
Kigoma Sumbawanga 220 1 485.00 220.00 106.70 - 106.70 -
Malagalasi kigoma 220 1 20.00 220.00 4.40 - 3.52 0.88
Solar II Project Shinyanga 220 1 10.00 220.00 2.20 - 2.20 -
Local Coal Dar es salaam 400 1 15.00 220.00 3.30 - - 3.30
Mtwara Songea 220 1 656.00 220.00 144.32 - - 144.32
-
Line upgrades -
Shinyanga Bulyanhulu 220 2 180.00 240.00 43.20 - 43.20 -
Dodoma Mtera 220 1 180.00 197.00 35.46 - 35.46 -
Iringa Kihansi 220 1 180.00 197.00 35.46 - - 35.46
Mbeya Makambako 220 1 180.00 197.00 35.46 - - 35.46

TOTAL 2,728.11 494.77 1,366.74 866.60

122
Table 4- 10: Phased transformers cost estimate
HV/LV Rating Total
Substation No. of T.x 2012 - 2015 2016 - 2020 2021 - 2035
(kV) MVA Cost M$
Shinyanga 400/220 250/332 4 13.97 6.99 5.59 1.40
Singida 400/220 100/133 2 2.84 1.14 1.70
Dodoma 400/220 150 2 3.16 1.26 1.89
Iringa 400/220 150/200 2 4.20 1.68 2.52
Arusha 400/220 250/332 4 13.97 5.59 8.38
Tanga 400/132 100 2 2.10 0.84 1.26
Morogoro 400/220 150/200 2 4.11 1.64 2.47
Kinyerezi 400/220 250/300 2 10.51 4.20 6.30
Makambako 400/220 150/200 2 4.20 0.84 3.36
Mufindi 400/220 150/200 3 6.30 5.04 1.26
Ubungo2 400/220 250/332 4 0.55 0.38 0.16
Somanga 200/33 100/130 2 2.84 2.27 0.57
Mwanza 400/220 250/332 3 10.51 4.20 6.30
Mbeya 400/220 100/132 2 2.84 1.14 2.27
Tanga 400/220 150/200 4 8.41 2.52 5.88
Babati 400/220 100/132 2 2.84 0.57 2.27
Dar-2 400/132 250/132 4 13.97 13.97
Sumbawanga 220/33 45/60 2 2.84 0.85 1.99
Mpanda 220/33 45/60 2 2.84 0.85 1.99
Kigoma 220/33 45/60 2 2.84 0.85 1.99
Nyakanazi 220/33 45/60 2 2.84 0.85 1.99
Songea 220/33 45/60 2 2.84 1.99 0.85
Namtumbo 220/33 45/60 2 2.84 0.85 1.99
Tunduru 220/33 45/60 2 2.84 0.85 1.99
Madaba 220/33 45/60 2 2.84 1.99 0.85
Mtwara 220/33 100/132 2 2.84 0.85 1.99
Mkuranga 220/33 250/200 2 2.84 2.84
Zinga 220/33 250/200 2 2.84 2.84
Mtwara 220/33 415/300 2 2.84 2.27 0.45

Total 141.38 42.64 61.70 37.50

(1) Generator step up transformers are not included

(2) Cost estimate is based on the transformer highest rating

123
Table 4- 11: Phased Substation Cost Estimate
Switchgear No. of No. of Unit Cost Total
Substation 2012-2015 2016-2020 2021-2035
(kV) Positions Bays M$/bay Cost M$
Shinyanga 400 9 4 2/3 6.83 31.87 19.12 6.37 6.37
Singida 400 11 5 2/3 6.83 38.70 23.22 7.74 7.74
Dodoma 400 8 4 6.83 27.32 16.39 5.46 5.46
Iringa 400 9 4 2/3 6.83 31.87 19.12 6.37 6.37
Arusha 400 10 5 6.83 34.15 20.49 6.83 6.83
Tanga 400 12 6 6.83 40.98 24.59 8.20 8.20
Somanga 220 5 2 2/3 5.25 14.00 8.40 5.60 -
Makambako 400 5 2 2/3 6.83 18.21 7.29 9.11 1.82
Mufindi 400 8 4 6.83 27.32 - 21.86 5.46
Ubungo2 400 6 3 6.83 20.49 - 14.34 6.15
Babati 400 6 3 6.83 20.49 - 12.29 8.20
Geita 220 6 3 5.25 15.75 - 11.03 4.73
Nyakanazi 220 8 4 5.25 21.00 - 14.70 6.30
Rusumo 220 4 2 5.25 10.50 - 7.35 3.15
Kinyerezi 400 12 6 6.83 40.98 - 28.69 12.29
Mwanza 400 7 3 2/3 6.83 25.04 - 5.01 20.03
Mbeya 400 5 2 2/3 6.83 18.21 - 3.64 14.57
Dar-2 400 8 4 6.83 27.32 - 5.46 21.86
Mtwara 220 6 3 5.25 15.75 4.73 11.03 -
Sumbawanga 220 6 3 5.25 15.75 4.73 11.03 -
Mpanda 220 6 3 5.25 15.75 4.73 11.03 -
Kigoma 220 6 3 5.25 15.75 4.73 11.03 -
Nyakanazi 220 6 3 5.25 15.75 4.73 11.03 -
Songea 220 6 3 5.25 15.75 11.03 4.73 -
Namtumbo 220 6 3 5.25 15.75 - 4.73 11.03
Tunduru 220 6 3 5.25 15.75 - 4.73 11.03
Madaba 220 6 3 5.25 15.75 11.03 4.73 -
Zinga 220 6 3 5.25 15.75 15.75 - -
Mtwara 220 6 3 5.25 15.75 13.39 2.36 -
Mkuranga 220 6 3 5.25 15.75 15.75 - -

TOTAL 653.22 229.19 256.44 167.59

Source: Team Calculation

(1) Cost estimate is based on a breaker and a half scheme.

(2) Switchgear associated with the power plants is not included.
(3) Subs transmission or distribution switchgear is not included.
(4) Expansion of existing substation is not included.

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 Table 4- 12: Phased Reactive Compensation Cost Estimate
SVC BSC
Substation
M VAr Cost MVAr Cost
Shinyanga 50/-50 5.26 350 5.53
Iringa 50/-50 5.26
Arusha 50/-50 5.26 350 5.53
Geita 50/-50 5.26 100 1.58
Mwanza 50/-50 5.26 400 6.32
Tanga 50/-50 5.26 250 3.95
Singida 50/-50 5.26 100 1.58
Nyakanazi 50/-50 5.26 150 2.37
Bulyahulu 50/-50 5.26
Dodoma 50/-50 5.26 100 1.58
Ubungo 50/-50 5.26 400 6.32
Mtwara 25/-25 2.63 100 1.58
Songea 25/-25 2.63
Kigoma 25/-25 2.63
Madaba 25/-25 2.63
Mpanda 25/-25 2.63
Sumbawanga 25/-25 2.63

Total - SVC 73.57 Total - BSC 36.34

Total 109.91 MUSD

Resource: Team Calculation

4.3.1 Summary of cost estimate

The overall phased costs for the transmission lines, transformers, substation and reactive power
compensation over the planning horizon (2012-2035) are summarized in table 4.13 below;

Table 4- 13: Cost Estimate Summary

Option, MUSD
Cost of Total
2012-2015 2016-2020 2020-2035
Transmission Lines 494.77 1,366.74 866.60 2,728.11
Transformers 42.64 61.70 37.50 141.38
Substation 229.19 256.44 167.59 653.22
Compensation 27.48 27.48 54.96 109.91
Diatribution System Loss
Remediation 75.70 75.70
Total 869.77 1,712.36 1,126.65 3,708.32
% of Each Phase 23.45% 46.18% 30.38% 100%

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 (1) Out of Hydro Power Plant Lines are NOT considered.
(2) Compensation is divided as 25% in the first two periods and 50% in the third.

DISTRIBUTION PLANNING
The Power System Master Plan objective seeks to promote efficient operation and
investment in the electricity sector for the long term interest of consumers from the
perspective of reliability, price, safety and quality of electricity services.

The electricity network infrastructure (both transmission and distribution) plays a critical
role in delivering services to consumers and driving efficient and competitive outcomes in
the wholesale (Zanzibar) and retail segments of the market. Unreliable infrastructure
which does not meet the needs of the community will have significant adverse effects on
the public and the economy. An appropriate planning process is essential to ensure
ongoing efficient and reliable supply of electricity.

Existing Distribution System

The distribution system network voltages are 33kV and 11kV which serve as the
distribution back-bone stepped-down by distribution transformers to 400/230 volts for
residential, light commercial and light industrial supplies. Heavy industries are supplied
at 11 kV and 33 kV. Until December 2012, there were more than 1,037,859 customers
linked by these distribution lines in which 335,322 are in Domestic Low Usage Tariff
(D1), 700,048 are in General usage Tariff (T1), 2,096 are in Low voltage maximum
Demand (MD) usage tariff (T2), 391 are in High Voltage Maximum Demand (MD) usage
tariff (T3), 1 as the Bulk sales to Zanzibar (T5), 1 as the Bulk Sales to Kahama Mining
(T8).

The total length of the 33kV lines is 12,602 km, 11kV lines are 6,392 km and 400/230
Volts lines are 26,565 km. Total number of transformers in the distribution system is
more than 12,000. All of these facilities were critically in poor condition, to date,
distribution networks (including 33 & 11kV, LV lines and distribution substations) in Dar
es Salaam, Kilimanjaro and Arusha are being rehabilitated and reinforced under the
TEDAP project. In other regions, rehabilitation initiatives by Finland and AFDBs
Electricity V project are also playing a great role in minimizing the distribution system
losses and new network extensions are also being carried out where it is appropriate. In
other 7 regions the same activities are being carried out under the MCC project. On the
other hand, though with its limited resources, TANESCO under its routine activity
programs carries out planned and unplanned maintenance works on the distribution
system.

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System Losses
Despite the above efforts, there are still high energy losses in Transmission and
Distribution Systems. This alarming situation called for a need to have a study to identify
the problem areas and their causes so as to take the necessary remedies to minimize
the losses. A study was commissioned in 2010 by Millennium Challenge Account
Tanzania to carry out a technical and commercial loss-reduction study of the
transmission and distribution of TANESCOs electrical power system.

The objectives of the study were to:

a) Reduce the current total level of technical and non-technical losses to 18% by
2013 in TANESCO system from an estimated loss level of 25%
b) Establish the level of system losses and accurately allocate these losses into
technical and non-technical, and also identify the main sources and causes of
these losses.
c) Identify the cost benefit of reducing losses.

The Sales Gap is first determined in terms of the difference between the inputs to and
outputs from the Transmission and Distribution (T&D) system. By performing load flow
analysis on the individual levels in the T&D system, the technical loss rate for each such
level was determined, in terms of the technical losses as a percentage of the input to that
level. The loss rates derived are summarized in table below:

Table 4- 14: System Loss Rates

System Level Losses
Transmission 5.3%
Distribution 8.1%
Total Technical Loss 13.4%
Commercial Loss 11.6%
Total Loss 25.0%
Source: COSS 2010

Applying the loss rates to the through flows for each level in the system makes it
possible to derive the technical losses at each level. These technical losses are
aggregated for the system. The technical losses are subtracted from the sales gap,
defined by the difference between units sent out and actual sales. This residue
comprises commercial losses. A separate analysis was performed for the condition of
the system at peak time. This is significant because it determines the sizing or capacity
(kVA) requirements in assigning costs to the various flows through the system. Applying

127
these loss rates to the flows through the T&D system, the technical losses for each level
in the system were calculated.

Technical Loss Reduction Program 2011 to 2013

Specific Remedial Measures
The most efficient way to improve technical loss performance on both the transmission
and distribution networks is to amend the processes for network development to build
efficiency into the networks through normal network development. This takes time to
produce results. To achieve significant technical loss reduction in the short term
additionally requires a specific program of remedial measures targeting the most
problematic network areas. These measures are summarized as follows:

i.Transmission Network
There are four transmission reinforcement projects proposed to be commissioned by
year 2015 that will definitely improve the transmission technical losses to the allowable
loss level. These projects include the 400 kV Grid Backbone (Iringa to Shinyanga), 400
Kv Dar es Salaam Chalinze Tanga Arusha, 400 kV Iringa Mbeya, and 400 kV
Dar es Salaam Morogoro Dodoma. The higher voltage level of 400 kV will transfer
more power with less losses compared to the existing 220kV network.

ii.Distribution Network
To achieve significant technical loss reduction in the short term additionally requires a
specific program of remedial measures targeting the most problematic networks. The
program is proposed to start from year 2013 to 2015 with an objective to minimize
energy losses from a level of 20.65% to the acceptable level of 18%. These measures
including the respective associated costs and loss savings (for distribution network) are
summarized as follows:

a) 11kV Networks
Power factor correction with capacitor installation.
11to 33kV voltage conversion for heavily loaded 11kV lines.

b) LV Networks
New MV/LV transformers to relieve heavily loaded LV networks.
Reconductoring other heavily loaded LV feeders that do not qualify for a new
transformer.
c) Capacitors
Capacitor installation to improve network power factors provides very cost
effective loss reduction. The overall system impact is relatively small but the costs

128
 are very attractive, saving MVA capacity, reducing losses and improving voltage.
It is economical to correct power factors in excess of 0.95 up to about 0.98.
The proposed strategy is:

To install fixed capacitors close to the middle of 11kV main feeders to fully
compensate reactive power at minimum load.
Within next 2 years target all 11kV lines with 2MVA or more of load and Power
Factor of 0.88 or less
In years 3 - 5 target 11kV lines with 2MVA or more of load and Power Factor
of 0.90 or less
To correct PF above 0.95 or towards 0.98 increasingly requires switched
capacitors on 11kV bus bars in HV/MV substations but these can still be
economical.

d) 11 to 33kV Voltage Conversion

Capacitor installation yields a modest improvement in 11kV network loss

performance at low cost. However it does not address the more seriously over
loaded networks. These require more significant development.

The options for relieving heavily loaded MV networks include:

New HV/MV substation out in the network and re-sectionalizing existing load
onto the new substation.
11kV to 33kV voltage conversion.
New 11kV feeder to relieve existing feeder or re-conductoring the heavier
loaded sections of the feeder.
33kV voltage conversion yields more significant loss reduction benefit. Losses
are reduced by some 90%. Conversion costs are also more predictable and
will generally be lower than for the construction of a new substation. From a
loss reduction perspective 33kV voltage conversion is a much more attractive
option and is taken as the preferred major 11kV network development option.

e) New MV/LV Transformers

The major development option for overloaded LV networks is to install a new
transformer out in the network near the centre of load congestion. Existing LV
feeders are split and portions are connected to the new transformer to redistribute
load between the available transformers. This provides significant LV load relief
and approximately 75% loss reduction on the relieved feeder(s).

129
 f) Re-conductoring LV Networks:
There are situations that do not justify such major development as a new
transformer but can still benefit from a degree of re-conductoring. This is an
additional development option. Approximately two thirds of the losses on a typical
LV feeder with distributed load arise in the first one third of the main feeder length.
Re-conductoring this first third section can reduce the overall feeder losses by
about a third. The idea is to run a length of 4x95mm2 bundle conductor on the
existing poles and re-distribute some of the existing load onto this.

To achieve significant technical loss reduction in the short term additionally requires a
specific program of remedial measures targeting the most problematic network areas.
The program is proposed to start from year 2013 to 2015 with an objective to minimize
energy losses from a level of 20.65% to the acceptable level by then of 18%; this will be
complemented by the reduction in transmission losses resulting from the introduction of
400 kV transmission lines in the system.

130
 Table 4- 15: Calculation of Energy Loss Savings
Specific Loss Remediation Units 2013 2014 2015 Total
11kV Overhead Networks
Convert to 33kV:
11kV Line Length km 200.00 250.00 315.00 765.00
Development Cost US$M 10.80 14.00 17.00 41.80
Loss Saving - Energy MWh 19,320.00 24,150.00 30,429.00 73,899.00
Loss Saving - Capitalized Value US$M 47.00 59.00 74.00 180.00
Install Fixed 11kV Capacitors:
No 11kV Feeders 66.00 66.00 66.00 198.00
Total Capacitors MVAR 60.00 60.00 60.00 180.00
Development Cost US$M 0.90 0.90 0.90 2.70
Loss Saving - Energy MWh 2,977.00 2,977.00 2,977.00 8,931.00
Loss Saving - Capitalized Value US$M 7.30 7.30 7.30 21.90
LV Networks
New MV/LV Substations: 86.00 100.00 100.00 286.00
Development Cost US$M 3.40 4.00 4.00 11.40
Loss Saving - Energy MWh 6,453.00 7,503.00 7,503.00 21,459.00
Loss Saving - Capitalized Value US$M 15.50 18.10 18.10 51.70
Reconductor LV Feeders: -
LV Feeder Length km 500.00 700.00 780.00 1,980.00
Development Cost US$M 5.00 7.00 7.80 19.80
Loss Saving - Energy MWh 14,621.00 20,470.00 22,809.00 57,900.00
Loss Saving - Capitalized Value US$M 23.92 33.49 37.32 94.72
Totals
Development Cost US$M 20.10 25.50 29.80 75.70
Loss Saving - Energy MWh 43,371.00 55,100.00 63,718.00 162,189.00
Loss Saving - Capitalized Value US$M 93.82 117.69 136.82 348.32

These measures including the respective associated costs and loss savings (for
distribution network) are summarized in Table 4-16.

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Table 4- 16: System Loss Remedy Costs

Source: COSS

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 CHAPTER FIVE

5 ECONOMIC AND FINANCIAL ANALYSIS

This chapter presents economic and financial analysis of the proposed power investment
plan. It identifies planning criteria used in the analysis which covers three major themes,
namely:
a) An estimate of the long-run marginal cost of generation, transmission and
distribution
b) An assessment of whether and when the isolated load centres should be
connected to the main grid; and
c) A financial analysis of the proposed generation and transmission expansion plans

Furthermore, the chapter shows the costs involved in the implementation of the
proposed plan so that the players can identify the projects to implement either
independently or in partnership. The modality of implementing these projects can either
be purely Government or purely private sector or in partnership (PPP). The
Governments role in this respect will be two folds: to mobilise financial resources to
implement some of the earmarked projects and to create conducive environment of
attracting investors in the power sector. In additional, this chapter also analyse
economics of interconnecting the isolated load centres as well as estimating long run
marginal cost.

5.1 Main Assumptions

5.1.1 Discount rate
The discount rate may be considered as the time value of money, and is used to
calculate the present value of a series of future costs. The selection of an appropriate
discount rate value should reflect the opportunity cost of capital, and therefore it tends to
be higher in regions where capital is relatively scarcer. The choice of discount rate is
discretionary. Use of a higher discount rate will tend to favour thermal plants in cost
comparisons with hydro due to their lower initial costs, but higher yearly operating costs,
while lower interest rates would favour hydroelectric plants, where most of the
expenditures are at the beginning of the project cycle. A real discount rate of 10 percent
(i.e. excluding inflation) was used in converting capital costs into equivalent annual costs
over the life of an asset and for comparisons of unit generation costs for initial screening
of options.

5.1.2 Debt Equity Ratio

The debt equity ratio of 70:30 is a standard ratio preferred by most financiers/banks, and
has been adopted in this study. Although somehow it may be difficult for the project
developers (in this case, the Government and/or private sector) to raise such equity, it
reflects their commitment towards implementation of the projects and its operations to be
able to service the debt.

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5.1.3 Interest Rate
Different source of finance have different cost of the loan to be offered. For the purpose
of this assignment, an interest rate of 7 percent has been assumed which is considered
to represent average cost of debt in Tanzania.
5.1.4 Interest During Construction (IDC).
This is interest incurred directly as the result of investment cost obtain as loan. This has
impact on the overall project cost as it is added on the project cost by capitalizing them.
A 7% per annum equivalent to the interest rate has been assumed in calculating IDC of
projects by considering 70% of the projects cost will be secured in the form of loan.

5.1.5 Inflation Rate on Capital Cost

Most of the costs in electricity projects are based in US dollar. The analyses and
comparisons made in this PSMP process are based on constant prices. However, it
should be noted that since projects are implemented one after another during the plan
horizon, it is obvious that inflation will have impact on the total cost of implementing this
Plan. In this case, inflation rate of 2.5 percent per year has been assumed, which is in
line with USA CPI index.

5.2 Financial Analysis

This section presents the approach and results of the financial analysis. It follows from
the economic analysis and long run marginal costs. The financial analysis looks at the
overall Tanzanian PSMP from the financial point of view and takes into consideration the
financing for the plan, the total amount of required debt and equity, the interest during
construction, and inflation. During the financial forecast period the annual interest costs,
repayment of debt, and returns to equity investors and income taxes are presented.

5.2.1 Summary of Financial Analysis

The financing requirement to implement the PSMP in the short run (2013 2017) is
about US$ 11.3 billion, the breakdown of which is indicated in Table 5.1 and 5.2 below.

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Table 5- 1: Term Financing Requirement (2013 2017) USD Million
Installed Planned On- Project
Investments 2012 2013 2014 2015 2016 2017
Capacity MW Line Year Total
Mwanza MSD 60 2013 80 80
Kinyerezi I 150 2014 188 188
Somanga Fungu II (CC 320) 210&110 2014 &16 135 91 84 55 365
Mufindi Cogen 30 2015 21 14 6 41
Sao Hill Cogen 10 2015 2 8 6 16
Kinyerezi II 240 2015 259 173 432
ZINGA BAGAMOYO 225 2015 138 138 276
MKURANGA 250 2015 100 100 200
Kiwira - 1 200 2017 62 123 123 103 410
Coastal Coal - I 300 2017 215 431 431 359 1,435
Wind I 50 2016 19 62 44 125
Ngaka Coal - Phase I 200 2017 71 143 143 119 476
SOLAR- 1 60 2016 43 144 101 289
Stiegler's Phase-1 300 2023 38 66 38 66 66 272
Kinyerezi III 300 2016 214 143 357
Wind II 50 2017 19 62 44 125
Mchuchuma - I 300 2018 115 231 231 192 769
Kiwira II 200 2018 62 123 123 103 410
Rusumo Hydro 27 2018 6 28 45 34 113
Ruhuji Hydro 358 2021 49 85 98 244 476
Mtwara 400 400 2017 289 192 481
Mchuchuma II 400 2018 32 95 32 159
Mchuchuma III 400 2018 32 95 32 159
SOLAR- II 60 2018 43 144 101 289
Kakono Hydro 53 2019 5 24 39 68
Mpanga Hydro 144 2022 11 22 25 58
Ngaka Coal - Phase II 200 2019 71 143 214
Malagarasi 45 2020 8 38 46
Rumakali Hydro 520 2025 30 52 81
Generation Investments 103 1,290 1,947 2,046 1,923 1,099 8,409
Transmission Investments 161 161 161 161 161 806

Total Investments 103 1,452 2,108 2,208 2,084 1,260 9,215

Cum. Investments 103 1,555 3,663 5,871 7,955 9,215 9,215

Financing
Debt 70% 72 1,016 1,476 1,545 1,459 882 6,451
Equity 30% 31 435 633 662 625 378 2,765

NB: 1 Total project costs marked with red colour are partial cost since construction of
these projects goes beyond 2017

135
Table 5- 2: Summary of short term financing requirement (2013 -2017)
Installed Planned On-
Investments 2012 2013 2014 2015 2016 2017 Total
Capacity MW Line Year
Generation Investments 103 1,290 1,947 2,046 1,923 1,099 8,409
Transmission Investments 161 161 161 161 161 806
Distribution Investments 25 348 506 530 500 302 2,212
Total Investments 128 1,800 2,615 2,737 2,584 1,563 11,427
Cum. Investments 128 1,928 4,542 7,280 9,864 11,427 11,427

Financing
Debt 70% 89 1,260 1,830 1,916 1,809 1,094 7,999
Equity 30% 38 540 784 821 775 469 3,428

The breakdown of the total capital expenditures, inflation and interest during construction
for generation and transmission plan over the period 2011 to 2035 is given below in
Table 5.3.

Table 5- 3: Breakdown of Capital Costs

Cost Item (Mill. USD) (Mill. USD) (%) (%)

1 Capital Costs without Inflation and IDC
Generation 17,518 63.3 42.8
Transmission 3,708 13.4 9.1
Distribution 6,460 23.3 15.8
Total Capital Cost (excl. Inflation & IDC) 27,687 100.0 67.7

(Mill. USD) (Mill. USD) (Mill. USD)

2 Capital Costs with Inflation (Inflation)
Generation 17,518 8,221 25,740
Transmission 3,708 1,414 5,122
Distribution 6,460 1,693 8,153
Inflation 11,329 27.7
Total Capital Cost (incl. Inflation) 39,015

3) Capital Costs with Interest During Construction

Interest During Construction 1,903 4.9
Total Capital Costs (incl Infl & IDC) 40,919 100.2

Inflation
The table shows that based on annual inflation of 2.5 %, the overall capital costs will
increase by 11,329 million Dollars (accumulation), an increase of 40.9%.

136
Interest during construction
The Interest During Construction (IDC) for the generation, transmission and distribution
over the period 2011 to 2035 amounts to 1,903 million USD, which increases the overall
cost of the capital expenditures by 6.9%.

Impact of financing of capital expenditures

The financing of capital expenditures is given below and is based on the 70% debt and
30% equity financing of the draw-downs for capital expenditures. The IDC is based on
the interest rate of 7% for new loans and the assumptions made on capitalizing the
capital works in progress.

Table 5- 4: Breakdown of Overall Financing Requirements for Capital Costs

Capital Costs and Financing Items (Mill. USD) (%)

Total Capital Cost without IDC 39,015

1 Drawdowns for Financing Capital Expenditures

Debt financed 27,311 70.0
Equity financed 11,705 30.0
Total Financing without IDC 39,015 100.0

2) Overall Financing including IDC

IDC 1,903 71.4
Total Debt (Drawdown +IDC) 29,214 28.6
Equity 11,705 100.0
Total Financing including IDC 40,919

The IDC is added to the debt principal and results in increase in total debt. The increase
in debt is marginal since this is the IDC over the study period. At the same time as the
IDC is accumulating, the overall debt portion decreases during the study period since the
principal including previous accumulated IDC is also being repaid.
Unit cost of supply of power
The unit cost of supply derived on a financial basis for the new power was calculated for
each of the years of the study period by dividing the Annual Revenue Requirements
(ARR) by the energy supplied. The financial cost of supply is derived on an accounting
basis and includes the depreciation expense, financing costs, income taxes and net
income for the company.
The Financial Unit Cost of Supply is obtained by dividing the ARR by the energy supplied
for that year. The ARR, energy supplied and unit cost of supply for each year is
presented below. The unit costs of supply start at 1.4 US$cents/kWh in 2013, and rise
rapidly to 4.5 US$cents/kWh in 2014, and then with fluctuations but with overall
increases to 17.9 US$cents/kWh in 2021 before falling back to 12.7 in 2029 and
remaining in that range till 2035. It should be noted that the ARR considered in this

137
analysis is to carter for the new investments only and not for the overall ARR of
TANESCO.
Table 5- 5: Annual Revenue Requirements, Energy Supplied and Unit
Cost of Supply
Year ARR Energy Unit Cost of
(Mill. USD) Supply Supply (US
(GWh) c/kWh)
2013 82 5,888 1.4
2014 312 6,973 4.5
2015 621 8,473 7.3
2016 1,176 10,018 11.7
2017 1,804 11,395 15.8
2018 2,165 12,320 17.6
2019 2,343 13,195 17.8
2020 2,570 14,127 18.2
2021 2,700 15,092 17.9
2022 2,821 16,176 17.4
2023 2,902 17,352 16.7
2024 3,028 18,645 16.2
2025 3,094 20,087 15.4
2026 3,232 21,629 14.9
2027 3,338 23,328 14.3
2028 3,496 25,214 13.9
2029 3,707 27,217 13.6
2030 3,990 29,473 13.5
2031 4,267 31,896 13.4
2032 4,376 34,578 12.7
2033 4,603 37,533 12.3
2034 4,670 40,804 11.4
2035 4,494 44,470 10.1

5.3 Estimate of Long Run Marginal Costs

From an economic perspective, the long run marginal cost is the cost of supplying an
incremental unit of electricity (kWh) to the system at a future date. In practice, such a
cost cannot be determined directly mainly due to the fact that the investment required to

138
meet the incremental kWh is lumpy. Adding to the complexity, it is the system as a
whole that supplies the incremental kWh.

The rationale for using marginal costs as a basis for electricity pricing is to direct the
customer, through the price charged for electricity, towards the most efficient use of
resources available. Theoretically, if the price is equal to the marginal cost of supply, an
optimal allocation of resources takes place and economic efficiency will result.

Marginal cost is one of many considerations used in the development of electricity tariffs.
The long run marginal costs (LRMC) of electricity supply are computed to satisfy the
criterion of economic efficiency. Marginal costs are usually adjusted to arrive at an
appropriate tariff structure that meets various other goals and constraints, including, the
financial viability of the electric power sector, social objectives, metering and billing
constraints etc. This report focuses exclusively on the estimate of long-run marginal
costs and does not address the financial viability or tariff structure issues.
Approach Used to Estimate Marginal Costs
Two broad categories of cost are considered: demand or capacity-related costs and
energy-related costs. Marginal capacity costs (also referred to as marginal demand
costs) are taken as the costs of investment in generation, transmission and distribution to
supply additional kilowatts plus the fixed costs of operation and maintenance. To
establish these demand costs the projected capital investment is required for the
generation and transmission aspects. Marginal energy costs are the costs of fuel,
energy purchases and the variable operating and maintenance costs needed to provide
additional kilowatt-hours.

One issue that needs particular attention is the estimate of the capital costs for the
expansion of the distribution system to meet the system needs at the end of this plan
(2035). The mandate for the master plan considered only the expansion of the
generation and transmission system. An estimate of the distribution investments is
required, even though it was not part of the mandate for the study. Based on studies
elsewhere, it is assumed that the distribution costs for the Tanzanias system will amount
to about twice the investment costs in transmission. For instance, SNC-Lavalin
calculated the marginal costs for a specific system in India where Generation = 64% of
the total, transmission = 11 to 13% and distribution = 23 to 25%. This study has adopted
the same for purposes of calculating the LRMC with a loss of 20%.

5.3.1 Summary of Results

The long run marginal cost of power in Tanzania was calculated on a year-by-year basis
by examining the incremental cost over the base year. This approach is closer to the
strict definition of long run marginal cost.
The development of the capital and operating costs, average annual energy generated
by the new plan additions and the energy transmitted is based on same approach as the
original 2008 PSMP study and its subsequent 2009 Update study.
From the analyses, the unit cost of generation, transmission and distribution are
calculated for each year. These are presented below.
139
Table 5- 6: Marginal cost ($ per kWh)
Marginal Marginal Marginal Marginal
cost cost cost cost
Productio Transmiss Distribution of supply
n ion
Period (US (US (US (US
Cents/k Cents/kW Cents/kWh) Cents/kWh)
Wh) h)
2013 to 2020 14.6 1.3 2.8 18.1
2021 to2036 5.9 0.6 2.8 8.7
2013 to 2036 9.1 0.8 2.8 12.1

The marginal costs of production, transmission and distribution cannot simply be added
to result in the overall cost of supply since there are transmission losses of 5 % as well
as distribution losses of about 20%. The marginal cost of supply is higher than other
marginal costs because the marginal costs of generation and transmission are applied
across a much smaller amount of energy at the distribution level.

5.4 Economics of Connecting the Isolated Loads

In Tanzania there are 6 isolated load centres namely Kagera, Kigoma, Lindi, Mtwara,
Ruvuma and Rukwa. The drive is to connect all isolated regions to the main grid system
by 2019. The process of connecting Ruvuma to the national grid is at advanced stage
and actual construction of the transmission lines will start soon. This analysis therefore is
confined to the remaining five isolated load centres. Given the fact that, the power from
the diesel generators is more expensive to generate than the power supply from the
main grid, this Plan suggest when it is economical to connect the remaining centres to
the grid.

5.4.1 Approach for Examining the Economics of Connecting the Isolated

Loads
The approach undertaken for the economics of the isolated load centres is to compare
the benefits with the cost of the interconnection. The benefits are the annual savings
resulting from the difference in generation costs and supply from the isolated diesel
generators as compared to the power supply from the main grid. The costs are the
capital costs of 132kV or 220kV as initial voltage of the transmission lines to connect the
load centres to the main grid, depending on the load growth of the respective centres.
The costs of associated new substation and transformer from 132kV or 220kV to the
distribution level are also considered. These capital costs of the interconnection are then
annualised and compared to the annual benefits.

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Assumptions for the isolated loads
The following are the key assumptions and parameters used in the model.
Load factor for isolated system: 60 %
Cost of Supply on isolated system: 190 $/MWh
Cost of Supply on grid: 10 $/MWh
Unit Savings 180 $/MWh
Cost of Interconnection
Transmission line 132 kV Single Circuit 200,000 $/kM
Transmission line 220 kV Single Circuit 284,000 $/kM
Substation
Bay and Switchgear at 132 kV 6.000,000 USD
Bay and Switchgear at 220 kV 8.000,000 USD
Substation and Transformer Cost 132 kV to 13.8/11kV 12,000,000 USD
Substation and Transformer Cost 220 kV to 13.8/11kV 20,000,000 USD
Total Switchgear and substation cost 132kV 18,000,000 USD
Total Switchgear and substation cost 220kV 28,000,000 USD
Discount Rate 10 %

5.4.2 Results for the Interconnection

The results from the economic analysis for varying loads and with distances of 200 to
500 km were analyzed via a model. The model was used to look at loads from 1 to 35
MW. These show that, to connect a 5MW load, the load should be within less than 100
km of the transmission system. This model was used for all isolated loads. Table5-7:
presents isolated load centres, the distance from the grid, the minimum economic load in
MW and the load in 2010. The table also presents the year in which the load would be of
sufficient size to make it feasible for connecting to the main grid.

Table 5- 7: Isolated Load Centres and Feasibility of Connection to the Main Grid
Isolated Load Distance Economic Load in 2010 Load in Time for grid
Centre from grid minimum (MW) 2035 connection
(km) load (MW) (MW)
Kagera 220 10 11.4 383 Now
Mtwara 353 15 10.2 271 2013
Rukwa 340 15 5.8 134 2015
Kigoma 280 10 5.4 184 2014
Lindi 353 15 1.2 179 2013
Source: Team Compilation
This analysis shows that the Government can initiate plans for the connection of all of
these isolated load centres. In terms of priorities, the Kagera centres would provide the
best economic return, followed by Mtwara. On economic point of view Lindi would be
connected by 2015 but technically Mtwara and Lindi could be connected at the same
time as early as 2013.
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 CHAPTER SIX

6 CONCLUSION AND RECOMMENDATIONS

6.1 Conclusion
Discovery of new mineral deposits such as natural gas in the southern part of Tanzania,
initial development of coal resources (Mchuchuma, Ngaka) and uranium mining (Mkuju
Ruvuma); and mushrooming of economic activities (construction, processing industries,
and others) are changing the structure of Tanzanias economy. All these pose pressure
on the electricity demand in the country. Despite the endowment of enormous resources
for power generation, some challenges exists including mobilization of adequate financial
resources to implement the proposed power projects and inadequate requisite human
resources skills and knowledge for developing the existing power resources.

Other general challenge especially in the preparations of this Plan is related to data
issue. Some data and information was found to be inconsistency and outdated. Some of
the identified projects have not been studied to feasibility level while others have
outdated feasibility study reports, thus render it difficult to make meaningful decision on
the project implementation. Furthermore, most generation resources are located in the
south-west part of the country while huge loads are located in the north-west of the
country, implying the need for long transmission lines.

The system expansion plan considered all energy resources available within the country
which includes hydro, natural gas, coal, solar and wind as well as the importation of
electric power from enamouring countries to ensure adequate, reliable power and
security of supply over the planning horizon.

The development of alternative expansion generation plans covered the three scenarios
following the three cases of load forecast. The 2012 PSMP Update study considers three
plans, that the scheduling of projects in each plan (high, base and low case) respects a
reserve margin on firm capacity in the order of 15percent - 20 percent, hydro thermal
mix of 40:60 percent and export/import of not more than 25 percent of total available
capacity. The purpose of these reserve margins is to allow sufficient generation
capability to meet local demand and the possibility for power trading with the
neighbouring countries during average hydro supply.

The Base Case Plan" was considered as the preferred plan for 2012 PSMP update
study as it does not commit over-investment and meets national development goals and
policy targets such as FYDP-I requires power generation of 2780 MW by 2015/16 and
LTPP requires more than 6700 MW by 2025.

The Preferred Base Case Plan has a deficit of about 508 MW in the Short-term which is
less than 50% of the deficit in the High Case Plan. The Base Case Plan has a total

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installed capacity of 8960MW by 2035 consisting of 3304 MW hydro, 995MW gas-fired
generation, 3800MW-Coal, 100MW-Solar, 120MW-Wind, 40MW- Biomass/Cogen, and
some export limited to 250MW of total available generation throughout the planning
horizon.

This Plan suggests countermeasures to address power shortage in the short, medium
and long term. While the short-term plan requires immediate decision and actions, the
mid to longer terms plan require coordinated planning, project development studies to
ensure that future electricity supply utilises the least cost projects, consistent with sound
planning criteria and addresses national interests.

In view of the above, the country will need a total of 3,400MW in the medium term
(2013-2017) and 8,990MW by 2035 that will require financing to the tune of USD 11.4
billion and UDS 27.7 billion in those two periods respectively. When inflation and interest
during construction are added, total investment required rises to US$ 40.9 billion dollars
in the long run. Of this amount, about two third of it is for generation.

6.2 General Recommendations

The following are recommendations for successful implementation of the PSMP 2012
updates.
i. For a sustainable development of power sector, there is a need to firm up project
implementation schedule as proposed by PSMP particularly those which have
element of PPP and IPP arrangements;
ii. There is a need to ensure that strategic power projects are studied to full feasibility
level to reduce project implementation lead time and cost;
iii. To speed up feasibility studies for coal and geothermal power projects, there is
need to enhance capacity of Geological Survey of Tanzania (GST) to carry out
detailed geological exploration to identify location of all coal and geothermal
resources;
iv. There is a need to create conducive environment for development of renewable
power projects (Wind, geothermal, Solar, and Biomass) to supplement exhaustible
resources;
v. Coal, Geothermal and Nuclear Policies should be prepared to guide the utilization
of these resources for power generation;
vi. To ensure effective implementation of PSMP 2012 updates, the Government may
need to establish a monitoring and evaluation unit; and
vii. Capacity building: In order to internalise and broaden up experts of formulating plan
of this nature and improve local expertise, the government needs to maintain and
retain the core team that involved in the preparation of this plan. More capacity is
required to enhance the process of formulate/ review/update of PSMP. There is a
need to have modern software, tools to improve the level of projections. This will
include training of the core team, procuring of the modelling packages (Stata etc)
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 and sharing leaf of experience with institutions involved in related to similar
planning works.

6.3 Specific Recommendations

A. Load Forecast
i. The current level of energy losses is high; more efforts are needed to scale down
energy loss from 25% to 15.8% as forecasted. The projected loss level by 2035 is
synonymous to semi-industrialised countries.
ii. Implement Demand Side Management programmes to defer investment in
additional generation.
iii. The share of T1 and T2 on electricity consumption kept on decreasing by 5.4 and
4.1 percentage points by 2035 respectively. This implies that, more energy will be
used by customers under category T3 (Agriculture and industries). However, in the
early years of projections, T1 share reach a maximum of 48% following introduction
of special electrification program.

B. Generation

i. In order to avoid power shortages, projects earmarked for implementation in the

short term (2013 2017) should be strictly adhered to as there is no room to
manoeuvre.
ii. Two hydro options will require removal on significant obstacles before becoming
firm candidates for implementation:
a) Songwe project is a multipurpose project located on the border between
Tanzania and Malawi, its development will involve trade-offs between two
countries and various competing uses of the water resource. It is necessary to
initiate joint discussions on the best way to develop the project.
b) The Stieglers Gorge option is located within the Selous Game Reserve; its
development is constrained by the Algiers Conventions which defines the
developments possibilities within national parks and game reserves. It is
therefore important to redefine the game reserve borders.
iii. The results of the study indicated occurrence of shortage of power supply in the
short term (2013 - 2017). Therefore there is an urgent need to arrange investment
in generation infrastructure in order to avoid load shedding;
iv. Implementation of generation supply should be based on the base case forecast
which has as a target the electrification of 75% of the households of Tanzania by
the year 2035;
v. The isolated centres should be connected to the main grid as soon as it is feasible,
ie., during the period 2013 to 2017;

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 vi. The generation additions should respect a need to have sufficient technological
diversification that the risk of power shortages during drought periods is reduced by
adhering to hydro-thermal mix ratio of 40:60;
vii. Development of renewable power resources (Wind, Solar, and Biomass); and
viii. Accept the import/export of firm power from outside the country (whether from,
Ethiopia, Zambia, Mozambique or elsewhere) as they become economic.

C. Transmission requirements

i. Continue implementation of earmarked Transmission lines projects

parallel with generation projects to ensure power evacuation.
ii. Reinforce distribution network to meet electrification targets.
iii. The current load factor in the Tanzania interconnected grid has been
relatively constant at about 65 percent over most of the historic period
and it is projected to reach 72 percent by 2035 reflecting emergence of
economic activities such as mining loads

D. Financial and Economic Perspective

i. Implementation of this plan requires huge financial resources.

Concerted efforts to be exercised in mobilizing required financing for
both power generation, transmission and distribution;
ii. The Government should continue with efforts to invest in power
infrastructure to meet long term power demand and at the same time
create conducive environment to attract private investment in the power
sector; and
iii. The isolated centres should be connected to the main grid as soon as it
is feasible.

Short-term commitments
Except for rental power with contract lasting for 2 years, in the short term there are very
few options available to meet the expected demand for power. All identified resources
that can be implemented during that period should be committed as soon as possible.
Thermal options
a) Investigations of the gas reserves need to be pursued to ensure that as much of the
gas reserves as possible are proven
b) Construction of the gas pipe-line from Mtwara Dar es Salaam must be fast-
tracked to allow its use for the proposed gas-fired power units
c) Investigations of the coal reserves need to be pursued to ensure that as much of
the coal deposits are proven as possible.

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 Hydro development options
a) Very few of the identified hydro options have recent feasibility study reports; all of
these options need to be studied to at least the feasibility level before decisions can
be made to firmly commit the construction of these options. This information is also
required by private investors if they are to bid on hydro projects
b) The options for the development of the Stieglers Gorge option need to be studied
to determine the feasibility of development of that resource; and
c) The options for the development of the Songwe River need to be studied to
determine the optimum development scheme for this river basin. This includes
negotiations with the Government of Malawi over the sharing of this resource.

Power imports/Exports
The possibility of imports/Export from Ethiopia via Kenya Tanzania inter-connector
needs to be pursued. Possible import of up to 200MW is anticipated by 2016.
Other options
It is recommended to implement the demand-side management program as proposed
under the recently completed Energy Rationalisation and Demand Response Study by
Ms Hatch of Canada.

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