NON-PROFIT/FOR-PROFIT PARTNERSHIP IN SHPP:

CEFA'S EXPERIENCES AND PERSPECTIVES IN TANZANIA

Jacopo PendezzaProject ManagerCEFA Tanzania

PRESENTATION OUTLINE1.Introduction

2.Rural Energy sector in Tanzania3.The Potential of Small Hydropower in

Tanzania4.CEFA and Rural Electrification in Tanzania:

25 years of commitment5.Looking for a bigger impact: the NPFPP

model6.What next: the concrete example of the

Ninga SHPP7.Conclusions

Expanding renewable energy access for rural communities in Africa is a challenging task

However, Energy production and distribution in rural areas in Tanzania is now a promising business opportunity

Because:• Potential Local Market

• National Priority - Favorable legal framework and policy

• Int’ Donors and Commercial Banks Financing

1. Introduction

PROBLEMGreat need for mobilizing financial resources to expand energy access for rural communities.

SOLUTIONA partnership between non-profit and for-profit actors

is here proposed in order to rapidly expand energy access.

Concrete possibility of a NPFPP between CEFA, an Italian NGO specialized in rural electrification, and a private partner for the realization of a Small Hydro Power project in Ninga, Tanzania.

Tanzania power supply:• national interconnected system • several mini-grids located far from the national grid.

National electrification 18.4%, set to arise 75% by 2035.

Rural electrification less than 7% of the rural population (2.2 million).

Installed generation capacity is 1,564 MW of which 1,438.2 MW is available in the main grid and 125.8 MW accounted for by Small Power Producers (SPPs), mini grids, and imports.

2. Rural Energy sector in Tanzania

The rural electrification sector is defined by law and well regulated under the Ministry of Energy and Minerals (MEM).

• REA (Rural Energy Agency), • EWURA (Energy and Water Utilities Regulatory

Authority),• TANESCO (Tanzania Electric Supply Company),

are the 3 key actors under MEM dealing with rural electrification, renewable energy and market development.

EWURA is regulating the private sector participation through Standardized Power Purchase Agreement (SPPA) for IPPs, SPPs (small power producers <10MW), SMPPs (very small power producers < 100kW), DNO (Distribution Network Operators), SPD (small power distributor).

2011TariffTZS/kWh

2012TariffTZS/kWh

2013TariffTZS/kWh

Standardized Small Power Purchase Tariff

121.13 152.54174.89 = EUR 0.08

3. The Potential of Small Hydropower in Tanzania

Hydropower is the most popular and the oldest renewable energy source used to produce electricity for rural grids.

Potential of small hydropower resources up to 10 MW in Tanzania is 480 MW.

Of the 11 projects for which Small Power Purchase Agreements (SPPAs) have been signed, four are mini-hydro projects, with a combined capacity of 20.5 MW

Examples:

• the MEM is conducting small-hydro feasibility studies in eight regions;

• GVEP International, in partnership with REA, is supporting the development of six hydro mini grids;

• REA has awarded some 20 matching grants to developers for feasibility studies;

• ESMAP is financing renewable-energy resource mapping, starting with small hydropower;

• EU is financing four Hydro Power projects (including one developed by CEFA).

4. CEFA and Rural Electrification in Tanzania: 25 years of commitmentCEFA (European Committee for Training and

Agriculture) is an Italian NGO that promotes initiatives of integrated rural development.

Founded in 1972 by a group of agricultural cooperatives based in Bologna, CEFA is present in the Mediterranean area, East Africa and Central and South America.

In Tanzania since 1976, CEFA promotes interventions in the fields of Rural Electrification, Water supply, Sustainable Agriculture, Agro-processing .

Matembwe, Njombe

Matembwe, NjombeSummary details

Type of facility Reservoir micro hydro plant

Commissioning year 1984

Funded by Italian Ministry of Foreign Affairs; Belgian Ministry of Foreign Affairs; European Union; CEFA

Ownership Matembwe Village Company – MVC Ltd (CEFA, Catholic Dioceses of Njombe, District of Njombe and Village of Matembwe)

Output power 120 kW

Villages served Matembwe and ImageDistribution network 19 km of MV

Households connected 556

Public institutions and economic activities connected

64

Aqueducts powered 4

Connection with TANESCO Yes (in 2015).

Bomalang’ombe, Iringa

Bomalang’ombe, Iringa

Summary details  Type of facility Reservoir mini hydro plantCommissioning year 2001Funded by Italian Ministry of Foreign Affairs; European

Union; CEFA

Ownership Bomalang’ombe Village Company – BVC Ltd (CEFA, Catholic Dioceses of Iringa, District of Kilolo and Village of Bomalang’ombe)

Output power 250 kWVillages served Bomalang’ombe and LyamkoDistribution network 17.3 km of MVHouseholds connected 252Public institutions and economic activities connected

76

Aqueducts powered 3Connection with TANESCO No

Ikondo, Njombe

Summary details

Type of facility Run-of-the-river micro hydro plant

Commissioning year 2004

Funded by Italian Ministry of Foreign Affairs; European Union; CEFA

Ownership CEFA (to be handover to MVC Ltd)

Output power 83 kW

Villages served IkondoDistribution network 8 km of MV

Households connected 130

Public institutions and economic activities connected

46

Aqueducts powered 1

Connection with TANESCO Yes (in 2015)

Ikondo, Njombe

Ikondo II

Ikondo II

Summary details  

Type of facility Run-of-the-river micro hydro plant

Commissioning year 2015

Funded by European Union; CEFA

Ownership CEFA (to be handover to MVC Ltd)

Output power 430 kw

Villages served Ikondo, Nyave, Ukalawa, Isoliwaya, Kanikele

Distribution network 47 km of MV (in 2015)

Households connected 280 (in 2015)

Public institutions and economic activities connected

75 (in 2015)

Aqueducts powered 1

Connection with TANESCO Yes (in 2015)

5. Looking for a bigger impact: the NPFPP model

6. What next: the concrete example of the Ninga SHPP

Summary details (Foreseen)  

Type of facility Run-of-the-river small hydro plant

Commissioning year 2017

Proposed financial model Developer equity, International donors, REA, etc and Commercial loans

Ownership To be handover to local entity

Output power 4,000 kW

Villages served Ninga, Lima, Isitu, Ikuna, Lole, Upami and Ilengitu

Distribution network 18 km of MV

Households connected 1680

Public institutions and economic activities connected

268

Connection with TANESCO Yes

Ninga SHPP - Estimated project cost

Disc. rate on investment 8.00% Depreciation 365,000 €/year 20 yearsGrant 0 Annual generation 21,750 MWh

Price of Energy 0.0795 €/KWh 174.89 TZS/kWh

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

YrEnergy

Sold MWh

Unit Price

€

Sales Revenues

O & M Working

RatioCash Flow

€PBT

Total Cost including

Depreciation

O&M unit cost per kWh

Cost of Kwh

NPV(Col. 7)

IRR (Col. 7)

YearCumulative Cash Flow

€ cent € cent Pay Back6.3 yrs

-2 75 months 2014

-1 -7,300,000 -7,300,000 2015 -7,300,000

1 21,750 0.0795 1,729,026 183,320 0.11 1,545,706 1,180,706 548,320 842.85 2.52 -5,434,065 2016 -5,754,294

2 21,750 0.0827 1,798,187 186,986 0.10 1,611,201 1,246,201 551,986 859.71 2.54 -4,155,042 -41.25% 2017 -4,143,093

3 21,750 0.0860 1,870,115 190,726 0.10 1,679,389 1,314,389 555,726 876.90 2.56 -2,920,642 -17.86% 2018 -2,463,705

4 21,750 0.0894 1,944,919 194,541 0.10 1,750,379 1,385,379 559,541 894.44 2.57 -1,729,363 -3.91% 2019 -713,326

5 21,750 0.0930 2,022,716 198,431 0.10 1,824,285 1,459,285 563,431 912.33 2.59 -579,755 4.78% 2020 1,110,959

6 21,750 0.0967 2,103,625 202,400 0.10 1,901,225 1,536,225 567,400 930.58 2.61 529,592 10.45% 2021 3,012,183

7 21,750 0.1006 2,187,770 206,448 0.09 1,981,322 1,616,322 571,448 949.19 2.63 1,600,038 14.30% 2022 4,993,505

8 21,750 0.1046 2,275,280 210,577 0.09 2,064,703 1,699,703 575,577 968.17 2.65 2,632,904 17.01% 2023 7,058,208

9 21,750 0.1088 2,366,292 214,789 0.09 2,151,503 1,786,503 579,789 987.53 2.67 3,629,466 18.96% 2024 9,209,711

10 21,750 0.1131 2,460,943 219,084 0.09 2,241,859 1,876,859 584,084 1,007.28 2.69 4,590,961 20.39% 2025 11,451,570

11 21,750 0.1177 2,559,381 223,466 0.09 2,335,915 1,970,915 588,466 1,027.43 2.71 5,518,585 21.47% 2026 13,787,485

12 21,750 0.1224 2,661,756 227,935 0.09 2,433,821 2,068,821 592,935 1,047.98 2.73 6,413,496 22.29% 2027 16,221,306

13 21,750 0.1273 2,768,227 232,494 0.08 2,535,732 2,170,732 597,494 1,068.94 2.75 7,276,814 22.92% 2028 18,757,039

14 21,750 0.1324 2,878,956 237,144 0.08 2,641,812 2,276,812 602,144 1,090.32 2.77 8,109,623 23.41% 2029 21,398,850

15 21,750 0.1377 2,994,114 241,887 0.08 2,752,227 2,387,227 606,887 1,112.12 2.79 8,912,972 23.79% 2030 24,151,077

Ninga HPP - Unleveraged Profitability

7. Conclusions

It’s now time to expand renewable energy access for rural communities in Tanzania.

New CEFA’s project will provide energy to 2,000 HH and small enterprises.

Thanks to a NPFPP is possible:- Rapidly expand financial resources- Expand energy access- Increase empowerment of local communities- Meet national target for electrification and

energy production

Thank you for your Attention!

Jacopo PendezzaCEFA TanzaniaP.O. Box 59, Njombe - TanzaniaTZ +255 689599034 +255 71863847IT +39 3281737292jpendezza@gmail.comwww.cefaonlus.it/uk