Packaging up power for rural Tanzania
Our Commitment: US$5m
Lighting Africa published a report in 2013 which linked inadequate access to sustainable, affordable power in Tanzania to low literacy rates and poor business productivity. Tanzania has an electrification rate of 15.3%, dropping to 3.6% in rural areas. Many of the 7.8 million rural households and 2.4 million small businesses operating in Tanzania’s frontier markets, are reliant upon kerosene or diesel generators: both fuels are relatively expensive, may not always be available and have associated health concerns. Connecting remote communities and businesses to the national grid is less cost effective than distributed energy generation, and potentially less reliable: in 2013 grid connected firms experienced 8.9 power outages in a typical month. Recent drought conditions have resulted in falling output from hydroelectric plants and inflated bills for Tanesco (the state utility) as it imports expensive emergency fuels; this compromises Tanesco’s ability to pay for domestic generated power and so deters new IPPs, further widening the gap between demand and supply. To address these challenges, the Government of Tanzania (GoT) established the Rural Energy Agency (REA): its mission is to promote and facilitate improved access to energy in rural Tanzania by actively supporting off-grid power solutions.
Solar photovoltaic (PV) panels convert sunlight directly into electricity. The cost of PV panels has fallen dramatically in recent years and parts of Tanzania benefit from irradiation levels equivalent to those in Spain: solar PV is therefore a competitive off-grid solution. Options range from solar powered lights and phone chargers to small-scale PV plants. While the former can partially meet domestic needs and are affordable for many, they are insufficient to meet the demands of small businesses. A local PV plant and/or mini-grid could provide the reliable, competitively priced power that SMEs need, but requires up-front capital investment that is beyond the reach of fledgling businesses. While REA can provide financing through the Rural Energy Fund (REF), rapidly deploying a scalable off-grid solution remains a challenge.
In 2013, the Shell Foundation partnered with Redavia GMbH to help them expand and commercialise their on-site solar farms. A year later, Redavia Tanzania Asset Ltd (“Redavia”) was founded by its parent organisation with additional funding from REEEP. Redavia have developed an innovative containerised PV solution: standardised shipping containers that provide the PV panels, fittings, back-up batteries and control systems required to provide up to 100KWp of installed Solar PV capacity. These containers can operate as a standalone solution on a greenfield site, providing power for the first time, or alternatively hybridise with or displace existing diesel generators, reducing operating costs. Containers are offered on a rental basis, individually or as a modular array, and can be rapidly redeployed if needs change or lease terms aren’t met. With on-site installation taking just 6 days, these containers avoid both high up-front capital costs for the end user and the lengthy development and construction periods typically associated with static PV plants. Redavia also retains responsibility for maintenance of the containers, making them a sustainable and affordable long-term solution for small businesses and rural communities.
Redavia has developed a phased growth plan: utilising capital from InfraCo Africa, the business will first deploy two containers to two rural communities in the Mbeya region of Tanzania: Isenzanya and Shitunguru. InfraCo Africa will then release up to US$5million of capital to finance a further ~30 containers enabling Redavia to prove its business model and grow to a commercially viable scale. These solar PV containers will improve living standards within rural communities and provide isolated SMEs with the power they need to be productive and profitable, fuelling economic growth in Tanzania.