The International Finance Corporation has partnered with Aldwych International and Six Telecoms to develop Tanzania’s first ever wind farm in the central town of Singida, north of Tanzania. The three institutions will collectively contribute an initial US$71m in equity and a further US$18m of equity during the development phase, for a project with a total capital cost of US$285m. The remaining finance will be secured through project financing loans.
The main goal of this project is to generate 100MW of electricity, with plans to raise that to 300MW in the future, and supply it at affordable prices.
Tanzania currently relies heavily on hydro-electric power, natural gas and fuel for electricity generation. Although Tanzania has an estimated 53.28 trillion cubic feet of natural gas reserves, its power production rate is only approximately 1,500MW per year. Only 38% of Tanzania is electrified, but demand for electricity is increasing by around 15% (more than 50MW) each year.
The successful operation of Singida wind farm will diversity Tanzania’s energy mix, fill the power gap and steer Tanzania away from unreliable hydropower plants.
As a private initiative, Singida wind farm will have a positive impact on Tanzania’s economy, providing more than 200 jobs during the construction phase and supplying power-hungry industries with locally generated electricity. In addition, the wind farm has the potential to increase private finance initiatives and public private partnership activity within the country and internationally. At a recent ceremony for the Singida wind farm, Dr. Mohamed Gharib Bilal, Vice President of Tanzania, stated that ‘Singida will add much needed power to the national grid as well as bring investment and economic opportunities to the country’. He further added that ‘by tapping into wind energy, we can take advantage of the complementarities between wind and hydropower - wind blows strongest in the dry season, and can generate power whilst water in hydro-reservoirs is preserved’.
Wind East Africa, the project company which owns the Singida wind farm, is currently negotiating a power purchase agreement to sell its power to Tanzania’s national power utility, TANESCO. This will be the first wind project TANESCO will connect to its grid. Singida will provide TANESCO with clean power at stable prices, as tariffs for wind energy remain relatively constant from using no fuel source.
Singida is expected to start operation by December 2017.
The Inside Africa team would like to thank Obi Imachukwu, Paralegal, for her contribution to this blog post.