The study analyzes the economics of renewable energy sources into electricity generation in Tanzania. Business as usual (BAU) scenario and renewable energy (RE) scenario which enforce a mandatory penetration of renewable energy sources shares into electricity generations were analyzed. The results show total investment cost for the BAU scenario is much lower as compared to RE scenario while operating and maintenance variable costs are higher in BAU scenario. Primary energy supply in BAU scenario is higher tied with less investment costs as compared to RE scenario. Furthermore, the share of renewable energy sources in BAU scenario is insignificant as compared to RE scenario due to mandatory penetration policy imposed. Analysis concludes that there are much higher investments costs in RE scenario accompanied with less operating and variable costs and lower primary energy supply. Sensitivity analysis carried out suggests that regardless of changes in investments cost of coal and CCGT power plants, the penetration of renewable energy technologies was still insignificant. Notwithstanding the weaknesses of renewable energy technologies in terms of the associated higher investments costs, an interesting result is that it is possible to meet future electricity demand based on domestic resources including renewables.
Energy is an essential and dominant component in achieving the interrelated economic and sustainable development of any country. Global energy demand is increasing at an exponential rate as a result of the exponential growth of world population [
The technologies mix in the Tanzanian electricity sector comprises mainly hydro and thermal power plants specifically gas-fired and heavy fuel oil (HFO) [
The country’s dependence on hydropower [
The country’s approach for assured sustainable energy future for electricity generation is on the use of renewable energy sources through the adoption of renewable energy technologies [
The methodology applied in this study is centered on the plausible scenarios optimization representing expansion of the electricity generation system with an objective of meeting projected demand. The optimization was done in the long-term basis with a planning horizon from 2010 to 2040 adopted for this study.
MESSAGE is the analytical tool that formulates and evaluates alternative energy supply strategies consonant with user-defined constraints on new investment limits, market penetration rates for new technologies, fuel availability and trade, and environmental emissions, among many others [
MESSAGE works on the principle of reference energy system which allows representation of the entire energy network including existing and future technologies [
Modelling the economics of renewable energy sources into electricity generation in Tanzania consists of the optimization of the energy supply system. The conceptual modelling framework as applied in this study follows an approach depicted in Figure
Conceptual modelling framework.
The electricity demands in this study are based on the official projections as given in Power System Master Plan (PSMP) 2012 update [
Electricity demand forecasts.
Two plausible modelling scenarios named as business as usual (BAU) and renewable energy (RE) were chosen in modelling the economics of renewable energy sources into electricity generations. BAU scenario is an overall electricity generation scenario (a reference case) which intends to illustrate how the electricity generation mix would take into account the renewable energy sources into power generations. BAU scenario follows official planned power system technologies capacities additions based on conventional energy sources such as natural gas, coal, HFO, and hydropower [
As the objective of this study is to model the economics of renewable energy sources into electricity generation, an alternative RE scenario is developed to cater for that purpose. It is a known fact that electricity generated from coal, hydropower, and natural gas is characterized with low prices as compared to those from renewable energy sources. For example, cost of generating electricity using solar energy is quite higher than that of thermal generation such as combined cycle gas turbine (CCGT) [
For the purpose of this study, the definition of renewable energy is limited to geothermal, biomass, solar thermal, solar PV, and wind sources and excludes hydro because it is a matured energy source that has been competitively used in Tanzania. Hydro is the renewable energy source which is commercially viable on a large scale level because of its least costly way of keeping large amount of energy in the form of electricity but constrained owing to societal and environmental barriers [
Modelling employed technologies using natural gas, biomass, geothermal, solar, wind, coal, and imported oil products (HFO) as fuels for the optimization of power generations. Nonrenewable technologies that were employed included natural gas technologies, hydro, HFO, and coal power plants. Natural gas technologies were bounded on gas turbine (GT) and combined cycle gas turbine (CCGT) power plants. MESSAGE model data collection and entry for optimization purposes were preceded by a quantitative analysis, specifically projection of PSMP 2012 electricity demand beyond 2035 and future fuel and technology costs. Data for the study consisting of electricity demand [
BAU and RE scenarios, as previously defined in methodology section, have been optimized using the MESSAGE model to decide the optimal supply options for Tanzania electricity generation from 2010 to 2040. The optimal electricity generations mix for BAU and RE scenarios considering electricity generation mix, operating and variable costs, primary energy production, and investment costs is presented and discussed in the next section.
It can be seen graphically from Figures
Electricity production by energy source, BAU scenario.
Electricity production by energy source, RE scenario.
Penetration of renewable energy sources into electricity generations in BAU is very small since optimization was based on meeting demand at a least-cost composition of energy sources and technologies. RE scenario represents an increase in the share of renewable energy from 1,124 GWh representing 5% in the year 2020 to 3,155 GWh (10%) in 2025, 6499 GWh (15%) in 2030, and 10,876 GWh in the year 2040. The increase follows a mandatory introduction of renewable energy into the scenario from 2020. Electricity generation in RE scenario is dominated by natural gas power plants which contributes 45.6% of the total electricity generated in the year 2040. RE scenario optimization results suggest wind as the most promising renewable energy technology. Wind technology achieves competitive costs in electricity generation earlier than other renewable energy technologies. The competitiveness of wind technology is attributed to a combination of lesser investment costs and the assumed technology maximum operation time of 35% as compared to the adopted 25% for solar PV. Comparison between the scenarios suggests a decrease of nonrenewable sources from 49,023 GWh to 42,987 GWh with the difference being replaced by renewable energy sources. Optimization results in RE scenario suggest that a rising share of renewable energy technologies over the years will be able to replace a big portion of nonrenewable energy sources. Notwithstanding an important decrease of nonrenewable energy sources for electricity generation over the study period in RE scenario, the country’s power system will however require these sources as least-cost solution.
Hydro and geothermal shares are limited in the electricity generation mix due to energy potential constraint of 4700 MW and 650 MW, respectively, even though they have low operating cost advantages [
The total investments costs for BAU and RE scenarios are presented in Figure
Investment costs comparison between BAU and RE scenarios.
Comparisons in terms of investments cost, operating and maintenance fixed costs (O&M), and operating and maintenance variable costs (O&M) are presented in Figure
BAU and RE scenarios costs comparison.
The primary energy supply in BAU scenario is expected to increase from approximately 21,138.2 GWh in 2015 to approximately 109,799 GWh in 2040. If the proposed RE scenario is implemented in place of BAU from 2020 to 2040, the primary energy supply will be reduced to 96,742 GWh. On comparing primary energy supplies of the two scenarios, it is observed that 86,396 GWh of coal will be needed in RE scenario as compared to 87,380 GWh of BAU scenario for a period from 2015 to 2040. Similar observation is noted for the case of natural gas consumption in which only 209086 GWh will be required for RE scenario as compared to 240276 GWh for BAU scenario. Additionally, the reduced consumption of fossil fuel (coal and natural gas) translates into small variable O&M cost in RE scenario. The small proportions in the reduction of fossil fuel consumptions are attributed to marginal share of the renewable energy penetration which amounts to only 15%. The reduction in fossil fuel consumption would be much higher if the share of renewable energy technologies is increased in the generation of electricity. The reduction in primary energy supply in RE scenario as compared to BAU scenario translates into massive reduction in CO2 emissions.
In the sensitivity analysis carried out in this section, the technical parameters for all technologies in the model were not altered as they are the results of literature review and experience facts. Therefore, throughout the sensitivity analysis workout, the study assumed the uncertainty is anticipated to be a result of economic variables. In view of that, the sensitivity analysis adopted for this study consisted of the variations in renewable energy shares and the variations in investments and fuel costs.
Along with the BAU and RE scenarios, additional scenario abbreviated as RE1 was developed and modelled in order to evaluate the economic consequences with respect to the renewable energy share changes. RE1 scenario technoeconomic inputs are exactly as those of RE except for the mandatory shares of renewable energy sources penetration into electricity generation. RE1 scenario requires a 25% share of wind, solar PV, geothermal, biomass, and solar thermal (summed together) energy of the total electricity generation by 2040 starting from 10% in 2020 and progressively increasing the share to 15% in 2025 and 20% in 2030 and thereafter to 25% in 2035 through 2040. The effect of mandatory penetration of renewable sources to the model depicts the displacement of generation from fossil fuel sources, particularly natural gas and coal energy sources. As the mandatory contribution of renewable energy sources reaches the capacity set in the RE and RE1 scenarios and it is not increased, other least-cost sources occupy the generation system. Still thermal and hydropower generations support the system but the generation from these technologies decreases as renewable energy technologies specifically solar PV, solar thermal, wind, and geothermal energy enter the system as visible from 2020 throughout 2040.
Results show renewable energy shares increases in RE1 scenario upsurge the total investments cost to 10426 million US$ in comparison to 7918 million US$ and 6099.9 million US$ for RE and BAU scenarios, respectively. The general conclusion with regard to an increased share of renewable energy is that the more the shares of renewable energy sources are included in the electricity generation the more the impact of increased investments costs observed is. However, the increased shares of renewable energy entail reduced O&M costs and the reduced CO2 emissions as compared to that of BAU scenario. With increased renewable shares, there is substantial opportunity for Tanzania to meet its future electricity demand sustainably and thus economic growth through renewable energy sources. Since electricity supply in the country is dominated by fossil fuels and hydropower, political will and policies tailor-made to the promotion of other renewable energy sources are necessary to accomplish their penetration. RE and RE1 are sustainability scenarios as they are being provided for with sources that are likely to continuously be at disposal opposite to fossil fuels sources which are depletable and endure heavy environmental costs in terms of CO2 emissions into the atmosphere.
The investments cost of coal and natural gas power plant specifically CCGT was changed to observe the change in the installed capacity of the whole system and its impacts on the penetration of renewable energy technologies without mandatory penetration policy. The choice of these technologies was based on the fact that they have dominated the entire least-cost generation system as observed in the results. What is more, these technologies have been the priority for development of the existing generation capacity in PSMP as hydropower plants capacity is limited at 4700 MW [
The observed changes on the installed capacity shares of coal power plant as compared to that of CCGT power plant from the year 2020 are depicted in Figures
The installed capacity shares changes for coal power plants.
The installed capacity shares changes for CCGT power plants.
The study presented a detailed analysis of the economics of renewable energy sources mixing into electricity generation in Tanzania. MESSAGE least-cost optimization results suggest that renewable energy sources and thus their technologies require compulsory policy measures to penetrate into the country’s electricity system. Renewable energy technologies failures to fit in into the country’s electricity system as suggested in the results were mainly due to technoeconomic competitiveness shown by conventional technologies under least-cost basis. Furthermore, the least-cost optimization results as considered in adopted scenarios of this study reflect the impact of the market environment and the challenges of renewable energy technologies explicitly wind and solar encounter in actuality. Mandatory penetration of renewable energy sources into electricity generation allows for realizing substantial reduction in primary energy supply, O&M costs, and CO2 emissions. However, RE scenario is still more expensive than BAU scenario in terms of investment cost. It is concluded that economic feasibility of renewable energy sources into electricity generation depends much on research and development (R&D) of renewable energy technologies that should allow for the investment cost decline coupled with efficiency improvement. Moreover, the use of renewable energy sources increases country’s energy security from disruptions of supply. The weaknesses of renewable energy incorporation into electricity generations are on the high cost of its implementation. Renewable energy mandatory incorporation into electricity generation as was shown in RE scenario requires more investments than the case in BAU scenario. An interesting result is that the RE scenarios support the view that it is possible to meet future electricity demand based on domestic resources in spite of the associated higher investments costs.
The authors declare that they have no competing interests.
The authors would like to thank Arusha Technical College (ATC), Nelson Mandela African Institution of Science and Technology (NM-AIST), Tanzania Atomic Energy Commission (TAEC), and College of Engineering and Technology (CoET) of the University of Dar es Salaam (UDSM) for their enabling environment that allowed successful completion of this work.