Definition of â€˜renewable energyâ€™
Is there any legal definition of what constitutes â€˜renewable energyâ€™ or â€˜clean powerâ€™ (or their equivalents) in your jurisdiction?
There is no specific definition of â€˜clean powerâ€™ in Tanzania legislation. â€˜Renewable energyâ€™ is defined under the Electricity (Development of Small Power Projects) Rules as the energy that comes from renewable natural resources.
What is the legal and regulatory framework applicable to developing, financing, operating and selling power and â€˜environmental attributesâ€™ from renewable energy projects?
The energy sector in Tanzania is regulated by EWURA as a regulatory authority vested with powers:
Some of the legal and regulatory frameworks applicable to the energy sector are as follows.
Renewable energy projects generation activities whose installed capacity at a single site is less than 1MW, and off-grid distribution and supply activities where the maximum demand in the off-grid system is below 1MW are exempted from obtaining licences. Exemption is intended to foster rural electrification. EWURA is empowered to make rules on exempted activities and on getting reports. EWURA regulations require all exempted operators to be registered with EWURA and obtain a Registration Certificate after the commissioning of the project. EWURA may provide a provisional registration for a small power producer (SPP) or a very small power producer (VSPP) that fulfils the registration requirements at any stage before the commissioning of the project by way of a letter. Registration is done by filling in application Form 5.
Projects of 1MW and above are required to obtain a licence. EWURA may issue a provisional licence to allow a developer to conduct preparatory activities, such as carrying out assessments, studies and other activities necessary for the application of a licence.
Application for registration is made in a prescribed form indicating the name and address of the applicant, an entityâ€™s registration documents (legal identification), description of the geographic area to be served, description of infrastructure (generation or distribution), initial size of the generation facility, description of generation technology, environmental clearance from the NEMC and proof of land use rights.
Minigrid power stations that are built to standards that allow interconnection to the main grid may apply to operate as:
Legal and regulatory framework applicable to financing renewable energy projects
The financing of renewable energy projects is one of the Tanzanian government incentives to promote renewable energy. The Rural Energy Fund, established under the Tanzania Investment Bank (TIB) Development Bank, is a fund manager for a Tanzania Electrification Expansion Programme (TREEP) credit line facility of US$42 million on behalf of the REA. The fund is accessible to participating financial institutions (PFIs) for on-lending to SPPs for power generation and renewable energy companies for solar distribution and installation. The main purpose of the fund is to support renewable energy sources through the private sector.
The nature of the fund is a refinancing package arrangement for PFIs. The refinancing arrangement is based on the following:
SPPs and VSPPs can access the financing of a project only through PFIs under TREEP. Seven banks have been vetted by Bank of Tanzania and are eligible to participate in the TREEP credit line: CRDB Bank, NBC Bank, Azania Bank, EcoBank, Stanbic Bank, NMB Bank and UBA Bank. The TIB is encouraging more banks to express their interest to be eligible to participate in a TREEP.
Does the government offer incentives to promote the development of renewable energy projects? In addition, has the government established policies that also promote renewable energy?
The National Energy Policy 2015 and the Energy Subsidy Policy 2013 have set out strategies to ensure the availability of reliable and affordable energy supplies. These promote efficient energy use to support national development goals and focus on renewable energy as a sustainable energy source for rural areas not connected to the main grid, which makes up about 70 per cent of the Tanzania population. This includes rural electrification plans and strategies focusing on grid expansion and the development of off-grid electricity supply systems in rural areas including new and renewable energy systems.
The government of Tanzania offers incentives to investors in renewable energy through the Tanzania Investment Centre (TIC), Export Processing Zones (EPZs) and other fiscal laws.
The TIC offers investors a certificate of incentives and strategic investor status for a project worth not less than US$20 million, and the investment enjoys additional fiscal and non-fiscal incentives.
Other incentives are:
EPZs offers incentives that include 10 yearsâ€™ exemption from corporate tax and interest, the remission of customs duties, VAT and other taxes on raw materials and goods produced in EPZs, and an exemption from local government taxes and levies on products produced in EPZs.
Through the Rural Energy Fund, the government has put in place a funding mechanism and procedures for the provision of grants and subsidies to developers of rural energy projects.
Photovoltaics and solar energy system parts are exempt from VAT, customs and excise duties.
Are renewable energy policies and incentives generally established at the national level, or are they established by states or other political subdivisions?
Policy and incentives in Tanzania are generally established at the national level and enforced at every level.
Describe any notable pending or anticipated legislative proposals regarding renewable energy in your jurisdiction.
In 2019, EWURA released the Electricity (Development of Small Power Projects) Rules, the Electricity (Generation, Transmission and Distribution Activities) Rules and the Electricity (Supply Services) Rules.
There have not been any recent major developments in the legislation regulating the renewable energy sector in Tanzania. The government is still undertaking the preparation of a geothermal strategy, a legal, institutional, regulatory framework and risk guarantee for the development of geothermal resources and other sources of renewable energy.
Describe the legal framework applicable to disputes between renewable power market participants, related to pricing or otherwise.
Any dispute between participants in the electricity supply industry or between participants and EWURA or any other government authority relating to the application of the Electricity Act may be brought before the Fair Competition Commission for mediation. Appeals may be made to the Fair Competition Tribunal.
The Electricity (Market Re-Organisation and Promotion) Regulations 2016 also govern disputes. Where procedures are not provided for in these regulations, the minister may do whatever is necessary and permitted by relevant laws to enable any responsible entity to effectively and completely adjudicate on any matter before it.