**3.2 Rural energy act (2005)**

46 Renewable Energy – Trends and Applications

Imported petroleum and related products are widely used in the transport and industrial sectors. It is also used for generating electricity in isolated grid-diesel power stations that have an installed capacity of about 21 MW and are located in Songea, Masasi, Tunduru, Kilwa Masoko, Mpanda, Kigoma, Biharamulo, Ikwiriri, Mafia and Ngara. Petroleum and related by-products are imported and distributed by private companies regulated by the Energy and Water Utilities Regulatory Authority (EWURA) which has the authority of monitoring performance and standards with regards to quality, health, safety and

The current level of energy demand and supply in the country signifies low level development in the industry sector, transport, and commerce. Industry and urban households depend to a considerable extent on energy sources such as electricity and petroleum products which are either imported (petroleum) or generated in the country (electricity). Traditional segment of the economy, mainly rural households depend on biomass as the main source of energy. Semi-urban and urban dwellers also depend on biomass especially charcoal and firewood as a source of energy for cooking purposes despite the fact that a large number of households in this category have access to electricity. The demand for modern energy i.e. electricity is growing at a fast rate. From 1990-1998 demand for electricity rose by 4.45 %; from 2003-2006 demand rose by 8% despite a prolonged period of electrical power shedding due to drought and insufficient rainfall for hydropower catchments areas. The demand for electricity is expected to increase from the present value of 925 MW to at least 3,800 MW by 2025 [Msaki, 2006]. Despite low electricity consumption estimated at 14 % for urban areas and about 2% for rural areas, in general, supply is still unable to meet demand. This shortfall is attributed to the country's dependence on hydropower which in turn is affected by climate variation and climate change. To increase accessibility of electricity to both urban and rural areas necessary efforts are needed. In this aspect, the government decided to commit itself to facilitate the increase of use of renewable energy as an alternative solution for increasing accessibility of modern energy to rural areas. Therefore, a number of reforms i.e. legal framework measures, policies and strategies have been formulated and enacted to provide a constructive atmosphere for utilization of renewable energy resources in the country. The following are some of the policies and strategies adopted for the promotion and facilitation

Tanzania power sector has undergone through different turbulent periods, changes and reforms since the country attained its independence in 1961. Most of the changes and reforms have sent positive signals to those who are interested in developing or starting electricity project in the country. The changes and reforms include laying down a National Energy policy (NEP), Electricity Industry Policy and The electricity act of 2008, and guidelines for sustainable liquid biofuel development. Some of the legal framework and

The first national energy policy (NEP) for the Country was formulated in 1992. Since then the energy sector has undergone a number of changes, necessitating adjustments to the

environment, licensing, tariff review of electricity and price control.

of an increased use of renewable energy within the country.

**3. Legal framework and policies** 

policies are elaborated in the following section.

**3.1 National energy policy (NEP) -2003** 

The Rural Energy Agency (REA) and the Rural Energy Fund (REF) are autonomous bodies established under the Rural Energy Act no. 8 of 2005. The two bodies are monitored by the Ministry of Energy and Minerals (MEM). REA and REF are established to:


 Allocate resources to projects in open and transparent manner and with well defined allocation criteria.

The act provides REF with funds from the following sources.


REA/REF have already supported various off-grid projects in small hydro power projects, biomass cogeneration projects, biomass gasification projects in Mafia and Mkonge Energy project. The supported projects are currently at various stages of implementation. The total expected capacity is 46 MW. A total of 8,400 new connections are expected. REA/REF support fiscal incentives for rural energy projects and programmes and count amongst the National aid initiatives attracting fiscal initiatives. On top of government subsidy to REF, the agency is also allowed to take up to 5% surcharge on each unit of energy generated by commercial electricity producer. REA/REF subsidies also support solar PV Systems. However, the subsidy is limited to 100Wp for domestic use and up to 300Wp for Institutions.
