The Tanzanian Market for Rural Lighting Technologies

Lighting Rural Tanzania Competition 2010

Presented by Jeff Felten, Camco TZ

8 April 2010

Problem:

• 90% of Tanzanian’s are without electricity and the opportunities and quality of life that electricity provides;

• That figure rises too approximately 98% in rural areas, roughly 32 million people.

Rural electrification from the TANESCO national grid is unlikely. The investment costs are high, and the activity is not profitable at the current prices charged to consumers (roughly $0.10 per kwh).

Approaches involve mini-grids and the development of solar energy off-grid, or specifically the development of the market for photovoltaic and rural lighting technologies (RLTs).

The government of Tanzania is promoting private sector, renewable energy approaches too

rural electrification.

Electrification rates around the country

A 50Wp solar PV system, like the one in the diagram

here, consists of a solar module, a charge controller, and a battery bank. It would also most likely include an

AC/DC inverter (not shown).

About 5,000 such systems were sold in Tanzania in

2009 at an average price of $600, generating $3 million.

A typical Tanzanian Solar Home System (SHS)

Typical Institutional Systems

• For schools, dispensaries, offices, etc.;

• From 300Wp to over 1kWp;• For lighting, computers, fans,

refrigerators (for vaccines), etc;• Frequently donor funded without

plans for maintenance and replacement of batteries;

• Great potential to upscale numbers of institutional systems with REF funding;

• Today about 50% of the PV market is SHS and 50% is institutional systems;

• Picture at left is TRA office in Kilwa.

Some of the small-scale RLTs on the Tanzanian market

• New LED technology has brought down prices and improved the quality of solar lanterns;

• D-Light dominates this new LED-based market in Tanzania;

• Sollatek’s Glowstar is the old man (and most expensive);

• Phillips is coming with Dutch-funded project;

• Prices range from Tsh 20,000 to 100,000

The Solar PV Sub-Sector in Tanzania:

• Approximately ten product suppliers (importers) almost all based in Dar es Salaam;

• About 150 dealers/retailers out in the regions and districts, and an even greater number of solar technicians;

• Relatively high prices due to small sales volumes and limited competition in the districts;

• Approximately 3.1MW installed nationwide, most systems being the property of schools, health facilities or large companies (railroad and telecommunications);

• A growing market for household systems (roughly 50% of the total market);• Annual market surpassed 100kWp for the first time in 2005, and doubled to

205kWp in 2006, 350kWp in 2007 and over 500kWp last year 2009.• A dynamic solar industry association (Tanzanian Solar Energy Association,

TASEA);• No system to enforce product quality standards.

Solar Systems Versus Solar Lanterns

•The top of the pyramid (in blue) represents the households that can afford to purchase SHS, given their income and the cost;

•The second level of the pyramid (in green) represents those households who cannot afford SHS but can afford solar lanterns for lighting (and potentially cell phone charging);

•The volume of the pyramid in green is far greater than the volume in blue, meaning promoting the less-expensive solar lanterns – with new LED technology – in addition to solar home systems allows greater numbers of households, businesses

and institutions access to modern energy.

Market Segments for Rural Lighting Technologies

• Households

• Schools

• Health facilities

• Small businesses

• Social community centres

Households•80% of Tanzanians live in rural areas, 2% with TANESCO grid-connected power;

•5.85 million non-electrified households;

•Though national PCI is low, there are many successful farmers in coffee, tea, cashews, tobacco, cotton, beekeeping and livestock;

•Over 100,000 rural civil servants, with monthly salaries but no power;

•Some regions – such as Shinyanga – have thousands of successful artisanal miners with good income.

Schools• 17,000 non-electrified schools;• In modern times, secondary

schools cannot provide adequate education without computers and internet access;

• Lighting in boarding schools allows kids to study at night. Studies have shown that children in schools with solar lighting perform better in exams when compared to students in schools without power;

• Singida undertaking mission to solarize all rural secondary schools.

Health Facilities

• 5,000 non-electrified health facilities;

• Power needed for lighting, ventilation (fans), refrigeration (for vaccines) and other medical equipment;

• Systems typically range between 300 and 500Wp;

• The donor-funded system at right – in Zanzibar – is excessively large and failed due to a lack of maintenance.

Small Rural Businesses91,000 rural small businesses in a wide

range of sectors:• Retail and wholesale shops;• Bakeries, butcheries, mills and other

agro-processing;• Artisans (like plumbers, carpenters,

electricians, tailors and hairdressers);• Bars, restaurants and hotels;• Private schools and private health

centers;• Transportation and fueling stations;• Construction and brick making;• Charcoal and timber;• Small-scale financial institutions;• Etc, etc, etc.

Solar systems can power small appliances and extend productive working hours.

Non-Commercial Establishments

• 10,000 non-electrified non-commercial establishments (churches, mosques and community centres);

• Use power for lighting, communications and entertainment;

• Typical system might be four 80Wp panels with four 40Ah batteries, charge controller and DC/AC inverter;

• Market segment not served by typical PV private actors, but by faith-based NGOs.

Solar PV System Market Potential in Tanzania

Market Segment & Assumption Potential (MW)

If 5% of 5.85 million households install 50Wp solar household systems

14.6

If 20% of 17,000 non-electrified schools and colleges install 300Wp systems

1.02

If 30% of nearly 5,000 non-electrified health facilities install 300Wp systems

0.44

If 20% of 91,000 non-electrified small/medium businesses install 200Wp systems

3.64

If 10% of 10,000 non-electrified non-commercial establishments (churches, mosques, social centers) install 320Wp systems

0.32

Total National Market 20.02

So what does this mean in financial terms?

At current prices of approximately $12 per watt, 20.02MWof solar systems would earn $240 million for those companies participating!

Rural Lighting Technology Market Potential in Tanzania

Marget Segment & Assumption Potential (units)

If 5% of 5.85 million households purchase four RLTs 1,170,000If 20% of 17,000 non-electrified schools and colleges purchase ten RLTs 34,000If 30% of nearly 5,000 non-electrified health facilities purchase five RLTs 7,500

If 20% of 91,000 non electrified small/medium businesses purchase five RLTs 91,000

If 10% of 10,000 non-electrified non-commercial establishments (churches, mosques, social centres) purchase five RLTs 5,000

Total National Market 1,307,500

So what does this mean in financial terms?

At current average prices of approximately $30 per RLT, the sale of 1,307,500 RLTs would generate $39,255,000 for those companies participating!

Solar Electric Systems + RLTs

$240 million

+ $40 million

= $280 million

The End

Thanks for your attention