Tanzania: Renewable Energy Program
Context
In 2011, Tanzania’s national electricity coverage was less than 14 percent, and even lower in rural areas—below 2 percent. Despite an abundance of resources, and government support for green investment, the development of small-scale renewable energy projects remained slow.
Program Overview
To promote investment in renewable energy projects, the Tanzania Rural Energy Agency (REA), in collaboration with the World Bank's Carbon Partnership Facility, designed an innovative financing instrument that monetized future carbon credits from private renewable energy projects. The instrument was a revolving fund that increased equity finance to a group of renewable energy projects. Using a small grant from a World Bank trust fund, the REA created a financing facility to mobilize resources to improve access through renewable energy projects. The financing facility would then be replenished through the sale of carbon credits—generated from the projects’ emissions reductions—to CPF.
Results
Between 2016 and 2018, seven small hydropower plants and a biomass plant generated over 27,000 megawatt hours (MWh) of electricity, powering 53,000 Tanzanian households, lowering emissions by 36,705 tons of CO2. All together the program is expected reduce 108,854 tons of CO2 in the remaining crediting period.
The innovative design of the financing facility demonstrates the catalytic role climate finance can play in combination with other sources of funding, helping to provide communities with electricity and strengthen the electricity network by injecting power at the end of the lines.
Program Documents
Relevant program documents can be found here.