United Republic of Tanzania POWER SYSTEM MASTER PLAN 2012 UPDATE Produced by: Ministry of Energy and Minerals May 2013 LIST OF ABBREVIATIONS AfDB African Development Bank BoT Bank of Tanzania CCM Chama Cha Mapinduzi COSS Cost of Service Study DSM Demand-side Management EAPMP East Africa Power Master Plan EEPCo Ethiopia Electric Power Company EPC Engineering, Procurement and Construction Contract ERT Energizing Rural Transformation ESKOM Electricity Supply Company (RSA) EWURA Energy and Water Utilities Regulatory Authority FYDP Five Years Development Plan GoT Government of the United Republic of Tanzania GWh Gigawatt-hours = 1,000,000,000 watt-hours GWh Gigawatt-hours = 1,000,000,000 watt-hours IDC Interest During Construction IPP Independent Power Producer IPTL Independent Power Tanzania Limited KPLC Kenya Power and Lighting Company kWh Kilowatt-hours = 1,000 watt-hours LTPP Long Term Plan Perspective MCA-T Millennium Challenge Account Tanzania MEM Ministry of Energy and Minerals MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umasikini Tanzania MKUZA Mkakati wa Kukuza Uchumi Zanzibar MoF Ministry of Finance MPEE Ministry of Planning, Economy and Empowerment MPIP Medium-Term Public Investment Plan MVA Mega Volt Ampere MVAr Mega Volt Ampere Reactive MW Megawatt = 1000,000 watts MWh Megawatt-hours = 1,000,000 watt-hours NBS National Bureau of Statistics NDC National Development Corporation NGO Non-Governmental Organisations POPC President‘s Office Planning Commission PPA Power Purchase Agreement i PPP Public Private Partnership PSMP Power System Master Plan R&D Research and Development REA Rural Energy Agency REB Rural Energy Board REF Rural Energy Fund SADC Southern African Development Community SAPP South African Power Pool SEZ Special Economic Zone SME Small and Medium Enterprises SNC SNC-Lavalin International Inc. SPP Small Power Producer SVC Static Var Compensator TANESCO Tanzania Electric Supply Company Limited TANWAT Tanzania Wattle Company TEDAP Tanzania Energy Development and Access Project TPC Tanzania Plantation Company TPDC Tanzania Petroleum Development Corporation URT United Republic of Tanzania USD United States Dollar WVES Way Leave Village Electrification Study ZECO Zanzibar Electricity Corporation ZTK Zambia – Tanzania – Kenya Interconnector ii Contents List of abbreviations ....................................................................................................................... i Acknowledgement ...................................................................................................................... vii CHAPTER one ............................................................................................................................ 1 1 INTRODUCTION .................................................................................................................. 1 1.1 Purpose and Scope ....................................................................................................... 1 1.2 Scope of the work .......................................................................................................... 2 1.3 Information collected for the PSMP Update ................................................................... 2 1.4 Factors considered in the Update plan .......................................................................... 3 CHAPTER TWO .......................................................................................................................... 5 2 POWER DEMAND FORECAST ........................................................................................... 5 2.1 Background ................................................................................................................... 5 2.2 Issues related to the load forecast ................................................................................. 5 2.3 National economy .......................................................................................................... 6 2.4 The Energy Sector ...................................................................................................... 12 2.5 Forecast Approach and Methodology .......................................................................... 20 2.6 Regional forecast ........................................................................................................ 26 2.7 Derivation of global energy sales forecast ................................................................... 34 2.7.1 Forecast Results .................................................................................................. 39 2.8 Sensitivity .................................................................................................................... 42 2.9 Comparison of Trend Analysis and Econometric Analysis ........................................... 43 CHAPTER THREE .................................................................................................................... 45 3 GENERATION .................................................................................................................... 45 3.1 Existing Generation Plants .......................................................................................... 45 3.2 Future Generation Options .......................................................................................... 49 3.2.1 Hydroelectric power ..................................................................................................... 49 3.2.1.1 Hydrology and Hydro System Capability .............................................................. 49 3.2.1.2 Hydrological Data Update ..................................................................................... 49 3.2.1.3 Hydro generation simulations ............................................................................... 49 3.2.1.4 Existing Hydroelectric Power Plants ..................................................................... 50 3.3 Development costs ...................................................................................................... 67 3.3.1 Generation Costs ................................................................................................. 69 3.4 Plant Data and Operating Costs .................................................................................. 73 3.5 Import Options - The Zambia-Tanzania-K Inter-connector ........................................... 76 3.6 Security of supply from Zambia through ZTK interconnector ....................................... 78 3.7 Other power interchanges ........................................................................................... 79 3.8 Renewable .................................................................................................................. 80 3.8.1 Nuclear ................................................................................................................. 83 3.8.2 Solar Photo Voltaic (PV) ....................................................................................... 84 iii 3.9 Generation Plan Results .............................................................................................. 84 3.10 Ranking on costs of new power options....................................................................... 86 3.11 Basic technical screening ............................................................................................ 86 3.12 Project Ranking and Availability .................................................................................. 86 3.13 Detailed Generation Costs and Screening Tables ....................................................... 88 3.14 Environmental and Social Impact Assessment ............................................................ 91 3.15 Status of environmental assessments ......................................................................... 93 3.16 Project Assessments in the Current PSMP .................................................................. 93 CHAPTER FOUR ...................................................................................................................... 94 4 TRANSMISSION EXPANSION PLAN ................................................................................ 94 4.1 Introduction ................................................................................................................. 94 4.2 Load flow analysis ..................................................................................................... 110 4.2.1 Year-2012 case .................................................................................................. 110 4.2.2 Year-2015 case .................................................................................................. 112 4.2.3 Year-2020 case .................................................................................................. 115 4.2.4 Year-2035 case .................................................................................................. 118 4.3 Transmission System Costs ...................................................................................... 121 4.3.1 Summary of cost estimate .................................................................................. 125 CHAPTER FIVE ...................................................................................................................... 133 5 ECONOMIC AND FINANCIAL ANALYSIS ....................................................................... 133 5.1 Main Assumptions ....................................................................................................