The Climate Investment Fund (CIF) has granted the United Republic of Tanzania $21.7 million to advance geothermal exploration and transform its energy sector.
The funds will finance the country’s Geothermal Energy Development Project which will advance Tanzania’s national economy by bolstering an affordable and baseload sustainable energy technology.
The Project funded under the CIF’s Scaling-up Renewable Energy Program (SREP) will receive a $5 million loan and $16.73 million in grant resources to be implemented by the African Development Bank (AfDB).
The CIF is one of the largest climate financing instruments in the world. It provides grants, concessional loans, risk mitigation instruments and equity to developing countries leveraging on funding from the private sector; multilateral development banks including AfDB, which also implement CIF projects and programs; and other sources.
The CIF recently granted Liberia $23.25 million to enable the country to transform its renewable energy sector through the development of a 9.8-megawatt power plant at Gbedin Falls on the Mano River in Nimba County.
Its Clean Technology Fund of the Climate Investment Fund (CIF) then approved $25 million for Morocco’s Midelt Phase 1 Concentrated Solar Power Project.
The Tanzania project will develop the Ngozi geothermal steam field in the southwestern region of the country, ultimately showcasing the technology’s broader potential in the country’s energy transformation.
Geothermal energy is a promising technology for Tanzania which has 15 geothermal sites with an untapped estimated potential of 650 megawatts (MW). A sixth of this potential can be developed in the Ngozi site.
Leandro Azevedo, AfDB’s Senior Climate Finance Officer and CIF Coordinator said, “Developing geothermal capacity in Tanzania is an essential part of that transformation and we hope that this project’s success will lead downstream to the installation of a 100 MW power plant and help create the conditions for the development of other geothermal sites in the country.”
The project involves conducting exploratory test drilling and installing the required steam gathering infrastructure in the Ngozi geothermal site.
The funds will be instrumental in mitigating the high-risk nature of geothermal prospection and field development.
Once fully operational, the project is expected to: improve Tanzania’s power supply, increase its energy security and public and private investment as well as benefit local households and businesses.
Its 100 MW generation will be added to Tanzania’s country’s energy mix adding up to 823 GWh per year to the grid, increasing the country’s energy security and reduce its dependence on electricity imported from Uganda, Zambia and Kenya. A more diversified energy mix will also strengthen the power sector’s resilience to future shocks.
The Geothermal Energy Development Project will create jobs and enhance capital mobilization from both public and private investors by creating an enabling environment for unlocking both public and private funds; total contribution expected from the private sector is estimated at $300 million.
The project is also expected to have transformational effects not only on Tanzania and its energy sector but also more broadly in the African Rift Valley Region.