By Peter Nyanje
With the completion of the Julius Nyerere Hydropower Project (JNHPP), Tanzania has entered a new era of energy abundance. The project is capable of producing 2,115MW of electricity, far beyond Tanzania energy needs at the moment.
This emans that Tanzania is now well positioned to export electricity, especially towards south where the southern power pool has been experiencing power shortages for years now.
But to truly capitalise on this milestone, the country must now unlock a much bigger opportunity: electricity market liberalisation.
The 2,115MW JNHPP, now the largest hydropower plant in East and Central Africa, has made Tanzania energy self-sufficient on paper. However, without a functional, competitive power market, much of that electricity risks going unused, underpriced or underleveraged.
In contrast, neighbouring countries like Kenya, Zambia, and South Africa are reaping the benefits of power sector reforms that invite private investment, promote innovation, and facilitate regional trade.
Now, business leaders and energy experts say it’s Tanzania’s turn to act.
From megawatts to markets
The JNHPP’s sheer scale has dramatically increased Tanzania’s generation capacity. But generation alone is not enough to guarantee the country of benefits from the mega project.
According to the African Mining Market, Kenya’s Energy Act (2019), Zambia’s power wheeling framework and South Africa’s unbundling of Eskom have shown that open-access electricity markets are essential to driving industrial growth and investor confidence.
Tanzania now has the power. The question is whether it has the market to match.
JNHPP: A game-changer with caveats
JNHPP, located along the Rufiji River, is expected to produce upwards of 6,000 GWh annually, supplying clean energy to millions of Tanzanians.
But peak and off-peak usage patterns, limited industrial demand and the absence of large-scale buyers could leave much of this power underutilised.
This highlights an urgent need for industrial-scale consumers connected to the grid, allowance to Independent Power Producers (IPPs) to generate and trade electricity and cross-border export capacity into regional power pools.
“Without market reform, JNHPP risks being a stranded asset,” warns a renewable energy developer in Arusha. “We need market access, competitive pricing and regional interconnectivity.”
Lessons from across the continent
Kenya’s reforms allow IPPs to sell directly to large customers. Zambia has rolled out power wheeling regulations that permit private energy flows through the national grid.
South Africa, which has been hit hard by power sortages in recent years, has been forced to partially unbundle Eskom – its power utility firm – and is establishing a fully independent system operator.
After the reforms, all three countries are seeing a rise in grid-connected renewables, private-sector energy financing and reduced dependence on loss-making state utilities.
Tanzania’s current vertically integrated model – where Tanzania Electricity Supply Company Limited (Tanesco) dominates generation, transmission and distribution – is increasingly viewed as outdated and inefficient.
What Tanzania can do now
Experts suggest a number of steps including legislative and regulatory reform under which the country could enact laws that legally unbundle Tanesco and enable third-party access to the national grid.
This will give IPPs and commercial consumers more flexibility and reduce risk for investors.
There is also a suggestion on infrastructure investment so as to accelerate the expansion of regional interconnectors – especially into Zambia, Malawi, DRC and Kenya – to allow power trade via the Eastern Africa Power Pool (EAPP) and Southern Africa Power Pool (SAPP).
Thanks God that tjhis is implemented and power interconnector to EAPP has already been completed through Namanga. A project to link with SAPP is going on.
Experts also call for establishment of a Power Market Operator.
Modelled after South Africa’s Independent Transmission System and Market Operator (ITSMO), this agency would manage bidding, contracting and trading – allowing Tanzania to eventually introduce a competitive power exchange. This entity will prove crucial if IPP are allowed.
Support renewable IPPs
Another suggestion is to strengthen independent power producers. Now that JNHPP provides base load power, the grid is more stable – opening the door for intermittent sources like solar, wind and biomass to complement hydropower, especially in rural and off-grid areas.
For Tanzania’s private sector, a reformed power market means lower and predictable energy costs, improved grid reliability, faster industrial development and opportunities for energy entrepreneurs, investors and local suppliers.
The mining, manufacturing, agro-processing and data centre industries all stand to benefit from a competitive, well-regulated electricity market. Energy security is the backbone of industrialisation. JNHPP has given us the hardware. Now we need the software in terms of policies, pricing and platforms so as to make it work.
