Legal framework and stepwise approach crucial for Tanzania geothermal development

Legal framework and stepwise approach crucial for Tanzania geothermal development Mt. Meru, Arusha, Tanzania (source: flickr/ Roman Boed, creative commons)
Alexander Richter 25 Aug 2016

Tanzania is looking at the success stories of other countries to develop its geothermal resources. Looking at Iceland it could learn from a stepwise approach to development and a good and improved legal framework are seen as crucial.

In a recent article in AllAfrica, the authors are looking into how Tanzania in Africa can learn from Iceland’s development of geothermal energy resources

In a comment, Mr Engilbert Guðmundsson, the former World Bank Partnership Coordinator for multilateral financial institutions and Director General of Icelandic International Development Agency (ICEIDA) said that the establishement of a Geothermal Development Institution paired with a strong legal and regulatory framework are crucial.

The government of Tanzania has already established the Tanzania Geothermal Development Company (TGDC), which is a subsidiary company of Tanesco and is a 100 per cent state-owned agency. The aim of TGDC is to accelerate the development of geothermal resources in the country and to realize its ambitious vision of 2025.

However, the current geothermal regulatory framework is not well coordinated. There is still no geothermal policy and no legislation that can link together all the existing structure.

Further there is need to have a risk profile and financing arrangement.

“Geothermal industry is associated with highest degree of uncertainty at the early stage of exploration which is also accompanied with high upfront costs and hence little participation of private sector at this phase,” says Dr Bjarni Pálsson, Manager Power Projects Department in Iceland National Power Company.

He says the government of Iceland together with available geothermal risks mitigation facilities in Europe carry these risks through financing between $25 million and $35 million till confirming the existing of the resource. The private sector comes in later and finances the power plant construction under the suitable Public Private Partnership (PPP) arrangements.

Capacity building is another crucial element in the success story of geothermal development and currently there is done too little in Tanzania.

Stepwise resource development is the best mode to understand the geothermal resource, power plants as small as a few tens of MW can be economically built to start generation.

Government involvement in financing the upstream activities is one very fundamental step to speed up development of geothermal energy in the country.

Geothermal policy, legislation and regulatory framework must be established to link with available frameworks and consequently encourage participation of private sector.

Stepwise generation of geothermal power is vital for understanding the reservoir behaviour and avoiding possibility of depleting the reservoir due to overexploitation.

Geothermal energy, if properly developed will be able to power the industries in environmentally friendly way and will pave a way to meet the country industrialization objectives as stated in Tanzania Development Vision 2025 and as advocated by President John Magufuli.

Source: AllAfrica