MIGA, World-Bank Group offers Guarantee to Support investors in Tanzania-Solar-Projects

Corporate Africa Investment Department  reports from Tanzania about existing energy projects across the country’s solar power sector, especially those suitable for foreign partners.

 

On the sun-scorched plateau outside Singida, a quiet revolution is unfolding not with the roar of diesel generators, but with the soft, nearly silent hum of inverters. Rows of photovoltaic panels stretch toward the horizon like a metallic mirage, absorbing a resource Tanzania has in near-absurd abundance: sunlight. For decades, East Africa’s energy narrative was written along the rushing rivers of the Nile and the natural gas fields of the Indian Ocean coast. But the arithmetic of power is changing. Between 2024 and 2026, Tanzania will bring online over 600 megawatts of utility-scale solar photovoltaic capacity—a figure that transforms it from a laggard into a regional laboratory for renewable investment.

For foreign investors—whether sovereign wealth funds, private equity infrastructure players, or specialized manufacturers of solar components—these projects are not merely environmental gestures. They are entry tickets into a rapidly integrating East African Power Pool (EAPP), a market of over 300 million people where electricity demand grows at nearly 6 per cent annually. But to understand the opportunity, one must first walk the dusty access roads of the five flagship projects that define Tanzania’s solar expansion.

The Portfolio: From Singida to the Shores of Tanganyika

At the heart of this push is the Manyoni Solar Project in the Singida region. Phase one, a 100 MW facility, was commissioned in late 2024, marking the first utility-scale private independent power producer (IPP) solar project to reach commercial operation in mainland Tanzania. Immediately adjacent, Phase two adds another 75 MWp, currently under construction with a completion target of late 2025. Together, these 175 MW make Manyoni the largest solar cluster in East Africa outside of Kenya’s Garissa complex. The site was chosen for its exceptional solar insolation—over 5.5 kWh per square meter per day—and proximity to the existing 220 kV transmission backbone linking Singida to Dar es Salaam.

Five hundred kilometers to the west, near the crystalline waters of Lake Tanganyika, the Kakono and Kigoma solar parks represent a different beast entirely. With a planned combined capacity exceeding 500 MW, this is not a single plant but a corridor of multiple operational and greenfield solar installations. Kigoma has long been an energy island—reliant on expensive diesel and undersized hydro from the Malagarasi River. The new solar parks are being phased in clusters of 50 MW to 100 MW, with the first units already exporting to the grid. What makes Kigoma strategic is its proximity to Burundi and the Democratic Republic of Congo, positioning it as a future export hub for cross-border power.

Meanwhile, the political capital is not being left behind. The Dodoma Solar Project (52 MW) is under active construction and expected online by mid-2025, reinforcing the government’s decade-long move to make Dodoma a fully functional capital. In the northwestern gold-mining heartland, the Shinyanga Solar Project (50 MW) became operational in late 2023, co-located with existing substations to serve industrial mining loads. Finally, a constellation of smaller solar farms across Dodoma, Singida, and Mwanza—each in the 10 MW to 30 MW range—is filling transmission gaps, often built near rural health centers and water pumping stations.

When aggregated, Tanzania’s operational and under-development solar capacity surpassed 600 MW by early 2025. To put that in perspective, that equals roughly one-third of the country’s current hydropower capacity at Mtera and Kidatu dams—but without the seasonal droughts that have forced rolling blackouts as recently as 2022.

The Foreign Investor’s Menu: Direct Equity and Supply Chain Entry

For a foreign institution, the first question is not whether to invest, but how to structure the entry. Tanzania’s energy sector offers two distinct lanes: direct project equity and value chain integration.

On the direct equity side, the Manyoni projects were developed under a classic IPP model with a 25-year power purchase agreement (PPA) backed by TANESCO, the national utility. While TANESCO’s creditworthiness has historically been a concern, multilateral risk guarantees from the World Bank’s Multilateral Investment Guarantee Agency (MIGA) and the African Development Bank (AfDB) have been deployed for these solar assets. Foreign investors—including pension funds from Canada, infrastructure managers from the UAE, and European development finance institutions—have taken stakes ranging from 30 to 70 per cent in these special purpose vehicles. The returns are not spectacular by venture capital standards (real returns in the 8–12 per cent range), but they offer dollar-denominated, inflation-linked revenues for two decades.

Largest Solar Power Plant in Tanzania

The Kigoma 500 MW corridor offers an even more structured opportunity: the government is procuring these as multiple smaller IPPs rather than a single megaproject, allowing mid-sized foreign investors to bid on 50 MW blocks. This lowers the barrier to entry. A European utility with €40 million (US$ 46.8 million) in deployable capital can realistically bid on a single Kigoma cluster, finance it with 30 per cent equity and 70 per cent senior debt from development banks, and achieve financial close within 18 months.

But the more novel opportunity lies in the supply chain, which most foreign investors overlook. Tanzania has no domestic solar panel or inverter manufacturing. All 600 MW of modules are currently imported—mostly from China, Vietnam, and India. This creates an immediate opening for foreign companies to establish local assembly or distribution hubs. For example, a mid-sized Indian or Turkish solar module assembler could set up a plant in the Kilimanjaro Special Economic Zone, import cells at lower duty, and supply the entire East African market. The Tanzania Solar Energy Association estimates that local assembly could slash project delivery times by 40 per cent and reduce transport costs by 25 per cent.

Similarly, foreign players specializing in mounting structures, DC cabling, transformers, or battery storage systems (several of these solar projects are being designed with 2–4 hours of lithium-ion storage) can partner with Tanzanian construction firms. Already, a South African tracker manufacturer and a Chinese inverter company have quietly signed memoranda of understanding with local contractors for the Manyoni and Dodoma sites. The margin on spare parts and maintenance contracts over a 25-year project life often exceeds the margin on power generation itself.

How Tanzania’s Power Industry Benefits

For the domestic power sector, the injection of 600 MW of solar is neither a panacea nor a threat—it is a strategic rebalancing. Tanzania’s installed capacity historically leaned heavily on hydropower (approx. 560 MW) and thermal gas (approx. 500 MW), with expensive liquid fuel making up the rest. Hydropower’s vulnerability became painfully clear during the 2021-2023 drought, when reservoir levels dropped so low that TANESCO shed over 200 MW of industrial load, forcing manufacturers in Dar es Salaam to idle their assembly lines.

Solar diversifies that risk. Even during dry seasons, solar generation remains predictable. By distributing solar farms across Singida, Shinyanga, Dodoma, and Kigoma, TANESCO also reduces transmission losses. Historically, power generated at Kidatu Dam had to travel 400 km to Mwanza; now, Shinyanga’s 50 MW plant sits directly in that load pocket.

Moreover, solar is forcing a long-overdue upgrade of grid management. Unlike hydro or gas turbines, solar is variable—cloud cover can drop output by 60 per cent in ten minutes. To integrate 600 MW of solar, TANESCO has been compelled to install new SCADA systems, automatic generation control, and a forecasting center. These upgrades, largely funded by the World Bank’s Tanzania Energy Development and Access Expansion Project (TEDAPE), benefit every power source on the grid. A smarter grid means less reliance on expensive open-cycle gas turbines for frequency regulation.

Finally, the tariff structure for these new solar PPAs is remarkably low. The levelized cost of energy for Manyoni Phase I came in at approximately US$0.055 per kWh, compared to US$0.12-US$0.15 for new diesel generation. This has already forced TANESCO to renegotiate more expensive legacy PPAs. Cheaper power, in turn, makes Tanzanian manufactured goods more competitive regionally.

The East African Region: A New Power Anchor

Tanzania’s solar expansion is not an isolated national project. It is a critical piece of the jigsaw puzzle that is the East African Power Pool. The EAPP—encompassing Tanzania, Kenya, Uganda, Rwanda, Burundi, South Sudan, Ethiopia, and the DRC—has long suffered from two ailments: insufficient generation and lack of transmission interconnections. Tanzania sits geographically in the middle, bordering six other nations.

Consider the Kakono/Kigoma complex. Those 500 MW of solar are located just 80 kilometers from the Burundian border and 60 kilometers from Lake Tanganyika’s DRC ports. A 220 kV transmission line from Kigoma to Bujumbura (Burundi’s capital) is already in feasibility studies, funded by the AfDB. Once completed, Burundi—a nation where only 12 per cent of the population has grid access—could import up to 100 MW of Tanzanian solar power, displacing its dependence on diesel imports from Kenya and Uganda. Similarly, a future interconnection from Kigoma to Uvira (DRC) would allow Tanzanian solar to power mining operations in South Kivu, which currently pay US$0.40 per kWh for private diesel generators.

On the northern corridor, the Manyoni and Dodoma solar clusters are strategically located along the backbone line to Arusha and ultimately Kenya. During peak demand hours (evenings, when solar fades), Tanzania could potentially export power to Kenya; conversely, during Kenya’s morning peak (when Tanzania’s hydro is spinning), power can flow south. This bi-directional flexibility is only possible with distributed solar assets that free up hydro reservoirs for storage.

Perhaps most importantly, Tanzania’s success with utility-scale solar—six major projects reaching financial close in three years—offers a replicable template for Uganda (which has delayed its solar rollout) and Mozambique (which remains gas-centric). Foreign investors who enter Tanzania now are not merely buying a Tanzanian asset; they are acquiring regional experience. The same teams managing Manyoni will be invited to bid on solar parks in Zambia or Madagascar. The same supply chain warehouses in Dar es Salaam will serve cross-border logistics.

Uncomfortable Facts

There are however fault lines such as TANESCO’s debt; while reduced by recent fiscal reforms, still exceeds US$2 billion. If the utility fails to pay its PPA bills for six months, foreign investors will invoke their MIGA guarantees—a slow and bitter process. Additionally, the 600 MW target assumes all projects reach COD on schedule. The Dodoma 52 MW and Manyoni Phase II are on track, but the full 500 MW of Kigoma is a vision, not a reality. As of early 2025, only approximately 120 MW of Kigoma’s planned capacity is truly operational; the rest is in various stages of land acquisition and financing.

Furthermore, solar alone cannot power a modern industrial economy. Tanzania will still need baseload (likely natural gas from Mnazi Bay and future hydro from the Stiegler’s Gorge project, if it ever advances). Solar’s 20-25 per cent capacity factor means 600 MW of panels deliver only about 150 MW of average power. Storage is the missing link—and foreign investors who pivot to grid-scale batteries alongside solar will capture the highest returns.

The Clearing Skies

For a foreign investor—whether a Japanese trading house, a German developer, or an Emirati sovereign fund—Tanzania’s 600 MW solar pipeline offers a rare combination: dollar-based revenues, multilateral risk insurance, and entry to a continent where energy demand will double by 2040. Direct equity in a Manyoni or Kigoma IPP provides stable, infrastructure-like returns. Supply chain investments in local assembly or distribution offer higher risk but also higher growth, leveraging East African trade agreements.

For Tanzania, the benefit is tangible: a more resilient grid, lower average tariffs, and the geopolitical heft of becoming a net exporter of clean electrons. For East Africa, the solar farms of Singida and Kigoma are the first serious challenge to the region’s hydraulic tradition—proving that the future of power lies not only in great dams but also in the patient, democratic harvest of sunlight. The panels are already in the ground. The inverters are humming. The only question now is who will join the grid.

Tanzania Electric Supply Company Limited (TANESCO): Plot No. 114, Block G, Dar es Salaam Road, P.O. Box 453, Dodoma, Tanzania. Email at customer.service@tanesco.co.tz