Tanzania: 2025 Amendments to the Electricity (Development of Small Power Projects) Rules, Government Notice No. 491 of 2020

Defined the following terms:

(a)  "Small power producer" previously defined as an entity producing electricity with a generating capacity between 100kW up to 10 MW at a single site using renewable energy, fossil fuels, a cogeneration technology, or some hybrid system combining a renewable fuel source with other fuel sources mentioned above and either sells the generated power at wholesale to a DNO or at retail directly to a customer or customers;
 

(b)  "Small power project developer” means an entity generating electricity in the capacity between 100kW up to 10 MW using renewable energy, fossil fuels, a cogeneration technology, or some hybrid system combining fuel sources and either sells the generated power at wholesale to a DNO or at retail directly to a customer or customers, and the development may have an installed capacity greater than 10 MW but shall only export power at the interconnection point not exceeding 10 MW, and the term “Small Power Producer” shall be construed accordingly;
 

(c)  "Avoided cost" was previously defined as the cost the DNO have incurred when it generates electricity itself or sourced it from another source; and 
 

(d)  “Eligible customer” means any person who is authorised by the EWURA to enter into a contract for the supply of electricity directly with any person licensed to generate electricity

Expands, replaces and clarifies various definitions under the SPP Rules including the following: 

(a) Amends the definition of “Small Power Project Developer” by limiting fossil fuels in hybrid systems to 25% of total capacity, updating “renewable energy” to “renewable energy sources,” and removing the previous allowance for installed capacity above 10 MW with export limits;
 

(b) Amends the definition of “Small Power Project Developer” by limiting fossil fuels in hybrid systems to 25% of total capacity, updating “renewable energy” to “renewable energy sources,” and removing the previous allowance for installed capacity above 10 MW with export limits;
 

(c) Amends the definition of “Avoided Cost” by replacing the previous broad description with a specific cost-comparison approach. The new definition now refers to the incremental cost savings realized by a DNO when purchasing electricity from another generator instead of generating it itself, thereby clarifying how avoided cost is calculated; and
 

(d) Amends the definition of “Eligible Customer” by changing the category of the contracting counterparty. The new definition permits an eligible customer to contract directly with a person licensed to generate electricity, replacing the earlier requirement that the contract be with a person licensed to supply electricity.

Rule 4(2) provided specific requirements for a SPP developer to demonstrate how its proposed area has a “technical benefit.”

Rule 4(3) of the SPP Rules restricted SPP developers from developing projects in areas not declared as strategic or where the proposed total installed capacity exceeded the maximum demand of the local distribution network. 

Subrule 6 of the SPP Rules required the DNO to immediately publish in widely circulated newspapers in Tanzania a list of areas determined to be of strategic nature. 

Subrule 8 of the SPP Rules previously exempted VSPP  projects already under construction stage from compliance with Rule 4 of the SPP Rules. 

Amends Rule 4 of the SPP Rules by adding an additional requirement under subrule 2(c) requiring proposed projects to offer additional commercial or technical benefits to the DNO, subject to DNO determination and approval by EWURA. 

Subrule 3 has been amended to restrict SPP developers to only developing projects in areas officially declared as strategic. 

Subrule 6 is amended to require DNOs to publish the list of strategic areas in the month of July annually in widely circulated newspapers in Tanzania, ensuring transparency. Lastly Subrule 8 of the SPP Rules is now deleted.

Therefore, all VSPP projects are required to comply with Rule 4 of the SPP Rules without exception and irrespective of the development stage.  

Under the SPP Rules, the development of a VSPP was strictly regulated. No person could develop a VSPP without first applying for and obtaining a letter of support from the Ministry responsible for electricity matter (the Ministry). The application had to be submitted in writing accompanied with:

(a)    a copy of a valid business plan;
(b)    a project implementation schedule;
(c)    an introduction letter from the relevant local authorities (City, Municipal, District, or Town Council);
(d)    for mini-hydro projects, evidence of land ownership and water rights; and
(e)    for projects intending to connect to DNO, a study report demonstrating potential technical benefits to the DNO.
 

The SPP Amendments revise Rule 35(1) by requiring that any PPA entered into between a DNO and a seller for the sale of electricity must be executed in the SPPA form as prescribed by EWURA, replacing the previous reference to the Third Schedule.

In addition, the SPP Amendments introduce new subrules (7), (8), and (9), which:

(a)    Require that a SPP developer and a DNO sign the SPPA approved by EWURA without substantive amendments;

(b)    Empower EWURA to issue standardised addenda to address emerging technologies or project-specific innovations, specifying technical and operational requirements; and

(c)    Mandate that parties to existing SPPAs adopt such addenda where required, ensuring consistency, adaptability, and alignment with evolving industry standards.