Renewable Energy Irrigation
Renewable Energy Irrigation
Business Model Description
Manufacture, distribute and install affordable solar-powered irrigation pumps utilising modern technologies for the production of high-value crops throughout the year and sale of products to high end domestic as well as export markets.
Expected Impact
Enhance agricultural productivity and support the sustainable commercialization of the horticulture industry.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Tanzania: Northern Zone
- Tanzania: Southern Highlands Zone
- Tanzania: Lake Zone
Sector Classification
Renewable Resources and Alternative Energy
Development need
Energy is important in promoting Tanzania's industrial development. This applies particularly to transforming productive sectors like agriculture, which are beset by challenges of low productivity. However, the energy sector itself is faced with challenges, including unreliability and inefficiencies in supply (1, 2, 3).
Policy priority
The Tanzanian government recognizes energy as important in promoting socio-economic development. It is committed to promote improved performance and spur prudent and optimal use of the energy resources so as to tap into unutilized potential in the productive sectors. Over the medium to long run, the government seeks to implement its 100% renewable energy policy (1, 4).
Gender inequalities and marginalization issues
Energy is a critical enabler in reaching socio-economic development goals for men and women. However, the benefits of increased access to modern and cleaner energy services often fail to accrue evenly to both gender. Women bear the burden of inefficient energy technologies, which in turn affects their health, time and productivity (5).
Investment opportunities introduction
Tanzania is endowed with diverse energy sources, including natural gas, biomass, hydro, geothermal, solar and wind power, much of which is untapped. Significant opportunities exists in the exploration of new and renewable energy resources and promotion of energy efficiency technologies and conservation initiatives (6).
"Key bottlenecks introduction
About 50% of the Tanzania's population lives in poverty, out of which 35% is unable to access all of the basic needs, including energy services. The poor spend about 35% of their household income on energy, compared to 14% for other socio-economic groups, which may result in limited purchasing power (7)."
Alternative Energy
Development need
Tanzanian energy sector is faced with several challenges, including lack of adequate and sustainable energy diversification systems; insufficient promotion and use of energy efficient technologies and behaviors; and inability to optimally utilize the renewable energy potential across the country (1, 4, 28).
Policy priority
Tanzania's government is committed to increase power generation predominantly by using renewable sources, such as hydropower, wind, solar and thermal energies. The emphasis is premised on the fact that if renewable energy is produced and utilized in a modern and sustainable manner, it will help to eliminate energy shortages and inefficiencies in the country (8).
Gender inequalities and marginalization issues
Less than 10% of the solar irrigation pumps are purchased by women, and most of the major decisions on crop choices and income use continue to be made by men. These findings vary from type of crop, with men making major decisions concerning high-income crops like tomatoes, and women commanding relatively more autonomy over crops like leafy vegetables (9).
Investment opportunities introduction
Alternative energy opportunities exist in the manufacturing and distribution of drip irrigation kits, photovoltaic (PV) panels and frames, surface and submissible solar water pumps, water level switches, polyvinyl chloride (PVC) piping, connectors and vales, as well as water storage tanks and filters (10).
Key bottlenecks introduction
Solar has not been utilized fully as energy sources in Tanzania, even though the country is in one of the major global solar belts, with 2,800-3,500 hours of sunshine per year and a global radiation of 4-7 kWh/m2 per day. Despite this potential, solar energy has predominately been used for drying to date (11).
Solar Technology and Project Developers
Pipeline Opportunity
Renewable Energy Irrigation
Manufacture, distribute and install affordable solar-powered irrigation pumps utilising modern technologies for the production of high-value crops throughout the year and sale of products to high end domestic as well as export markets.
Business Case
Market Size and Environment
< USD 50 million
10% - 15%
The market size for all types of irrigation technologies in Tanzania was estimated to be USD 86.2 million in 2018 and expected to grow to USD 151.3 million by 2022 (13).
The market size for solar powered irrigation pumps is estimated at USD 25 million, which is split between small, medium and large scale farm operations (13).
Indicative Return
20% - 25%
Smallholder irrigated farms have two to three times higher yields than rain-fed farms. Small-scale irrigation technology present IRRs of up to 28% (13).
The average cost of one petroleum generator-powered pump per year is USD 1,657 with a lifespan of four years. The cost of using a 3 Hp solar pump for the life span of 20 years is USD 4,348. This means that already after 2.6 years the financial benefits of the solar powered pump outweigh the petroleum generator (13).
Investment Timeframe
Short Term (0–5 years)
Solar water pumps have higher capital costs and lower operating costs than competing pump technologies. The payback for solar water pumps is 4-6 years, while for a diesel pump is less than a year. However, the life cycle cost of a diesel pump can be up to six times more than the life cycle cost of a solar water pump (13).
In terms of replacement, the life span of diesel pumps is approximately 7-12 years, whereas the life span of solar panel modules, which are the most delicate components in solar water pumps, is 20-25 years (13).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
One of the critical weaknesses in Tanzanian agriculture is low productivity of land due to over dependency on rain-fed agriculture and low and underdeveloped irrigation potential. Out of 10.8 million hectares under cultivation, only 450,392 hectares are currently under irrigation. Irrigation development is constrained by low investment by both the government and the private sector. In general, Tanzania lacks the necessary infrastructure that could provide for a wide range of crops and efficient water use. Furthermore, the technical capacity of most producers for the development and sustainable management of irrigation schemes is still inadequate (29, 30).
Tanzania has a low rural household electrification rate of 16.9%, which together with erratic grid power supply, fuel scarcity and price volatility, hinders many farmers from obtaining conventional irrigation systems (13).
Gender & Marginalisation
Horticulture is currently estimated to encompass 423,906 operators who employ over 500,000 people, approximately 65% of which are women. Promoting irrigated horticulture produce will lead to increased income to women farmers in the rural, poor marginal areas (13).
Expected Development Outcome
Renewable energy irrigation increases the productivity of Tanzania's agriculture sector. It can reduce food imports, which with 80% take the largest share of Tanzania's total merchandise imports (14).
The adoption of modern irrigation technologies moves farmers from subsistence to market-based, commercial production, partly achieved through the improvement in yields and crop quality. Additionally, once a farmer has adopted irrigation, he/she is likely to implement other productivity-enhancing measures, including farming higher-value crops and expanding cropped areas (13).
Investing in water resource management in Tanzania has the potential to reduce the adverse impact of climate variability and extremes, such as drought, which has posed a considerable risk to agricultural production, and hence poverty reduction and economic growth. Irrigation is increasingly viewed as a strategy to mitigate the impacts of climate variability and change. Improved irrigation systems can have positive impact to the planet owing to the fact that it facilitates and promotes water recycling and reuse and rainwater harvesting (31).
Gender & Marginalisation
As a labor- and technology intensive industry, renewable energy irrigation and horticulture activities build the productive capacities of women and increases their representation and participation in science and technology (14).
Renewable energy irrigation provides reliable irrigation systems for the horticulture sector, which maximizes benefits accruing directly to women (13).
Primary SDGs addressed
7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)
Share of renewable energy in the total final energy consumption estimated at 83.828 in 2017 (31).
N/A
9.4.1 CO2 emission per unit of value added
Carbon dioxide emissions per dollar of manufacturing estimated at 11,580 kt in 2018 (32).
N/A
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
Volume production of the traditional commercial crops estimated at 794,500 tons in 2020/21 (1).
Volume production of the traditional commercial crops projected at 71,583,200 tons in 2025/26 (1).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Gender inequality and/or marginalization
Planet
Corporates
Outcome Risks
Enhanced irrigation activities may deplete scarce water sources, especially surface water bodies, if not managed sustainably.
The production and maintenance of renewable energy irrigation systems is resource intensive, and may negatively impact on the environment especially if the end of life stage is not managed sustainably.
Impact Risks
Renewable energy irrigation depends on external factors affecting production, such as soil character, weather conditions and availability of water resources, and requires stable supply chains for equipment and inputs, which may affect the expected impact.
If the required advisory and technical assistance services are not available to support farming practices and agronomy knowledge, such as regarding water use, the impact of renewable energy irrigation may be limited.
Impact Classification
What
Renewable energy irrigation enhances agricultural productivity and supports the sustainable commercialization of the horticulture industry.
Who
Farmers and farmer households benefit from greater agricultural productivity with new job opportunities for the general population, and the planet enjoys lower externalities from food production through renewable energy irrigation.
Risk
While the renewable energy irrigation system is proven, external factors affecting production and supply chains as well as advisory and technical assistance require consideration.
Impact Thesis
Enhance agricultural productivity and support the sustainable commercialization of the horticulture industry.
Enabling Environment
Policy Environment
National Irrigation Policy, 2013: Sets a target of reaching coverage of 1,243,230 hectares under irrigation in the year 2025, up from the current 694,715 hectares (34).
Water Sector Development Programme, 2006 - 2025: Is designed to address shortfalls in urban and rural water supply infrastructure, to improve water resource management primarily through upgrading the country’s Basin Water Sources and to strengthen the sector institutions and their capacities (33).
Financial Environment
Fiscal incentives: Tanzania offers 0% import duty on project capital goods, raw materials and replacement parts for agriculture, animal husbandry and fishing, including for edible oil production. It also offers 100% capital expenditure in the agricultural sector (21).
Fiscal incentives: Exemption of import duty and VAT on some components, such as panels, batteries, inverters and regulators, which also apply to renewable energy irrigation (13).
Other incentives: The Tanzania Renewable Energy Association (TAREA) partnered with the Energy Transition Facility of the Kingdom of the Netherlands to create an enabling environment for more affordable solar irrigation pumps for smallholder farmers, including provision of fiscal incentives (20).
Regulatory Environment
National Irrigation Act, 2013: Makes provision with respect to the management, use and maintenance of irrigation systems. It establishes the National Irrigation Commission and defines its functions and powers (17).
Water Resources Management Act, 2009: Makes provision with respect to the management, use and protection of water resources, namely water courses, surface water, groundwater and estuary waters. It sets out fundamental principles of water use and conservation, and also states preferences in water allocation (35).
Plant Health Act, 2020: Has come into play following the dramatic spread of transboundary plant pests and after diseases have increased dramatically in recent years (19).
Marketplace Participants
Private Sector
Wade Rains Ltd, Balton International, Nabaki Africa, BioKube A/s.
Government
Tanzania Rural Energy Agency (TAREA), Ministry of Agriculture, Tanzania Engineering and Manufacturing Design Organisation (TEMDO), National Irrigation Commission, Energy and Water Utilities Regulatory Authority (EWURA).
Multilaterals
Food and Agricultural Organisation (FAO), International Fund for Agricultural Development (IFAD), African Development Bank (AfDB).
Non-Profit
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Kingdom of Netherlands, United States Agency for International Development (USAID), UKAid, Low Energy Inclusive Appliances (LEIA).
Target Locations
Tanzania: Northern Zone
Tanzania: Southern Highlands Zone
Tanzania: Lake Zone
References
- (1) United Republic of Tanzania, 2021. Third National Five-Year Plan (FYDP 3).
- (2) United Republic of Tanzania, 2015. National Energy Policy.
- (3) World Future Council, 2017. Climate Action Network for Tanzania, Policy Road Map for 100% Renewable Energy and Poverty Eradication in Tanzania.
- (4) Institute for Sustainable Futures, 2019. A 100% Renewable Energy for Tanzania, Access to Renewable Energy all within One Generation.
- (5) African Development Bank, 2017. Gender Country Briefs – Tanzania.
- (6) United Nations Development Programme, 2015. Tanzania’s Se4All Investment Prospectus.
- (7) GTZ, 2007. Eastern Africa Resource Base: GTZ Online Regional Energy Resource Base: Regional and Country Specific Energy Resource Database: IV - Energy Policy.
- (8) Clean Technologies, 2018. The Potential Renewable Energy for Sustainable Development in Tanzania: A Review.
- (9) Jemimah Njuki et al, 2014. A Qualitative Assessment of Gender and Irrigation Technology in Kenya and Tanzania.
- (10) United States Agency for International Development, 2022. Feed the Future Innovation Lab for Collaborative Research on Horticulture. http://horticulture.ucdavis.edu.
- (11) Mashauri Adam Kusekwa, Biomass Conversion to Energy in Tanzania: A Critique.
- (12) SmartSolar Tanzania, 2022. https://www.lorentz.de/en/references/africa/tanzania/841.
- (13) Foreign, Commonwealth & Development Office, of the United Kingdom, 2019. Tanzania Market Snapshot, Horticulture Value Chains and Potential for Solar Pump Technology.
- (14) World Integrated Trade Solution , 2018. Tanzania Food Products Imports.
- (15) The World Bank, 2019. Tanzania’s Path to Poverty Reduction and Pro-Poor Growth.
- (16) International Trade Administration, 2021. Energy Resource Guide, Tanzania.
- (17) United Republic of Tanzania, 2013. National Irrigation Act, No. 5 of 2013.
- (18) United Republic of Tanzania, 2004. Investment Promotion Act No. 6 of 2004.
- (19) United Republic of Tanzania, 2002. Plant Health Act.
- (20) Tanzania Renewable Energy Association / Kingdom of the Netherlands, 2020. Increasing the use of solar powered pumps for Irrigation in Tanzania.
- (21) United Republic of Tanzania, 2022. Standard Incentives for Investors. https://investment-guide.eac.in.
- (22) EEAS, 2022 https://eeas.europa.eu/delegations.
- (23) Netherlands Enterprise Agency, 20015. Tanzania Horticulture Sector Outlook Opportunities and Challenges.
- (24) USAID, 2022. https://pdf.usaid.gov.
- (25) Tanzania Horticulture Association, 2021. Horticulture Industry Markets Access Strategy (HIMAS).
- (26) Tanzania Horticulture Association 2020, Industry Position Paper.
- (27) Global SDG Indicator Platform, 2022. https://sdg.tracking-progress.org/indicator/9-4-1-carbon-dioxide-emissions-per-unit-of-value-added/?tab=map.
- (28) United Republic of Tanzania, 2021. Intended Nationally Determined Contributions (INDCs).
- (29) United Republic of Tanzania, 2013. National Agriculture Policy.
- (30) The United Republic of Tanzania, 2016. National Irrigation Commission, Proceedings of the Workshop on “New Directions for Irrigation Development in Tanzania: The Context of Public Private Partnership".
- (31) The Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN), 2017. Pathways for Irrigation Development: Policies and Irrigation Performance in Tanzania.
- (32) The Global Economy, 2022. https://www.theglobaleconomy.com/Tanzania/carbon_dioxide_emissions.
- (33) United Republic of Tanzania, 2005. Water Sector Development Programme 2006 – 2025.
- (34) United Republic of Tanzania, 2013. National Irrigation Policy.
- (35) United Republic of Tanzania, 2009. The Water Resources Management Act.
- (36) Hydrology Research, 2020. Evaluation of Recharge Areas of Arusha Aquifer, Northern Tanzania: Application of Water Isotope Tracers.