Electrification pathways for Tanzania: Implications for the economy and the environment

Abstract

The role of electricity availability in promoting the economic growth of low-income countries is a highly debated issue. Taking the Tanzanian government’s view that a lack of infrastructure for power generation, together with a low electrification rate, are a limitation to growth, this paper studies the implications on the country’s sustainable development of expanding the electricity sector. The analysis is based on the joint use of the OSeMOSYS open-source power system optimization model and the Leontief Input-Output model (based on the Tanzanian Social Accounting Matrix). Four scenarios are considered, representative of alternative technological and environmental policies, characterized by different timing to achieve full electrification. Results indicate that while an expansion of the electricity sector can contribute significantly to economic growth, the associated direct and indirect growth in carbon emissions is equally remarkable. Relying on the country’s renewable generation potential would be important but might not be sufficient to lower the economy-wide carbon intensity, particularly under the assumption of reaching full access already in 2030. Targeting energy efficiency and/or decarbonization efforts in the industrial sectors as well as in the provisions of services would also be necessary. The latter is particularly relevant as, per effect of an average income increase, household consumption habits contributes to drive the economy away from its traditional, agricultural base.