Powering prosperity: Tanzania positioning for a bold leap into a bright future leveraging Ethiopian energy

Electricity is the lifeblood of modern economies—the driving force that fuels industrial growth, fosters social development and elevates the quality of life. In sub-Saharan Africa, where more than 600 million people still lack access to electricity, the need for reliable power is more urgent than ever. Recognising this critical need, Tanzania is embarking on a transformative journey to secure its energy future. By forging a strategic alliance with Ethiopia to import vital electricity through Kenya’s transmission network, the country is setting the stage for a regional energy renaissance. This collaboration marks a significant shift in East Africa’s energy landscape and highlights the power of collective action toward shared prosperity.

Energy landscape: Assessing Tanzania and its neighbours

Tanzania’s energy challenges are far from unique. Across East Africa, nations are grappling with chronic electricity deficits, insufficient infrastructure, and a reliance on unreliable sources. With an installed grid capacity of 1,899.05 MW, it heavily relies on natural gas and hydropower. As of 2022, 63% of this capacity (1,193.82 MW) comes from natural gas, 32% (601.60 MW) from hydropower, and a small fraction, 4% (83.93 MW), is derived from fuel, with less than 1% (10.5 MW) from biomass. 

This diverse energy mix is primarily managed by the Tanzania Electric Supply Company (TANESCO), which operates eight natural gas power plants, seven hydropower plants, two heavy fuel oil plants, and seven small gas oil power plants. Despite this capacity, the country still struggles to meet demand. The maximum recorded demand reached 1,482.80 MW in August 2023, with growth projections indicating an annual increase of 10-15%. To address these needs, the Tanzanian government plans to increase its generation capacity to 5,000 MW by 2025, notably with the completion of the Julius Nyerere Hydropower Project, which will add 2,100 MW to the grid and a ramp-up in natural gas use.

Contrastingly, Kenya has made notable strides in expanding its energy sector. With an installed capacity of over 2,700 MW, Kenya has prioritised the development of renewable energy, with hydropower, geothermal, and wind power now contributing a substantial share of the country’s energy mix. Nevertheless, Kenya still faces energy access challenges, with an estimated 30% of the population lacking electricity, particularly in rural areas.

Meanwhile, Uganda, with an installed capacity of around 1,200 MW, is similarly confronting a growing energy deficit despite progress in hydropower generation. Uganda’s electricity access rate is estimated at 55%, but it continues to face power shortages during dry seasons when its hydropower plants face reduced water flow. Power outages are common, and the high cost of electricity remains a barrier to industrial development.

A game changer: Tanzania’s partnership with Ethiopia

Tanzania’s bold partnership with Ethiopia is built around importing electricity from Ethiopia’s vast hydropower resources and represents a pivotal moment in the region’s energy evolution. Ethiopia has one of Africa’s most abundant renewable energy resources, with an estimated potential of 45,000 MW from hydropower alone. Currently, Ethiopia’s installed capacity stands at over 4,500 MW. This is primarily driven by the Grand Ethiopian Renaissance Dam (GERD) and other hydropower projects. This rich resource base positions the country as a regional energy powerhouse, capable of meeting domestic demand and exporting electricity to neighbouring countries, including Kenya, Djibouti, and Sudan.

Through this collaboration, Tanzania stands to benefit from a more reliable, renewable energy source, reducing its dependency on expensive, environmentally damaging fossil fuels. The agreement to import electricity via Kenya’s transmission network will directly address the chronic energy shortages in Tanzania’s northern regions, particularly in areas such as Arusha and Mwanza, which have long struggled with unreliable power supply.

The socio-economic impact

The strategic importation of electricity will profoundly affect Tanzania’s economy and social development. For instance, Tanzania’s industrial sector, which has long been hindered by power shortages, stands to benefit immensely from a more consistent and affordable energy supply. Reliable power will enable businesses to operate fully, creating job opportunities and stimulating economic growth. The manufacturing, mining, and agriculture sectors—key drivers of Tanzania’s economy—will experience a major boost as energy costs decrease and supply becomes more predictable.

Consistent electricity will improve essential services such as education and healthcare in Tanzania’s urban and rural areas. Schools and hospitals will function more efficiently, improving access to quality services. According to the World Bank, energy poverty—lack of access to reliable power—continues to affect millions of Tanzanians, particularly in rural communities. With the new influx of electricity, more households will gain access to power, improving living standards and providing the foundation for long-term prosperity.

Regional cooperation: A step towards a unified East Africa

The impact of this partnership extends far beyond Tanzania. This collaboration between Ethiopia, Kenya, and Tanzania is a model of regional integration that could pave the way for a more unified East African energy market. The interconnected power grid resulting from this agreement will enhance regional energy security, ensuring that electricity can be shared across borders to meet peak demand or address shortfalls. This could help to stabilise the region’s energy supply and reduce the frequency of power shortages, a common challenge in many East African countries.

The ripple effects will foster deeper economic integration, encourage cross-border trade, attract investment, and create a conducive environment for sustainable economic development. With electricity being one of the most critical inputs for industrial growth, the improved power infrastructure could help transform East Africa into a major industrial hub in the coming decades.

Overcoming challenges

While the partnership with Ethiopia presents immense opportunities, significant hurdles exist. The successful implementation of this project will require substantial investments in the transmission infrastructure to connect Ethiopia’s hydropower plants to Tanzania’s grid. This includes expanding the existing network through Kenya and ensuring the infrastructure can handle increased power flows.

Furthermore, regulatory alignment and harmonisation will be crucial for the project’s success. Differences in energy policies, tariffs, and standards across the three countries could complicate the grid’s smooth operation. The private sector will play a pivotal role in driving investments, with public-private partnerships (PPPs) helping to mobilise resources and expertise.

Long-term sustainability will also depend on continued investments in renewable energy development across the region. Tanzania, for example, has substantial potential for solar and wind power, which, if harnessed, could further reduce dependence on imported energy. Energy efficiency programmes and demand-side management will also be necessary to ensure the energy system remains reliable and cost-effective.

A vision for the future

Tanzania’s decision to import electricity from Ethiopia signals a new era of regional cooperation and visionary thinking. By prioritising infrastructure development, policy reforms, and strategic partnerships, Tanzania is positioning itself as a leader in East Africa’s energy future. This initiative is a shining example of how African nations can work together to solve common challenges and unlock the continent’s full potential.

For neighbouring countries like Kenya and Uganda, Tanzania’s move is an inspiring model of how energy collaboration can drive economic growth and social development. If East Africa continues on this path of regional integration and investment in renewable energy, the region has the potential to transform into one of the world’s most dynamic economic zones, powered by sustainable, reliable energy for all.

In this vision, Africa’s energy challenges are not insurmountable; they are opportunities to innovate, collaborate, and achieve shared prosperity. Through bold action, regional cooperation, and unwavering commitment, Tanzania, Ethiopia, and their neighbours can build a brighter, more sustainable future for future generations.