Energy rationalization and demand response

EXPERTISE : , Energy Efficiency and DSM Programs
SECTOR : , Public


Hatch Ltd

project description

The Government of Tanzania (GoT), through its Ministry of Energy and Minerals, is responsible for energy policy formulation. The Tanzania Electric Supply Company Limited (TANESCO), a state-owned company, is the main operator in the electric sector. Before 2004, Tanzania’s power supply system had been very much dependent on hydropower generation and thermal generation had accounted for only a small proportion (14%). Thermal generation had been mostly used during the peak demand periods until early 2004. Since then, thermal power plants have started being used increasingly for base load generation. This change has resulted from the droughts that led to low water levels in TANESCO’s main power reservoir dams. The impacts of the 2003, 2004 and 2005 droughts on electricity generation were dealt with the resources increased to add generation capacity with assistance from the World Bank and the GoT.

Frequent droughts in the catchment areas of the hydropower generating dams prompted the need to consider energy rationalization and demand-side management (DSM). With the help of World Bank financing, TANESCO contracted Hatch and Econoler to provide advice on possible options, strategies and actions that consumers and the utility could adopt to increase generation capacity and rationalize electricity use. Such DSM initiatives helped achieve savings from reduced use of more expensive energy-generating or purchasing options and helped GoT meet its obligations to low‑income consumers.


In the context of the energy rationalization and demand response consultancy for TANESCO, the Hatch and Econoler team provided assistance in assessing Tanzania’s energy situation and developing tailored DSM initiatives. The main objective of the consultancy was to propose DSM actions which could be implemented immediately to help TANESCO address future demand-growth and supply-shortfall situations. As part of the DSM program development process, particular attention was paid to the rationalization of energy consumption of the industrial sector, which accounted for approximately one third of the total national electricity consumption.

More specifically, Econoler led the technical analysis by carrying out the following tasks:

  • Identified and assessed all possible options regarding load control and energy efficiency to achieve targeted DSM objectives.
  • Prepared a set of DSM programs along with a detailed implementation plan for the energy rationalization and demand response scheme.
  • Developed a tailored energy audit incentive and implementation program for medium- to large-size industrial clients. This program included a description of the eligible demand-limiting and EE technologies, the identification of the targeted industrial sub-sectors, the identification of the barriers to DSM and possible mitigation solutions (e.g., incentives, free pre-audits, technical assistance, etc.). The industrial energy-auditing program also included an estimate of the market potential, the estimated implementation and operation costs, a marketing plan, procedures for DSM program monitoring and evaluation and a tentative program implementation and management plan.
  • Designed programs to assist implementation of the demand response scheme and reduced energy costs of electricity consumers through energy conservation and efficiency measures.
  • Educated consumers and the general public about the current and future impacts of electricity pricing and usage.
  • Facilitated consumer uptake of energy conservation measures and fostered a more efficient use of electrical appliances.
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