DEVELOPMENT OF BUSINESS MODELS TO SCALE-UP APPLICATION OF RENEWABLE ENERGY
REQUEST FOR PROPOSALS

1. Introduction

The Rural Energy Agency (REA) was established under the Rural Energy Act, No. 8 of 2005. The main role of the Agency is to facilitate and promote investment in modern energy supply to increase access to modern energy services in rural Tanzania Mainland at the same time reduce carbon footprint by utilizing renewable energies. The Government of Tanzania has received funds from the World Bank under the TEDAP Off-grid Component. It is intended that part of the funds will be used to cover eligible payments in terms of Matching and Performance Grants for supply, installation and operation of solar PV, small Wind Turbines, hybrid systems, micro and mini-hydropower Plants to supply electricity to isolated rural areas in Mainland Tanzania.

2. The Business Model Competition

It is expected that the developer will come up with a Business Model that attract both the Matching and Performance Grant funding. The maximum Matching Grant that will be provided is one hundred and fifty million Tanzanian Shillings (TZS 150,000,000.00) while the Performance Grant will be five hundred thousand Tanzanian Shillings (TZS 500,000.00) per connection with a maximum of 1.2 billion Tanzanian Shillings (TZS 1,200,000,000.00). The Performance Grant will be given as far as the developer identifies potential rural customers to be connected in the mini-grid that will be supplied from the system that the developer will supply and install. The Matching Grant will be used to carry out the initial preparatory works including carrying out Feasibility Study, Business Plan, Environmental and Social Impact Assessment (ESIA) and Resettlement Action Plan (RAP). It is expected that some of the proposals will have costs above maximum indicated grants. In view of this, the Agency expects that the Winner will co-finance the project from other sources of funding in order to realize the project.

3. Program Objective

Overall Program Objective is the provision of clean, affordable, sustainable and environmentally friendly energy services to rural communities on Mainland Tanzania. The following are some of the specific objectives of the competition.

• To increase access to electricity for lighting and productive use for rural communities on Mainland Tanzania.
• To increase access to electricity for secondary schools and health facilities for various uses.
• To increase use of biomass in electricity generation in the rural areas.
• To apply improved technology for exploitation of low cost renewable energy sources including wind, solar, biomass etc.
• To bring to the market products that are competitive in terms of prices using the Low Cost Design Standards that have been developed by REA in collaboration with other stakeholders.
• To build sustainable technical and commercial capabilities of rural energy entrepreneurs to operate and sustainably manage renewable energy systems.
• To enhance private/public sector project developers’ competencies in preparing viable and bankable project proposals.
• To contribute towards achieving Government objective of attaining 30% access to modern energy services by 2015.

4. Who Should Participate

Proposals are welcome from civil society groups such as registered women groups, social entrepreneurs, Community Based Organization (CBOs), private foundations, government agencies, academic institutions, the private sector, and individuals.

5. How to Apply

Proposals using the available Templates that are to be downloaded from the REA website have to be submitted through the Rural Energy Agency postal address or email address provided below. For instructions and detailed information on how to apply, please visit our website at www.rea.go.tz/News/BusinessOpportunities/RFPDevelopmentofBusinessModels.aspx. If you are unable to access the internet or the website, please contact REA through the following telephone numbers +255 22 2412001 - 3  or send e-mail to info@rea.go.tz.

6. Proposal Templates

1. REA Pre-Feasibility Report Template for Rural Energy Projects.
2. REA Project Identification Concept Note Template for Rural Energy Projects.
3. REA Business Plan Template for Rural Energy Projects.

7. Summary of Key Timelines

• 31st May, 2012: Deadline for submission of Concept Notes.
• 1st June, 2012 – 15th June, 2012: Review of proposals.
• 15th June, 2012: Announcement of finalists.
• 16th June, 2012 to 14th August, 2012: Preparation Detailed Proposals.
• 15th August, 2012: Submission of detailed Proposals.
• 16th August, 2012 to 14th November, 2012: Review of Detailed Proposals.
• 15th to 16th November, 2012: Exhibition and Award.
• 1st March, 2013 to 28th February, 2014: Implementation and start of operation of proposed project.

8. Submission of Proposals

1. You MUST send your completed proposal in the proposed template/format to the Rural Energy Agency (REA) by e-mail at info@rea.go.tz as per above deadlines.
2. Language to be used in the proposal is preferably English since most of the proposals will attract foreign financing. However, a proposal submitted using Swahili Language will also be considered. Proposals submitted in other languages apart from the ones mentioned here will not be honored.
3. Implementation time-frame: Proposed activities must be completed within 12 months of receiving the initial disbursement.

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About REA

The Rural Energy Agency (REA) was established by the Act of Parliament No.8 of 2005 as an autonomous institution to administer the Rural EnergyFund (REF). REA is governed by the Rural EnergyBoard (REB).

The main function of REA is to promote investment in modern energy services by working with key partners and collaborators from the private sector, NGOs, CBOs, and Government agencies to mobilize resources in order to achieve its objectives. The Agency, in partnership with investors, identifies modern energy projects, provides training, in project identification and preparation, technical assistance, and provides managerial and financial assistance in order to enhance energy projects sustainability.

In collaboration with key service sector institutions and ministries responsible for rural services (e.g. health, education, rural development, water, etc.) the Agency promotes modern energy supply for productive use aiming at reducing poverty and raising the livelihood of communities in the rural areas.

Learn more about REA.

Contacts

Director General
Rural Energy Agency - REA
dg@rea.go.tz
info@rea.go.tz