The Crux of Sustainable Energy Provision, An explorative study of cluster strategies in rural Tanzania
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An energy transition is required in Tanzania. Household energy needs are currently largely met by unsustainable woodfuel resources. 92.4 percent of rural households use firewood for cooking, while 62.2 percent of urban households rely on charcoal. These woodfuel resources are responsible for indoor air pollution, annually resulting in the death of 18,500 people, mostly children under five. Moreover, many households experience energy poverty, that is they aren’t able to gain sufficient access to, for example, cooking fuel or lighting for their homes. The traditional strategies to introduce modern energy, mainly connection to the electricity grid, are slow and unable to reach the majority of rural households for the foreseeable future, especially those households in inaccessible and poor areas. To make an energy transition and to meet the energy demand in Tanzania in a sustainable way three appropriate energy technologies (AETs) were identified based on the study in this master thesis. AETs make use of locally available and renewable energy resources and can be owned and controlled by the local population. In this way these decentralized technologies don’t require an elaborate infrastructure, such as the centralized electricity grid, which suits the characteristics of rural Tanzania. The stage of sector development of AETs in Tanzania was studied to assess whether these technologies can be easily disseminated. The solar PV (photovoltaic), improved cook stoves (ICS) and biogas technologies were selected based on the appropriateness characteristics and sector development. Sustainable energy provision requires a sector of independent enterprises that own the capacity to provide appropriate energy technologies. Such appropriate energy enterprises (AEEs) ensure that a technology doesn’t disappear when donor or governmental interventions finish. Cluster strategies promote the development of groups of such resilient AEEs. This master thesis contains the results of 18 months of exploratory studies of cluster promotion for appropriate energy enterprises in rural Tanzania. It was found that in contrast to theory of cluster strategies that designates a coordinating task to local governments, cluster formation of AEE depend on civil society organizations. Representation of the rural energy topic on the local level by district governments and public agencies is virtually absent. Tanzanian organizations on the national level have technological knowledge of AETs available, but their knowledge is seldom shared or commercialized. A conducive factor for developing appropriate energy enterprises is the modest shift to an opportunity driven entrepreneurial attitude in Tanzania. The lack of trust in businesses beyond family ties is an important institutional hurdle for cluster formation. It hinders the necessary formation of enterprise linkages. No full-grown appropriate energy enterprise cluster was identified during the research, but based on the encountered inceptive clusters five types of cluster promotion are categorized. Firstly, the development organization SNV experiments with an organizational cluster that brings together the main stakeholders in the energy sector to coordinate their activities. This type of cluster promotion is a first step to improve the institutional setting for appropriate energy enterprise clusters. Secondly, Camco, a consultancy firm, shows that customers can be organized to collectively procure an energy technology and create economies of scale. AEEs are potentially linked to these groups of customers to promote enterprise clusters. Thirdly, development organization Instituto Oikos initiated a one stop shop that provides a wide range of energy technologies for a community. This type of cluster promotion comes closest to the theory of cluster strategies because it brings together governments, enterprises and civil society organizations in one location. Fourthly, a number of organization among which TaTEDO, a Tanzanian NGO, started energy platforms, a large energy installation that delivers an energy resource to nearby households, for example via a mini-grid. This type of cluster promotion creates a focal point for all energy related issues in a village, but requires an elaborate strategy to create proper management of the energy platform and promotion of AEEs. Fifthly, the Tanzanian companies Tanga Fresh and Diligent are active in respectively the dairy and Jatropha sector. Clusters of appropriate energy enterprises are promoted through these existing value chains by integrating appropriate energy technologies such as biogas and improved cook stoves to fit the energy needs of their producers. The goal of sustainable energy provision is to meet household energy needs. The research results point to cluster promotion through existing value chains as currently the most suitable strategy for achieving this goal. In rural Tanzania it makes economic sense to use the limited infrastructure to integrate energy provision and appropriate energy enterprises with the existing business activities, such as diary and Jatropha production. The crux is to create the right institutional setting to develop the mutual benefits of sustainable energy provision for households and enterprises. The results in this master thesis show that in sub-Saharan Africa lack of trust and inefficient institutions can hinder enterprise development. Development sometimes requires a third party to allow entrepreneurs to initiate investment or carry out a transaction. Successful business relations can create trust and propel the process further. Cluster promotion is a strategy to change the institutions or “rules of the game” in favour of enterprise development and endogenous growth.