Prolonged drought at hydropower stations and rising fuel prices have resulted in acute energy shortfalls, forcing the state-run power utility to introduce rolling blackouts.
Construction of the first-ever wind power station in the country, in the central town of Singida, will add some 50 megawatts of electricity to the national power grid.
The state-run National Development Corporation (NDC) holds a 51 percent stake in the project and a privately owned company, Power Pool East Africa Limited, retains the rest. The details of the financing were not immediately available.
The country produces most of its electricity from hydro dams and generates close to 300 MW using natural gas from a deposit on Songosongo island off the coast.
Its energy demand is close to 900 MW while it produces less than 800 MW.
The state-run Tanzania Electric Supply Company (TANESCO) has announced it will raise tariffs by 18.5 percent from January 1.