Uganda has a burgeoning renewable energy sector: with just over 900MW of power-generation capacity, 17% is made up of small renewables consisting of small hydro projects and biomass co-generation at sugar manufacturing plants. This share will grow considerably, as 157MW of feed-in-tariff supported projects are expected to be commissioned by 2018.
The bulk of the country’s generation comes from large hydro plants owned by the state-run Uganda Electricity Generation Company (UEGCL) and Bujagali Energy Limited, an independent power producer (IPP). Under its 2007 Renewable Energy Policy, Uganda has a target to increase its renewables capacity, including large hydro, to 1,420MW by 2017 – in 2015 it stood at 786MW.
Uganda is one of the few sub-Saharan countries to have liberalized its energy market; generation, transmission and supply were unbundled in 2001. Distribution is dominated by Umeme, which in 2015 supplied 98% of Uganda’s electricity consumption. The near-monopoly is a publicly traded company with a 20-year concession for distribution and retail in Kampala and several other territories. Uganda Electricity Transmission Company (UETCL) and UEGCL are both state owned and have a mandate to support government policy objectives. IPPs account for 58% of generation capacity, a share which is set to grow in the near term as a number of smaller renewables projects are developed. However, UEGCL intends to roughly triple its capacity with a 600MW hydropower project, developed in partnership with China, due to come online in December 2018.
Renewable project developers have been offered a feed-in tariff since 2007, but this has had limited success in encouraging capacity build. As a result, in 2013 the government and development partners launched a programme to fast-track 20-25 small-scale renewable projects with a target capacity of 150MW. The scheme, known as GET FiT, originally focused on small hydro, bagasse (sugarcane waste) and other biomass. In 2014 solar PV was included in the list of eligible technologies. To encourage participation, developers benefited from a top-up on the existing feed-in tariff and standardisation of power purchase agreements and the development process. By the end of 2015, 17 GET FiT projects had been approved for 20MW of biomass, 117MW of small hydro and 20MW of solar PV, with commissioning expected by 2018. Once complete, the portfolio of projects will have increased Uganda’s small renewables capacity by 123%. However challenges remain to bring these projects online, as grid capacity is constrained. Despite international donors agreeing to fund additional transmission and distribution capacity, projects have been slow to get off the ground. Prospects for further small-scale renewables development are muted, as with the commissioning of the 600MW Karuma hydropower project in 2018 the country faces a period of over-capacity.
Credit-enhancement and support instruments are available to the private sector for both on- and off-grid projects via the government owned – and internationally financed – Uganda Energy Credit Capitalisation Company (UECCC). Support includes technical assistance for early stage grid-scale project development and working capital for pay-as-you-go off-grid solar providers. UECCC has provided over $350,000 subsidising the cost of customer connections and had a 2015 budget of UGX 1bn ($308k) to support installation of residential and commercial PV systems.
Uganda has one of the lowest electrification rates in Africa, remaining at 15% in 2015. Under the Strategy and Plan covering 2013-22, the Rural Electrification Agency aims to connect over 1.4m customers to the main grid. The Agency plans to increase today’s 7% rural electrification rate to 26% by 2022, with the ultimate goal of universal access by 2035. It is also in the process of building micro-grids to connect an additional 144,000 off-grid customers via solar PV, micro-hydro and biomass generation financed by private developers or local communities.
The solar PV market in Uganda has steadily grown over the last 15 years with new players, including foreign investors, entering the market. Today over 200 companies are involved in the solar business. The lack of grid access in rural areas and the growth of telecoms, which facilitates mobile payment and monitoring systems, are structural factor that have benefited off-grid solar development. Policy measures such as tax exemptions for solar equipment and subsidies for end-users have also supported expansion of the sector. However, many players complain that these mechanisms are poorly implemented, often creating additional challenges. Biofuels production has been lacklustre to date. However a biofuels blending bill has been introduced by the government as is expected to pass into law in 2016. This should support development of production capacity on top of an 18mLpa bioethanol plant that was commissioned in September 2016.
Uganda scored 2.05 in Climatescope 2016, up from 1.68 the previous year. This increase carried it two places higher to rank 7th overall. Its best performance came on Low-Carbon Business & Clean Energy Value Chains Parameter III.
On Enabling Framework Parameter I, Uganda’s score sank by a small margin. The sector’s low barriers to entry and the relative strength of its clean energy policy environment are supportive factors.
On Parameter II, the country’s score more than doubled thanks to a sharp rise in the volume of investment to $189m in 2015, compared with approximately $50m across all sectors over the last four years.
Uganda ranked 8th on Low-Carbon Business & Clean Energy Value Chains Parameter III. Its score is supported by its distributed energy sector, both in terms of the diversity of the value chains present and number of service providers.
On Greenhouse Gas Management Activities Parameter IV it scored higher owing to improvements in its carbon policies. It ranked 13th globally, and 3rd in Africa behind South Africa and Kenya.
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