Uganda has just over 900MW of power-generating capacity, of which 17% comes from renewable sources excluding large hydro. This is primarily small hydro projects and cogeneration capacity attached to sugar manufacturers. The state-owned Uganda Electricity Generating Company Limited (UEGCL) holds just under half – all of it large hydro – of the country’s on-grid generation capacity. That said, Uganda has a target to increase the share of modern renewables in total energy consumption to 61% by 2017 from 4% in 2007 – in 2014 it stood at 25%.
One of the few sub-Saharan African countries to have liberalized its energy market, Uganda’s generation, transmission and supply segments were unbundled in 2001. The generation and transmission companies, Uganda Electricity Transmission Company (UETCL) and UEGCL, are both state-owned but in 2014 UEGCL announced plans to list on the Uganda Stock Exchange by 2017. The supply company, UMEME, is privately owned and has a 20-year concession for distribution and retail.
Independent power producers currently 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 jointly with The People’s Republic of China.
Renewable project developers have been able to benefit from a feed-in tariff since 2007, though this had limited success in encouraging capacity build. As a result, in 2013 the government, with development partners, launched a program aiming to fast-track 20-25 small-scale renewable projects. The program, known as GET FiT, is expected to add some 150MW of renewable capacity to the Ugandan electricity grid by 2018. Originally only hydro, cogeneration (bagasse) and biomass projects were eligible. In 2014, Uganda added solar PV projects to the scheme and introduced a feed-in tariff for the technology, aiming to develop 20-30MW in just over a year.
By the end of 2014, 15 projects had been approved consisting of 28MW of biomass, 80MW of small hydro and 20MW of solar PV, with commissioning expected by 2016. The third and final round of tenders to procure the remaining capacity for hydro, bagasse and biomass will be completed in 2015, while an additional round of solar PV is expected in the following year. The country also has a geothermal developer – although the geothermal project is yet to progress past exploratory stages.
Credit-enhancement and -support instruments are available to private-sector-led projects via the government agency, the Uganda Energy Credit Capitalisation Company. Such tools include a partial risk guarantee, bridge financing and subordinated debt finance.
In June 2015 the Ugandan Cabinet approved a draft biofuels blending bill that would require all petroleum products to contain 20% biofuels as well as providing tax rebates and financing incentives for developers. The bill was originally proposed in 2007 but, after the discovery of Ugandan oil reserves, it ceased to be a priority. With support from the government, the bill will go before parliament after the 2015 summer recess.
Uganda has one of the lowest electrification rates in Africa, at 15% in 2014. Under the Strategy and Plan covering 2013-22, the Rural Electrification Agency plans to connect over 1.4m new electricity customers to the main grid. Its goal is to increase rural electrification to 26% by 2022, with the ultimate goal of reaching universal access by 2035. It is also in the process of building microgrids to connect an additional 144,000 off-grid customers via solar PV, micro-hydro and biomass generation financed by private developers or local communities. However, progress on both fronts is sluggish. The increase in electrification is slowing and REA is struggling to find parties willing to finance the microgrid generation, which it is not mandated to do itself.
Score Summary
Uganda scored 1.68 in Climatescope 2015, placing it 9th on the list of countries overall. The country’s ranking climbed one place on the list from 2014. Its highest ranking came on Low-Carbon Business & Clean Energy Value Chains Parameter III.
On Enabling Framework Parameter I, Uganda climbed to 7th place overall. This was partly driven by its policy score and an improvement in regulations governing distributed energy.
On Clean Energy Investment and Climate Financing Parameter II, the country’s score increased, due to a jump in the volume of loans and grants, among other things.
Uganda’s strong showing on Parameter III was, in part, supported by a relatively large number of service providers, in both the distributed and utility-scale clean energy sectors.
On Greenhouse Gas Management Activities Parameter IV, the country scored higher owing to a comparatively strong performance on the Clean Development Mechanism Risk Indicator.