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Energy & Resources

Uganda sets the standards for Africa in renewable power

There are a number of key initiatives concerning off-grid initiatives in Uganda, among them the enactment of off-grid regulations and the adoption of new business models. As a regulatory authority, what do you see as the biggest challenges Uganda faces in these initiatives?

Firstly there is the enactment of the off-grid regulations, The Electricity (Isolated Grid Systems) Regulations, 2020, which provide for a clear and robust regulatory framework covering the technical, legal, economic, environmental, tariff and grid arrival considerations.

Then there is the adoption of attractive new business models. For example, the Electricity Regulatory Authority [ERA] licensed bundled villages under one licence under the Pro Mini Grids project. The economies of scale with such a packaging help in the provision of access to even smaller communities that without a model would be non-viable both financially and economically.

The ERA has been discouraging non-renewables in the design of projects, especially under the competitive tenders, with higher marks awarded to solutions with renewable power. 

The provision of government subsidies to off-grid developers through the Rural Electrification Program. The subsidies are mainly towards the construction of the distribution grid and the last mile connections and this has been a great success.

Additionally, the design of simplified internal wiring solutions, with ready boards for those households that lack internal wiring, or for semi-permanent housing structures where the conventional internal house wiring is not possible.

What have you learned so far from partnerships with institutions such as the Mulago Neonatal Unit and Uganda Prisons Services, to switch from using biomass to electricity in kitchens?

Our observation is that the initial capital for efficient cooking facilities is high. Therefore there is a need for a framework that manages the front end cost of the acquisition of the equipment. In time as the cost falls we are able to then roll out on a massive scale, unrestricted by the tariffs. But now we see reduced tariffs for cooking. 

The cooking tariff is to encourage domestic users to cook using electricity as opposed to using charcoal, which contributes to the depletion of forest cover but also creates respiratory health challenges.

As mandated under the Electricity Act, the ERA has approved investments towards the provision of electrical infrastructure used by citizens.

Are there any specific initiatives being driven or championed by the ERA that are helping to improve both the livelihood of the citizens of Uganda and the environment?

Basic access to electricity – lifeline (social tariff) for all domestic consumers across the country, small distribution companies – driving access in the mostly rural parts of the country where the main national grid distribution company would ordinarily not operate due to the limited revenue per customer. 

Also the adoption of enabling policies (REFIT, Rebate, Quality of Service etc) geared towards enhancing the efficiency, access, and customer experience of the stakeholders in the electricity supply industry.

Access to electricity in sub-Saharan Africa has doubled in the past two decades. To what extent will off-grid renewable power help make this a reality across the country?

Access to electricity stands at 51% with the majority (32%) connected to off-grid systems. The Energy Policy has recognised off-grid supply as a contributor to Uganda attaining universal access to electricity.

The ERA has enacted enabling regulations to offer a robust regulatory framework including the attraction of private sector capital into the off-grid renewable power segment.

What are the biggest challenges in delivering off-grid renewable power? 

Affordability of the electricity – with consideration given to full recovery of capital expenditure, operations and maintenance costs, and a reasonable return on investment, the end user tariffs for the off-grid systems are in most cases bound to be higher than the national grid tariffs making it unaffordable for the end users. We need to have in place a suitable framework and source for subsidy (especially towards the construction of the distribution network and last mile connections) to support the buying-down of the tariff.

How successful has Uganda been so far in meeting its energy targets?

Following the electricity reforms in the early 2000s, the country has registered tremendous growth in the sector including the successful unbundling of the electricity supply industry; the attraction of substantial amounts of private capital into the generation and distribution segments; an increase in the generation capacity; increased transmission capacity; revamped distribution network system; reduced energy losses; improved revenue collection realisation; and a reputable and competent regulator, ranked as number one on the African continent for four straight years.

Is it fair to say Uganda is setting a standard for the rest of the continent or even the rest of the world to follow when it comes to renewables?

Correct. The regulatory climate in Uganda has been assessed as the best on the African continent for the last four consecutive years. Also participating in the registered user index has enabled us to identify gaps and continuously work to improve on them. 

In addition to our regulatory climate we also have a lot of support from government. There is minimal interference with the independence of decision making. 

It is very important that our body determines the price of electricity. And we are supported by government to implement it, which is not found in many countries, because in some countries, the tariffs are determined by politicians, who can make it difficult for the sector to implement them. And in the end, you find a lack of investment in the network, or a lack of compensation. And, therefore, the climate suffers, as well as the quality of supply, and the quality of service suffers. 

But we have enjoyed a lot of support from the government. 

It is true we’ve had some of the most expensive projects. For example, we hosted the first-ever big hydro on the continent. And when you host the first project, it’s breaking new ground, and therefore the risk perception is high. But all this has worked in the interest of the country. 

We have seen a lot of progress. And we believe that it can only get better. We are in for very exciting times in Uganda.