Uganda, which relies on hydropower for up to 84% for its electricity generation, is now exploring the option of scaling up mini-grids, both grid-connected and off-grid systems in a bid to achieve at least 26% rural electrification rate with at least 1.4 million home connections by 2022.
The rural electrification plan gives priority to renewable energy mini-grid systems. However, the manager in charge of off-grid renewable energy at the state-owned Rural Electrification Agency (REA), Mr, Benon Bena, said faces several challenges that are being addressed by the Ministry of Energy in partnership with Uganda’s development partners and the private sector.
Focusing on off-grid mini-grids
Mr. Bena said the government has shifted focus to mini-grids, especially off-grid systems because Uganda, like many sub-Saharan Africa countries, has scattered settlements, which limit the number of people that can effectively be reached by the national grid.
Bena said the delay to expand the national grids has on the other hand created a perfect opportunity for off-grid systems such as PV-hybrid (with diesel, small hydro, biomass or wind), PV-hybrid with batteries and PV only with battery systems in boosting access to electricity.
However, he said: “These potential for off-grid systems will not realized unless Uganda addresses several constraints such as the existing mindset of energy planners who view grid as the only approach to providing electricity.”
The REA off-grid manager was among the top African energy sector decision makers who turned up in Dar es Salaam, Tanznia in November to show-case available opportunities in Uganda for the private sector to develop renewable energy off-grid systems during the third Africa mini-grid summit in Dar es Salaam Tanzania sponsored by Singapore-based Magenta Global.
“As a government, Uganda is hoping to demonstrate that mini-grids can provide reliable electricity cost effectively,” he said.
“There is also the challenge of consolidating projects in a geographical area to benefit from economics of scale and reduced operational cost,” he said.
High consumer tariffs
Bena said Uganda, which in December 2016 commissioned East Africa’s largest grid-connected PV plant with capacity of 10MW, is currently exploring ways of addressing the high upfront capital requirement that has been blamed for the high consumer tariff. These tariffs limit the ability of rural communities to pay for electricity.
Some of the options REA is proposing include providing subsidies especially for the distribution grids, concessional financing or guarantees to lower end-user tariff and the streamlining and shortening of the licensing procedures of those willing to invest either in grid-connected mini-grids or off-grid systems.
He said Uganda is also in the processing of “removing or reducing license fee for very small renewable and providing predictability of when the grid is likely to be extended to off-grid areas.”
“We are developing rural electrification master plans that give timelines of when the grid is expected and what happens when it arrives,” he said.
REA recently launched the process of preparing a master plan that among other things will help determine areas suitable for grid extension within the next 10 years and also those suitable for off-grid solutions.
“This process will be followed by a study of these identified off-grid areas to pre-feasibility level before they are tendered to the private sector for development,” said Bena.
The Ugandan government through the Ministry of Energy is expected to provide a buy-out option to the mini-grid operators or offer a grid connection that guarantees them their projected revenues.
“We are improving the regulation and incentives for connection of small renewables to the grid,” said Bena.
Scaling up of off-grid systems in Uganda comes after a report in September by the International Renewable Energy Agency, which said: “Isolated mini-grids in Africa offer the potential to electrify entire communities in a single project, as well as providing flexibility to scale and interconnect with the grid at a later date.”
The report ‘Solar PV in Africa: Costs & Markets’ further said the existing grid-connected mini-grids such as those linking government, education or hospital complexes, mining or business activities “also represent an opportunity for solar PV to reduce operating costs and lock in prices.”
“With the fall in solar PV costs, solar PV mini-grids offer important economic opportunities today as either the sole source of generation or in hybrid configuration with other generation sources,” it said.
IRENA estimates that stand-alone solar PV mini-grids or solar PV-hybrid mini-grids in sub Saharan could cost between $1.9 and $5.9 per a watt.
“With the extensive use of diesel-based mini-grids there are opportunities to not only hybridise existing diesel mini-grids, but also develop new mini-grids with the decline in solar PV and Li-ion battery costs, incorporating solar PV has become highly economic to reduce diesel costs,” said IRENA.
Adding solar to diesel mini-grids
Furthermore, IRENA said: “The addition of solar PV to existing diesel mini-grids is an increasingly economic option” and estimates Africa to have 35GW of oil-fired generation capacity of which 19.7GW is in sub-Saharan Africa.
Currently, Uganda has an installed capacity of 855MW of which more than 80% is hydro-based. At least another 783MW of hydro-based projects are underway with financing from China and only 157MW of renewable energy projects are in various stages of development by the private sector through the country’s feed-in tariff scheme.
Written by Shem Oirere, a freelance writer based in Nairobi, specializing in renewable energy.