Year in review 2013

Executive Summary


The GET FiT Uganda Program was formally launched in May 2013. The Program is designed so as to simultaneously target the key barriers confronting investors looking at potential investments in small renewable projects (1-20MW) in Uganda and thereby fast-track some 15-20 projects, 170MW and 830GWh/year. The main feature of the Program is a front-loaded results-based premium payment designed to top-up Uganda’s own REFiT and be paid out over the first five years of operation.

Additionally, the Program is designed to contribute to installation of 20MW of grid connected solar PV, resulting from a reverse auction with a GET FiT top-up; improvements to the enabling environment, for example standardized PPA and IA for small renewables; parallel implementation of a World Bank GET FiT Partial Risk Guarantee (PRG) providing coverage for up to MUSD 160 for small renewables; actively facilitating and promoting commercial investments in the sector, and lifting the capacity and competence of ERA through targeted TA Programs.

The initiative is being spearheaded and implemented by ERA, the Government of Uganda and KfW, with funding contributions from the Governments of Norway, Germany, UK and the European Union (EU). 

During 2013/14 (April 1st-March 31st), the GET FiT Program has made considerable progress in building its pipeline of projects. After successful completion of two Request for Proposal, the approved portfolio now stands at 12 projects, representing 103 MW and about 600 GWh of annual generation. This is generally in line with expectations and consistent with an intention of three RFP rounds and a solar PV tender targeting 20 MWp, in order to achieve the overall target of 170 MW and 830 GWh/year. The current portfolio would imply nearly MUSD 330 in investment and MUSD 60 in approved GFPPM commitments, which would be consistent with a targeted 1:5 leverage ratio, even with a payments-on-results design (rather than capital grants). The results of the two first RFPs and reactions from the market indicate that the GET FiT Program is well targeted to address the critical barriers confronted by small renewable energy developers in Uganda.

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The Program design and institutional set-up is well established in the sector, having a clear and well respected role among the relevant stakeholders, particularly investors. Key milestones regarding Program set-up have included: two successful tender rounds and a promising pipeline for the final RFP; award and mobilization of the Implementation Consultant (Multiconsult|Norplan); development of a monitoring and evaluation (M&E) framework and baseline (IMC Wordwide); GoU approval of the small-scale renewables standardized PPA and IA; approval of the World Bank IDA PRG Program; successful launch of Uganda’s first solar PV tender, facilitated by the Solar Tender Agent (AGUT EAS; several TA assignments for ERA procured and initiated; a well-attended and engaging Commercial Bank Round-table to promote private investment in renewables in Uganda; and; 40,000 hits on the GET FiT Homepage.

Thanks to Development Partners’ commitments, the Program is now fully funded and well placed to achieve on the key output targets. The soon finalized M&E system will enable tracking of other key target outputs and outcomes and allow for a comprehensive evaluation of the Program´s approach.

However, results will not be achieved due to funding commitments alone. The results-based nature of the Program implies that the success depends on the performance of individual projects and developers. This leads to uncertainty and risks, particularly regarding the wide range of potential sources of delay for individual projects in the portfolio. While it is notable that none of the hydropower projects have started construction, it is expected that several will do so within the 2014 calendar year. The main focus of KfW and the GET FiT Secretariat for the year to come will be to ensure progress for the project portfolio, but this will also depend upon the action of authorities, developers, investors and consultants.

With the GET FiT Secretariat now fully staffed and operational, the underlying risks and uncertainties are being actively and regularly monitored. The coming year will prove decisive in terms of the Program´s prospects for achieving its time-bound targets; with progress on the existing portfolio and the results of the third and final RFP round being the critical developments to follow during the year. In order to effectively steer the GET FiT project portfolio through the development phase to commissioning will require dedicated and coordinated efforts from all involved stakeholders. With a sizeable project portfolio already approved, the GET FiT Secretariat is committed to do its part to ensure that the people of Uganda reap the full and timely benefits of these projects, and thus of the GET FiT Program itself.
 

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