Addressing critical grid bottlenecks: GET FiT interconnection support

During the course of GET FiT implementation, it has become clear that certain grid investments are needed to address critical bottlenecks and to ensure adequate interconnection and power evacuation for several projects in the GET FiT portfolio. This is largely due to the high regional concentration of hydropower projects in the portfolio, causing capacity constraints on the local distribution and transmission grid. However, through targeted joint efforts by GoU, Development Partners and GET FiT, the infrastructure and associated TA support required to overcome these barriers are now identified, their costs have been estimated, and progress is being made to secure funding and allow for timely and coordinated implementation.

In this regard, GoU has established a dedicated task force (ERA, UETCL, Uganda’s Rural Electrification Agency (REA), and the private distribution company Umeme) to address the interconnection challenge. In June 2014, the task force delivered the report “Power Evacuation and Grid Interconnection Study for the Global Energy Transfer Feed-in-Tariff Projects”, with the following primary objective: 

To plan for adequate infrastructure to enable proper and full evacuation of the proposed GET FiT generation projects to mitigate power shortages in the medium to long term and also to avoid situations of deemed energy1.

The task force has identified system - and budget requirements for integrating the current GET FiT portfolio in its entirety, while also aiming, to the extent possible, to facilitate projects expected aboard after RfP Round 3. Based on the conclusions of the task force, KfW and the GET FiT Implementation Consultant developed a list of urgent investment needs to the existing Ugandan grid. These investments will safeguard the targets of the GET FiT portfolio through ensuring adequate grid integration for all projects, while also introducing additional benefits such as i) potential for grid integration of additional renewable energy generators, ii) increased rural access, iii) increased grid stability, iv) employment and more. Identified investment needs include:

  • Mbale – Bulambuli transmission project.
    A high voltage (132 kV) 60 km transmission grid extension including two substations in Eastern Uganda. Required to evacuate power from Siti II and a range of potential future hydro sites in the Mt. Elgon area.
     
  • Opuyo Substation.
    Transmission substation reinforcement in Eastern Uganda required for evacuating power from future solar plants in Soroti (from second solar PV tender).
     
  • Reinforcement of medium voltage (33 kV) distribution networks
    in Western Uganda, mainly by increasing conductor size for critical line segments. This is required to adequately grid integrate a range of GET FiT hydropower projects in the Kasese – Fort Portal area.
     
  • Nkenda Substation.
    Transmission substation reinforcement in Eastern Uganda required to adequately grid integrate a range of GET FiT hydropower projects in the Kasese – Fort Portal area.
     
  • TA support to ERA
    in development of standard documents for grid interconnection of small renewable energy generators and compliance monitoring of transmission and distribution companies. 

Total investment needs are estimated to some MUSD 90 and financing must be urgently secured to allow for full implementation in the period 2015-2018. While GoU is already committed to several of the above mentioned projects through their national grid investment plan, support from development partners will be necessary to ensure that these investments are implemented in a timely manner with respect to the GET FiT portfolio. 

Additional funding to aid GoU in implementing the proposed interventions is currently being solicited and encouraging progress has already been made in this regard: GET FiT development partners, including UK DFID, World Bank, EU and Germany have committed or are considering opportunities for providing additional support to grid interconnection. Notably, the EU is already financing the feasibility study for the Mbale – Bulambuli 132 kV transmission grid extension. In December 2014, Germany committed to provide a concessionary loan of up to MEUR 40 to the project (subject to positive appraisal based on the feasibility study). To ensure the full financing of the estimated MEUR 50 investment costs, the EU is also considering an investment grant for the transmission line.  In parallel, UK DFID is reviewing a proposal to fund i) the urgently required 33 kV grid reinforcements in Western Uganda, ii) the Opuyo transmission substation upgrade and iii) TA support to ERA. The World Bank is prepared to provide funding for the Nkenda Substation upgrade. 

Furthermore, the Governments of Norway and Germany and the World Bank are already involved in on-going transmission grid extension projects in Uganda along with a range of other development partners. 

Going forward, GET FiT Uganda will continue to be a driving force in ensuring that the required grid reinforcements are implemented in a timely manner. The GET FiT Secretariat will maintain its role as a member of the Joint Task Force, supporting ERA, UETCL, REA and the distribution companies throughout the coordinated implementation of required grid reinforcements and extensions. GET FiT will ensure alignment of grid investments with the implementation of the GET FiT portfolio, and facilitate communication and coordination between stakeholders (including project developers).

Through the joint efforts of GoU, its parastatals and key Development Partners, the grid interconnection support component established under GET FiT can provide a forceful and efficient tool to overcome critical grid-related bottlenecks. As a result of the swift and serious actions taken by Ugandan authorities and the proactive support of KfW and the GET FiT Secretariat, the identified requirements can still be implemented in time to safeguard the original GET FiT renewable energy production targets, while even introducing a range of additional benefits.


----------
1 Deemed energy is energy which could have been produced at a generating facility but is not due to insufficient grid capacity. This represents an income loss to the power plant owner, which must be compensated by GoU. Thus insufficient grid capacity represents a critical risk to the financial viability of the Ugandan power sector.