The GET FiT Uganda Program was formally launched in May 2013. The Program is designed to target the key barriers confronting investors looking at potential investments in small renewable energy projects (1-20 MW) in Uganda and thereby fast-track up to 20 projects1, representing up to 170 MW and 830 GWh/year. The main feature of the Program is a front-loaded results-based premium payment designed to top-up Uganda’s own Renewable Energy Feed in Tariff (REFiT) and be paid out over the first five years of operation.
The initiative is being spearheaded and implemented by Uganda’s Electricity Regulatory Authority (ERA), the Government of Uganda (GoU) and the German Development Bank KfW, with funding contributions from the Governments of Norway, Germany, UK and the European Union (EU). The World Bank supports the Program through a Partial Risk Guarantee facility.
In 2015, six GET FiT hydropower projects started construction. Following a series of delays, this represents an important milestone for the Program. The remaining projects in the portfolio are expected to break ground in 2016, which is vital to meet the time-bound targets of the Program. Moreover, the first and only biomass (bagasse) project was officially commissioned in July, resulting in the first premium payment being disbursed by the Program. Finally, the solar PV projects awarded support in late 2014 are progressing and one of the two 10 MW solar projects has reached financial close and will commence construction in early 2016.
The third and final RfP round was completed in July, resulting in the approval of six additional hydropower projects. While funds are currently available to support up to five projects, the last project is placed on a reserve list. Should projects within the current portfolio dropout or, preferably, additional funds become available, this project may still be supported. Unfortunately, few biomass/bagasse projects applied in this final tender, and none were approved. GET FiT will thus remain with only one biomass power plant in its portfolio.
As a result of intense efforts to overcome legal and regulatory issues, which caused severe project delays throughout 2014, a range of projects have signed Power Purchase Agreements (PPA) and Implementation Agreements (IA) during the past year. Despite the delays, the discussion process has resulted in more viable agreements that will benefit future small RE developers in Uganda. With legal issues largely resolved, most developers can now concentrate fully on technical aspects. Hopefully this will enable swift progress towards construction starts in the upcoming year.
Despite progress in 2015, challenges still remain. Issues relating to grid interconnection for several GET FiT projects have emerged as the most critical external risk to Program success. Comprehensive efforts are being made by GET FiT development partners to mitigate these risks, through i) financing critical power grid infrastructure, and ii) financing technical assistance to ERA for grid regulation. Furthermore, KfW and the GET FiT Secretariat are facilitating dialogue and coordination to achieve timely progress in line with implementation of the GET FiT portfolio.
Overall, GET FiT Uganda has so far managed to establish a promising project portfolio, with about one third having started or completed construction. A range of technical, legal and regulatory issues have been solved or at least highlighted, paving the way for future RE developers. Going forward, continuous efforts will be made to ensure that more projects break ground and that interconnection issues are resolved as soon as possible. 2016 is likely to become another interesting and challenging year for GET FiT.
Finally, we are encouraged to see that the GET FiT concept is likely to be rolled out in other countries. In 2015, 10 countries in Sub Sahara Africa have been assessed as potential partners for GET FiT implementation. Assessments are still on-going, and decisions to proceed towards programme establishment are expected in the second quarter of 2016.
1) The estimate has increased from previous estimates of up to 15 projects. Mainly due to smaller average project size and introduction of four solar projects to portfolio.