Delivering infrastructure and energy. The GET FiT Uganda Programme made substantial progress in 2018. Four new hydropower projects with a total capacity of 29 MW were commissioned during the year, thus increasing the total installed capacity of the GET FiT portfolio to 87.1 MW. A total of ten projects, including seven hydropower projects, two solar projects and one bagasse project, are now operational and delivering renewable energy to the Ugandan grid. Overall, GET FiT projects generated a total of 271 GWh during 2018, corresponding to approximately seven percent of the total grid electricity supplied in the country.
Saving money with renewable energy. According to the system operator (Uganda Electricity Transmission Company Ltd. – UETCL) power from GET FiT projects represented a critical contribution in meeting national electricity demand over the past year. Due to delayed commissioning for Uganda’s planned, large hydropower plants, and increasing demand for exports to Kenya due to problems with regional supply on its side of the border, UETCL has experienced a general shortage of supply and has been forced to dispatch thermal (HFO) plants to meet demand. Access to clean renewable energy delivered from GET FiT projects reduced the need for expensive thermal power, and contributed to estimated savings of more than USD 20 million and 180 000 tonnes in greenhouse gas (GHG) emission reductions in 2018.
With the expected commissioning of up to six additional hydropower projects in 2019, and ongoing efforts to resolve grid related issues for operational plants, the overall energy generation from the portfolio is expected to increase substantially in 2019. Depending on the commissioning of non-GET FiT power plants, it is expected that the entire portfolio could contribute up to 18 % of the total electricity generation in Uganda in the interim period. Investment Climate. GET FiT Uganda has clearly demonstrated its potential for private sector development. It is not only contributing through the development of additional, technologically and geographically diversified renewable energy capacity in the country, but has also had a considerable impact on the overall power sector of Uganda. As of 2018, the Programme has leveraged over USD 450 million in private investments, including USD 160 million of private commercial financing. After closing the GET FiT funding window, the private sector interest in renewable energy development has remained very high in Uganda, with a range of solar, hydro and biomass projects now being developed without subsidies.
Job creation. With a continued high level of construction activities in 2018, job creation from the portfolio continues to be substantial. Since the Programme was launched in 2013, an accumulated total of over 8,500 jobs have been created through the project portfolio, with nearly 90 percent of those jobs being occupied by Ugandan staff. This refers to direct jobs only, associated with development construction and operation of the respective power plants. The potential indirect job creation due to e.g. local economic growth is not included but is expected to be significant.
Additionally, while long-term effects of the Programme are still to be observed, indications of increased sector and regulatory capacity can already be reported in 2018: ERA has reported substantially reduced review and processing time of generation licence applications, as well as increasingly timely and complete reporting of licensees. The strengthened capacity of ERA not only benefits development of small IPPs, but also the Ugandan power sector as a whole.
Portfolio output and performance. The operational part of the GET FiT portfolio (87.1 MW) is distributed across 47.1 MW in hydropower projects, 20 MW in solar PV projects and 20 MW in bagasse. The portfolio delivered a total of 271 GWh to the Ugandan grid in 2018:
Construction progress. Most of the remaining seven hydropower projects which are still under construction are expected to be commissioned in 2019. One or two will be completed in 2020. Actions were taken by the Programme to minimise commissioning delays beyond the original 2018 funding window, including additional supervision visits, and application of incentives such as financial penalties in the form of subsidy reductions. While developers certainly have made substantial efforts, poor progress on certain design and construction works might lead to further delays for some projects. Active GET FiT supervision and assistance will therefore be maintained in the upcoming year for a continued push towards a fully commissioned portfolio including close monitoring of environmental and social compliance.
Grid Integration. The successful grid integration of the portfolio remains a challenge for the Programme, both in terms of full evacuation of commissioned projects and the development of grid connection infrastructure for projects under construction. GET FiT Uganda development partners have provided considerable additional funding towards important investments in the reinforcement of the national and local grid infrastructure to facilitate power evacuation from GET FiT projects. While contractors were mobilised in 2018 for some of the most critical components, other reinforcement needs are still not properly addressed. This represents an operational, financial and reputational risk to the Ugandan power sector and to the GET FiT Programme. GET FiT maintains a close dialogue with the Government of Uganda agencies to facilitate high-level attention and coordination in fasttracking the grid infrastructure which will continue in the forthcoming year.
Technical Assistance. Two Technical Assistance components for the Electricity Regulatory Authority (ERA) were concluded in 2018. A new framework for licensee reporting was put in place, and a new regulation for determining financial and economic returns for licensees in the power sector was established. The latter will greatly improve ERA’s ability to conduct constructive negotiations with entities that want to invest in power sector infrastructure in Uganda and to ensure levels of returns that are economically viable to the benefit of Ugandan consumers, while also reflecting benchmark costs and maintaining private sector attractiveness. Another milestone project for ERA is the implementation of a new Regulatory Information Management System (RIMS). The digitalisation of core ERA processes, including licence applications and reporting, will further cement the position of ERA as one of the most progressive power sector regulators in Africa. Further, as part of a twinning arrangement, ERA and the Implementation Consultant (Multiconsult) are developing checklists and guidance documents for institutionalisation at ERA, papers for international publications, and are in continued dialogue on key technical, environmental and social issues of power projects. This knowledge transfer is a key element of the GET FiT exit strategy.
Outlook. 2019 will surely be an exciting yet challenging year for the Programme, with up to six of the seven remaining hydropower projects set for commissioning. These will require close follow up, particularly related to implementation of adequate grid infrastructure. GET FiT grid interventions are due for completion during the year, which will positively affect the evacuation of operational plants and increase the portfolio’s generation. To ensure a timely implementation process, GET FiT will continue to push stakeholders on fast-tracking critical grid upgrades in 2019.
The Ugandan power sector appears more vibrant than ever, with a booming interest from the private sector. The successful implementation of seventeen IPPs under GET FiT has clearly set a new standard for what is possible with private sector mobilisation, thereby freeing up scarce public resources in times of rising debt. Notably, and highly encouragingly, there is now an increasing interest from the private sector in other areas of the power sector as well, e.g. for development of transmission projects, large power plants, and off-grid electricity development. Although there are many challenges ahead, such as a growing generation surplus, and uncertainties remain, the general private sector interest is good news for Uganda and bodes well for exciting times ahead.
With continued, targeted efforts at the project level and sector level, the overall impact of the GET FiT Programme will be further strengthened in the upcoming year. The diverse project portfolio will, more than ever, offer affordable renewable energy to Ugandan consumers, contributing to clean and sustainable power sector development, improved security of power supply, power quality and grid stability.