Uganda has been ranked 10th out of the 55 countries in world and third among African nations in this year’s Climatescope assessment of countries in Africa, Asia, Latin America and the Caribbean on their potential to attract investment for clean energy companies and projects. Uganda has introduced several reforms in the electricity sector that have boosted investments.
According to the report, Uganda performed best, achieving 75% low-carbon on Value Chain Parameter III. The report notes that Uganda’s non-large hydropower sector attracted US$307 million from 2006-2013, though annual investment ranged from US$135 million in 2008 to zero last year. In Africa, Kenya and South Africa are the only two countries ahead of Uganda in the Climatescope index.
Uganda has a liberalised power sector, but its electrification rate remains modest at 14%. The Rural Electrification Agency (REA) is working to connect over 500,000 new customers to the main or independent grids, or to solar photovoltaic (PV) systems over 2013-2022, the report notes. The REA recently launched a donor-funded project, the Global Energy Transfer for Feed-in-Tariff (GET-FIT) programme.
Under GET FIT, Uganda aims to implement about 20 small renewable projects a year, through an existing FIT mechanism, as well as grant funding for solar PV projects. The first two rounds of the programme have seen the licensing of close to 10 projects to supply over 100 MWe. Uganda is spearheading electricity reforms in Africa and has attracted considerable international interest. Donors such as Norway, the EU, the UK’s DFID, Germany and the World Bank have committed US$70 million as guarantees to subsidise the cost of the resulting power.
Uganda currently has an installed electricity capacity of 890 MWe, but only 493 MWe are available, due to restrictions on water release, wear and tear of some power dams and the least cost merit dispatch policy, which favours the use of cheap hydropower over expensive thermal power. Uganda needs to generate 42,000 MWe of electricity from all hydro, petroleum and gas sources, geothermal and nuclear power, to become an upper-middle income country, according the nation’s Vision 2040 master plan.