Powering Uganda’s Future: The Untapped Potential of Mini Grids to Transform Electricity Access

A REPORT about the untapped potential of mini grids to transform electricity access in Uganda.

Abstract

This report is about the energy poverty hampering Uganda’s socioeconomic development. It explores the potential of mini-grids in Uganda, examining various aspects of mini-grids including the challenges and economic implications surrounding their development and contribution to rural electrification. It aims to provide a comprehensive understanding of how mini grids can enhance electricity access in Uganda.

The report further analyses the regulatory framework, highlighting the fragmented environment that hinders rapid mini-grid development. It explores the financial and policy challenges of integrating decentralised grids into the national grid and the cost per kilowatt hours (kWh) implications for rural consumers.

By addressing these challenges, Uganda can accelerate its progress towards universal electrification by 2040, reducing energy poverty, fostering economic growth, and supporting sustainable development through renewable energy solutions.

Introduction

Uganda is in a peculiar position regarding its provision of energy. The country is home to abundant natural energy resources - particularly hydrological which accounts for 82% of the country’s total energy output. However, according to the World Bank, by 2022 only 47.1% of the population had electricity access. There is an incredible disparity between urban and rural populations, with 57.2% of Ugandans in urban areas such as Kampala and Entebbe living with access to electricity while only one in ten live with access in rural areas.

The phrase which describes this phenomenon concerning the developing world is energy poverty – the lack of access to modern energy services in the home. Consequently, the most common fuel source in Uganda is bioenergy – such as charcoal, firewood and natural gases. This accounts for 94% of total primary energy consumption.

While observing the completion of the ambitious Karuma Hydro Power Damn (600MW) after four years of delays and $1.7 billion spent, Uganda still has one of the lowest electrification rates in Africa. This is due to constrained distribution infrastructure, limited access to off-grid solutions, unaffordable energy prices, and uncoordinated and restrictive planning processes.

The government aims to achieve 100% rural electrification by 2040, but current progress indicates significant hurdles. As of 2022, Uganda had a total population of 34,889,566, with 73.84% living in rural areas. Therefore, out of almost three-quarters of Uganda's population, only 10% have access to electricity. Put like this, it becomes evident how Uganda's energy poverty severely hampers socioeconomic development – affecting education, healthcare and economic activities. Inadequate and unreliable energy supply hinders income generation and lowers productivity, perpetuating a cycle of poverty. In the face of this reality, many businesses turn to expensive and unreliable alternatives like diesel generators, which increase operating costs and reduce profitability.

Figure 1. Line graph representing Uganda’s national and rural electrification rates and their associated target by 2040.

As the energy grid mainly supplies urban and semi-urban areas, much of the population relies on off-grid solutions. The development of decentralised energy technologies such as mini grids is key to accelerating electrification in Uganda. A mini grid is a small-scale electricity system that provides power to a local area, often independently from the national grid. Mini grids are made up of generators and energy storage systems and can be powered by a variety of sources, including solar, wind, hydro, or biomass. As of 2020, Uganda has 34 known mini grids commissioned producing 6% of the country's total energy capacity. While the market for expansion exists, progress is hampered by national policy, opaque licensing practices and controls on energy tariffs making energy provision unprofitable for firms without subsidies.

This report explores the potential of mini-grids in Uganda, examining various aspects including types, challenges, economic implications, and potential solutions, aiming to provide a comprehensive understanding of how mini-grids can enhance electricity access in Uganda.  

Methodology

To collect information, this report will begin by reviewing large-scale grids currently operating in Uganda. Data from the Uganda Electricity Transmission Company Limited (UETCL) and the Ministry of Energy and Mineral Development will be analysed to assess metrics like installed capacity, actual generation, grid efficiency, and electricity access. Investments and expansion efforts will also be evaluated. Reports from the Rural Electrification Agency (REA) will help identify gaps, especially in rural areas, and insights will be drawn from similar grids in other sub-Saharan African countries.

Next, there will be a focus on the operations of existing mini grids through a case study approach. A representative sample of projects will be selected based on geographic diversity, scale, and ownership models. Primary data, such as technical performance and socio-economic impacts, will be collected via direct observations and analysis.

A comprehensive literature review should reveal the institutional and financial environment influencing mini-grid development. This includes the analysis of Uganda’s energy policies and regulations, as well as reports from the International Renewable Energy Agency (IRENA) and the World Bank to identify trends, regulatory barriers, and financing models.

Additionally, mini-grid operations will be evaluated by analysing energy generation capacities, load profiles, and maintenance practices. Financial models will also be reviewed to determine economic viability, especially in remote areas.

Finally, a detailed desk review will be undertaken to assess the roles and interests of various actors involved in mini-grid development. This will involve analysing existing reports, policy documents, and market data to understand the dynamics between government agencies, private sector players, and community groups. By synthesising this information, we can evaluate the key influences on mini-grid development and the broader energy sector. This approach will integrate both quantitative and qualitative data, providing a comprehensive evaluation of mini grids' potential to enhance energy access in Uganda, leading to informed policy and investment recommendations.

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