Promotion of Mini Grids for Rural Electrification in Uganda
Title: Promotion of Mini Grids for Rural Electrification in Uganda
Commissioned by: German Federal Ministry for Economic Cooperation & Development (BMZ) German Climate Technology Initiative (DKTI)
Co-funded by: European Union (EU)
Lead executing agency: Ugandan Ministry of Energy and Mineral Development (MEMD)
Overall term: 2016 to 2021
Uganda is endowed with great renewable energy potential, able to generate power from solar resources, hydro resources, biomass and wind. However, only about 50 per cent of the country’s population has access to any kind of electricity, and 24 per cent of the population has access to Tier 1, meaning has electricity supply more than four hours per day. Outside of the cities, electrification drops to just 38 per cent where 70 per cent of the population lives. This low electrification rate is a major barrier for economic development and poverty reduction. This can be solved using mini grids since they can supply reliable and grid-like electricity in most villages where grid extension is not financially viable.
The Ministry of Energy and Mineral Development (MEMD) seeks to promote private investment for mini grids in Uganda. However, the policy and regulatory framework for mini grids still needs to be developed to enable mini-grid projects to reach the necessary scale. As of 2015, only around 10 mini grids were registered in Uganda, operated mainly by communities and non-profit organisations. Only about five have leveraged a certain share of private investment.
The project is improving framework conditions for scaling up private sector investment in renewable energy mini-grid electricity distribution.
The Promotion of Mini Grids for Rural Electrification project’s activities are part of the broader energy programme in Uganda. They are implemented in partnership with MEMD, the Rural Electrification Agency (REA) and the Electricity Regulatory Authority (ERA).
The approach operates on four levels:
1. Policy and Steering: Strengthening public actors in the field of electrification planning, formulation of policies and regulations, and promoting sustainable business models.
2. Regulatory Instruments: Developing instruments and mechanisms such as a reverse auction tender model for bundled projects hosted by the Government, which promote private sector engagement and provide investment security through Government buy-in.
3. Technology and Design: Building private sector capacities for planning, installation and operation of mini grids. The project is also supporting Technical and Vocational Education and Training (TVET) for solar and mini grid technicians together with Cologne Chamber of Skilled Crafts and Small businesses (HWK) and Nakawa Vocational Training Institute (NVTI).
4. Productive Use: Providing trainings and access to finance for small and medium enterprises, smallholder farmers, and households, ensuring electricity is used to drive economic development and making the mini-grid business model sustainable.
As part of an effort to increase rural electrification, the programme has selected two developers through a reverse tender process with REA, for the set-up of a total of 40 solar mini grids; 25 in Northern and 15 in Southern Uganda. The development of the reverse tender process is one way through which the project is supporting government to increase private sector investment towards mini grids in Uganda.Placement of low voltage distribution line works has commenced in preparation for the setting up of the 40 solar mini grids.
Under its TVET activities, the project has supported training of more than 250 solar technicians jointly with HWK and Nakawa VTI. In addition to this, a solar and mini-grid training curriculum has been developed and certified and a Renewable Energy Training Centre for solar and mini-grid technicians is being finalised. The centre is fully equipped with state-of-the-art solar demonstration and teaching materials to facilitate a practical learning environment. The centrepiece of the facility is the 10 kilowatt-peak (kWp) solar mini grid demonstration site. It contains all the operational features of a fully functional solar mini grid, provides power to the solar department and is key tool for energy usage data collection and analysis.