Brussels, 30-03-2006 Uganda country study: Part B Energy and Policy Final version SIXTH FRAMEWORK PROGRAMME PRIORITY 3 Underpinning the economic potential and cohesion of a larger and more integrated EU SPECIFIC SUPPORT ACTION RECIPES Renewable Energy in emerging and developing countries: Current situation, market Potential and recommendations for a win-win-win for EU industry, the Environment and local Socio-economic development 513733 1 st January 2005
Table of contents 1. INTRODUCTION...3 2. MAIN ENERGY ISSUES:...4 2.1. UGANDA ENERGY 21 THE NATIONAL ENERGY POLICY...4 2.2. THE ENERGY SECTOR IN UGANDA...10 3. NEW AND RENEWABLE SOURCES OF ENERGY AND ENERGY EFFICIENCY SECTOR...12 3.1. BIOMASS...12 3.2. SOLAR...13 3.3. SMALL HYDROPOWER...15 3.4. WIND ENERGY...18 3.5. GEOTHERMAL ENERGY...18 3.6. COGENERATION ENERGY...18 Uganda - Part B - Energy and policy - 060330.doc Page 2 of 20
1. Introduction In RECIPES project, the data collection phase is realised by local experts in 15 Emerging and Developing countries. Uganda is one of the selected countries. Experts are asked to provide 5 parts, describing the Renewable Energy present and future situation in their country: - Part A: Questionnaire providing data on RE situation. - Part B: Energy and Policy - Part C: Country Maps - Part D: Description of RE projects - Part E: Interviews with stakeholders This document (Part B Energy and Policy) aims at providing highlights of the current policy concerning energy and renewable energy. It provides answers from the local experts to questions asked by the RECIPES team. RECIPES local expert in Uganda is Mr. Timothy Byakola, Programs coordinator in Climate and Development Initiatives a Non- Governmental Organization established in Uganda to lobby and advocate for relevant policy changes on climate change and sustainable energy issues in Africa. Uganda - Part B - Energy and policy - 060330.doc Page 3 of 20
2. Main energy issues: 2.1. Uganda Energy 21 The National Energy Policy Uganda s population stands at about 25.4 million people, of which 95% population do not have access to electricity. The annual population growth is about 3% and the electricity demand growth is rated at 7-8% per year. Uganda s energy sector is characterized by biomass, fossil fuel and hydro electricity power generated from two large dams. The annual energy consumption is estimated to be 20 million tons of wood, 430,000 tons of oil products, hydropower installed capacity of 300MW from two large dams, another 13.05MW from small hydro projects; located in the west and one in the West Nile region in northern Uganda and 10MW from cogeneration. The country also generates 3MW from thermal to cater for the electricity needs of urban towns in the Northern region where the national grid has so far not been extended. Uganda s per capita energy consumption of 0.3 TOE or 12.72 GJ is among the lowest in the world. Few people have access to modern energy supplies such as electricity and petroleum products. The energy consumption rate stands at about 5 million TOE per year of which approximately 93% is biomass (wood, charcoal and agricultural residue). The grid electricity access rate is 6% for the whole country and about 1% for the rural areas. Uganda - Part B - Energy and policy - 060330.doc Page 4 of 20
Figure 1: Energy consumption in Uganda, 2001 90.00 80.00 70.00 %, consumption 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Fuelwood, 82.79% Charcoal, 4.76% Residues, 5.21% Gasoline, 2.14% AV gas, 0.47% Kerosone, 0.68% Diesel, 2.32% Fuel oil, 0.49% LPG, 0.02% Electricity, 1.12% Source MEMD The majority of the communities both urban and rural depend largely on fuel wood and charcoal for their energy. Of the total grid supplied about 72% of the electricity is consumed by only 12% of the domestic population concentrated in Kampala, and nearby cosmopolitan towns. Domestic electricity consumption can be categorized as follows, residences (55%), industries (20%), commercial end-users (24%) and street lighting (1%). Figure 2 NATIONAL ENERGY RESOURCES/ POTENTIAL Technology Biomass Small Hydro Cogeneration Geothermal Solar Water Heaters Solar Potential 4,650,000 toe 13.05MW 10 MW Nil 6000 KWh/day 520,076 Wp Uganda - Part B - Energy and policy - 060330.doc Page 5 of 20
Uganda is endowed with a vast amount of energy resources that include large hydro, small hydro, geothermal, biogas, biomass, biomass based cogeneration, wind, solar and more recently petroleum being explored in the rift valley area of the country. If harnessed properly these resources could satisfy the country s energy needs and stimulate faster economic development. In light of the importance of energy as a major driver for national economic development, the country has realized a need for a long- term planning approach for energy development. The liberalization of the energy sector has required clear, long term policy guidelines to encourage project development and harmonize sector activities. Energy Policy Context Uganda s energy sector is mainly dependent on biomass energy a fact that has led to many environmental problems and scares of desertification. This energy consumption pattern is a major threat to the country s economic development. NEMA 1 (2000/2001) noted that over 90% of the national energy demand is met from wood fuel. The energy sector has bigger environmental impacts than most other economic sectors. Energy policies should, therefore, aim at mitigating these impacts. Uganda s economy is growing at an average 6% per annum owing largely to the implementation of macro-economic adjustment and structural reforms. This growth has necessitated increased industrial investment which itself could only be realized with substantial investment in energy supply. The energy policy recognizes linkages between the energy sector and the other sectors. In particular policies on the economy, environment, water resources, agriculture, forestry, health, transport, education, decentralization and land-use have to be taken into consideration. The policy also recognizes the importance of developing compatibility with the global and regional energy policies. This is intended to make sure that local policy developments acknowledge 1 National Environment Management Authority is the Government institution mandated to monitor the environment Uganda - Part B - Energy and policy - 060330.doc Page 6 of 20
international and regional energy trends, especially in areas of energy investment, pricing and global impacts. At the regional level, the Uganda energy policy takes into consideration the East African Energy Master Plan which addresses energy trade, exchange of information and experiences and joint promotion of petroleum exploration among others. Therefore Uganda s policy objectives have been formulated in the context of the following settings: Economic, social and environmental policies; The nature and linkages of the energy sector with other sectors; and International and regional linkages of the sector. The main policy goal of the energy sector is: To meet the energy needs of the Ugandan population for social and economic development in an environmentally sustainable way. Broad Objectives Objective 1- Objective 2- To establish the availability, potential and demand, of the various energy resources in the country. To increase access to modern affordable and reliable energy services as a contribution to poverty eradication Objective 3 To improve energy governance and administration Objective 4- Objective 5- To stimulate economic development To manage energy related environmental impacts Reforms in the Energy Sector There have been a series of reforms in the power sector opening up opportunity for Independent Power Producers. Government of Uganda (GOU) has privatized out electricity generation, transmission and distribution as a key strategy in increasing Uganda - Part B - Energy and policy - 060330.doc Page 7 of 20
efficiency in the energy sector and on the amount of electricity required for the local market. The reform programme was a response to the critical need to improve the performance of the energy sector which government had controlled as a monopoly since the country s independence through the Uganda Electricity Board (UEB). Before the reforms, UEB held the monopoly of electricity generation, transmission, distribution and supply within the country and neighboring countries in the region. UEB has now been unbundled into three independent companies namely the Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Transmission Company Limited (UETCL) and the Uganda Electricity Distribution Company Limited (UEDCL) each responsible for one of the three core responsibilities in the electricity sector of generation, transmission and distribution respectively. An independent regulator, the Uganda Electricity Regulatory Authority (ERA) has been put in place charged with the responsibility of regulating power generation, transmission and distribution among other responsibilities. Uganda mainly depends on electricity generated from two large hydropower stations the Old Owen Falls Dam (Nalubale) and the New Owen Falls Dam Extension, which is adjacent to but not connected to the Old Owen Falls Dam. The two power stations formerly owned by government generate about 300MW of electricity and are currently run by a South African Power Company ESKOM. There are five smaller hydro power stations owned and run by private companies that generate a sum total of 13.05MW of power. As a measure of uplifting living standards, stimulating investment and alleviating Poverty of the rural communities, Government of Uganda with support of World Bank has developed strategies to promote rural electrification. The tenyear Rural Electrification Strategy and Plan (RESP) is aimed at increasing the rural electrification rate from the 2001 estimate of one percent to 10 percent by 2010. This strategy is focusing at several options of energy sources including geothermal, solar, wind and small-scale hydropower dams. The Electricity for Rural Transformation (ERT) Programme has also been put in place and a Rural Electrification Fund (REF) to facilitate investment in the energy sector with aims of increasing access to modern, clean, and affordable energy to the rural areas. In addition, the ERT Programme in line with the electricity act 1999 Uganda - Part B - Energy and policy - 060330.doc Page 8 of 20
will facilitate the private sector as the primary service provider. All rural electrification projects will benefit from subsidies given to the private sector from the REF to make the projects commercially viable at affordable tariffs to consumers. However, even after liberalization of the energy sector, lack of comprehensiveness in the energy policies and assessment of alternatives to large hydropower dams have continued to hamper the reform process. In the past, the energy sector in Uganda has overly laid emphasis on policies that predominantly address energy supply side issues, particularly for the commercial sources of energy. This approach has favored the urban population which is the major user of commercial fuels, while marginalizing the energy needs of the majority of the population who live in the rural areas and depend on biomass. This is despite the fact that the rural areas contain the largest proportion of the poor population in Uganda. The Constitution of Uganda 2 recognizes the need for an energy policy when it states The State shall promote and implement energy policies that will ensure that people s basic needs and those of environmental preservation are met. The Poverty Eradication Action Action Plan (PEAP) 3 recognizes energy as having a direct impact on poverty alleviation. In this context, the need for an energy policy exists not only as a constitutional requirement but also as critical factor in meeting Government s major economic development programmes. The Ministry of Energy and Mineral Development (MEMD) 4 is responsible for the energy sector, dealing specifically with energy policy formulation, implementation and monitoring. 2 The Constitution of Uganda was promulgated in 1995 3 Poverty Eradication Action Plan is Uganda s Poverty Reduction Strategy Paper. 4 www.energyandminerals.go.ug Uganda - Part B - Energy and policy - 060330.doc Page 9 of 20
2.2. The Energy Sector in Uganda The Ministry of Energy and Mineral Development (MEMD) is responsible for the sector, dealing specifically with energy policy formulation, implementation and monitoring. The sector comprises the following supply sub-sectors. Petroleum Sub-sector Uganda is not yet producing any petroleum yet although prospecting trials around the rift valley basins, particularly the Albertine Graben Western Uganda have revealed possible reserve. Drilling trials of TURACO-2 well in Semliki basin identified horizons with potential for petroleum products. Since there is no local production, Uganda imports all its petroleum products with a petroleum import bill of about US$ 120 million per year. This constitutes about 8% of total national imports and represents slightly above 20% of the country s total export earnings. The long distance from Mombasa and Dar es Salaam increases the costs of transportation and for this reason Government is promoting the Kenya-Uganda Pipeline Project. The upstream of the petroleum industry deals with exploration, development and eventual production of petroleum while the down stream covers transportation (of both crude and refined products), refining, storage, distribution and marketing. The petroleum (Exploration and Production of petroleum) Act of 1985 and the petroleum (Exploration and Production) (Conduct of Exploration Operations) Regulations of 1993 regulate upstream activities while the down stream is governed by the Petroleum Act of 1964. Imports of petroleum principal products (petrol, diesel and kerosene) in 2004, totaled 571,749m 3 compared to 526,585m 3 in 2003 representing 8.6% growth. Total sales of petroleum products in 2004 amounted to 646,839m 3 compared to 632,091m 3 in 2003 representing 2.3% (MEMD Annual Report 2004). Uganda - Part B - Energy and policy - 060330.doc Page 10 of 20
Per capita consumption has grown from 16 litres in 1991 to 24 litres in 2004 which is still low compared to those of her neighbors Kenya and Tanzania. Figure 2: Petroleum products (1983-2001) 50.00% 45.00% 40.00% % of total petroleum 35.00% 30.00% 25.00% 20.00% 15.00% Gasoline Kerosene AV Gas Diesel Fuel Oil LPG 10.00% 5.00% 0.00% 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 Source: MEMD (2001) Year Uganda - Part B - Energy and policy - 060330.doc Page 11 of 20
3. New and Renewable Sources of Energy and Energy Efficiency Sector Uganda has a variety of renewable energy resources which include plentiful woody and non-woody biomass, solar, wind, geothermal and hydrological resources. Presently only a meager fraction of this renewable energy potential is exploited with the exception of biomass. It is estimated that other renewable sources of energy, excluding large hydropower, contribute less than 2% of Uganda s total energy consumption. 3.1. Biomass Biomass resources which include firewood, charcoal and crop residues play a very significant role in Uganda s energy supply, constituting over 90% of total energy consumption. Biomass energy provides almost all the energy used to meet basic needs of cooking and water heating in rural and most of the urban households, institutions and commercial building. Biomass in forms of firewood and charcoal is the main source of energy for rural based industries. Biomass saves foreign exchange and employs up to 20,000 people and generates Ushs. 36 billion (US$ 20m) per year in rural incomes. The daily per capita consumption of woody biomass for energy is about 4kg (NEMA 2000/2001). By 1998, the wood fuel demand was estimated to be about 18.5 million tones (0.88 toe) according to the Forest Department (1996), about 1.2% of wood fuel is used to produce charcoal. There are a number of initiatives that have been undertaken by Government and the private sector to conserve biomass resources in the country. Device Efficiency Efficiency after Tradition Device Improvement (Older Model) % Household Lorena 16 30 Stove Institutional Stoves 36 49 Charcoal Stoves - - Baking Stoves Uses 1 unit of Uses 0.1 unit of Uganda - Part B - Energy and policy - 060330.doc Page 12 of 20
Source: MEMD Annual report 2004. firewood firewood Biomass trend (1993-2001) 97 96.5 96 95.5 95 Biomass % 94.5 94 93.5 93 92.5 92 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year Source MEMD 3.2. Solar NEMA (1998) noted that Uganda is endowed with plenty of sunshine giving solar radiation of about 4-5 kwh/m 2 / day. This level of insolation is quite favorable for all solar technology applications. Solar energy applications in Uganda include solar photovoltaics (PV), water heating, cooling and crop drying and are suitable for producing electricity for areas off the grid. However rates for solar energy dissemination in Uganda remain relatively low a factor that could be attributed to the high initial investment costs. This technology remains only affordable to government programs and NGOs that normally would import them with a tax waiver. Currently a solar unit that can be used for lighting and probably to run a radio set is about US $ 550; a price that is unaffordable to many Ugandans whose annual per capita income is estimated to be less than US$ 350 Because most of the solar businesses are located in Kampala, the city, there is a problem of accessibility of rural towns to solar Uganda - Part B - Energy and policy - 060330.doc Page 13 of 20
technologies. Activities in up country districts are on and off with very few programmes in place to disseminate solar energy countrywide. The World Bank has given a US $ 16,000 grant to five companies dealing in solar related products to beat these barriers related to rural markets. Number of Solar Units disseminated (1992-2002) No. Units 2500 2000 1500 1000 500 0 PV Dissemination 1992 1994 1996 1998 2000 2002 Years (1992-2002) The increase in solar dissemination can be attributed to the establishment of UPPPRE, elimination of taxes on solar equipment and increase in solar SMEs. The increase in SMEs has created competition, raised awareness and controlled prices of solar equipment. However the waive on taxes on solar equipment, in the short run reduced prices of solar panels in the country although, currently prices have gone up almost to pre-tax relief prices. Solar water heaters unlike solar electricity had not been exempt from taxes not until 2003. Karekezi et al. (1997) noted that, solar energy was hardly used in Uganda and that there were at least 538 PV installations in the country, which by 1992, had amounted to a total capacity of only about 152.5 KW. These were being used by the Ministry of Health Uganda - Part B - Energy and policy - 060330.doc Page 14 of 20
and other government corporations. He also noted that by 1992 there were 238 PV vaccine refrigerators, amounting to about 60KW of installed capacity. NEMA (1998) also noted that, NGOs enjoying tax exemptions ranked among the highest buyers of PVs. By 1998, there were approximately 1,500 solar installations in the country, which had been financed by external donor agencies and they included 300 community-based systems. In 1998, NEMA also found out that, PVs were mainly found in large institutions and international Non-Governmental Organizations. The number of solar units in the country can be estimated to be more than 10,919 PV installations. This growth in number can be attributed to government intervention through the UPPPRE 5 and the tax exemptions on solar equipment. The Uganda Photovoltaic Pilot Project for Rural Electrification (UPPPRE) was started with the goal of developing a sustainable market for solar PV technology. The project addressed various constraints related to marketing and use of PVs; including financing, awareness about the potency of PVs, and technology transfer. Its target areas were areas far away from the national grid and areas where it was not possible to be connected to the grid or any other source of electricity within 5 10 years or more. 3.3. Small hydropower Uganda has an installed capacity of 13 MW generated from different small hydro dams across the country. Karekezi et al, 1997 notes that a survey financed by the European Development Fund (EDF) identified 76 sites with potential ranging from 120 kw to 566 kw in the West Nile region alone. Some of the few studied Small hydro sites in the country Site District/region Estimated potential (MW) Rwizi Mbarara 0.70 Kakaka Kabarole 1.5 Nzongezi Mbarara 2.00 Nyamabuye Kisoro 0.70 5 Uganda Photovoltaic Pilot Project for Rural Electrification (UPPPRE) Uganda - Part B - Energy and policy - 060330.doc Page 15 of 20
Sipi Kapchorwa 1.00 Sipi Kapchorwa 2.00 Inyau Arua.030 Heisesero Kabale 0.30 Kitumba South-west Kabarole 0.20 Nyakibale Rukungiri 0.10 Kisizi Rukungiri 0.30 Moyo Moyo n.a. Ora Arua 0.90 Nkussi Mbarara 0.90 Mitano Kabale 2.00 Maziba-I Kabale 1.00 Maziba-II Kabale 1.50 Kakagati Mbarara 1.25 Sezibwa Mukono 0.50 Kagando Kasese 0.06 Kuluva Arua 0.20 Ishasha Rukungiri 4.00 Muzizi Kyenjojo 20.00 Some of the small hydro electricity-generating stations include Kagando with 0.4 MW in Kasese, Kisiizi in Rukungiri with 0.06 MW, Kuluva in Arua 0.09 MW, Kilembe Mines Ltd in Kasese 5.0 MW and Kasese Cobalt Company Ltd also in Kasese 7.5 MW. The Kasese Cobalt Company for example has generated its own power to run its industry and has the potential to supply the national grid or other nearby towns. The Company is also putting up a second hydropower station at Mubuku to generate 10MW of electricity (NEMA, 1998). Small Hydro Power Generation Trend Uganda - Part B - Energy and policy - 060330.doc Page 16 of 20
Gwhr Power 120 Power Generated From Small Hydro 100 80 60 40 20 0 1990 1992 1994 1996 1998 2000 2002 Years (1990-2002) Source from collected data Isolated minigrids a) West Nile Electrification Project Construction of the Arua-Nebbi 33kV line, funded by a grant from the Royal Kingdom Norway, was completed. A 1.5MW Heavy Fuel Oil generator has been installed. Construction of Nyagak mini hydro started in 2005. b) Kisiizi Electrification Project The Kisiizi micro hydropower project is expected to produce about 300 kw of power to supply Kisiizi hospital and sell some to the neighbouring centres. The existing plant owned and operated by Kisiizi Hospital is generating 60kW to supply the Hospital. Government is supporting the Hospital to upgrade the generation to about 300kW. c) Ndugutu Micro Hydro Project Government of Uganda received a Turbine-Generator set of 250 KW donated by UNIDO for the Ndugutu mini Hydro Power Project in Bundibugyo District. The potential load centres for the project are five settlements within the vicinity of the proposed project area Uganda - Part B - Energy and policy - 060330.doc Page 17 of 20
in a radius of about 5 km. They include the settlements of Kabutabule, Butaama, Kakuka, Busunga and Bunyangule. The project is being packaged as a cooperative rural scheme. 3.4. Wind Energy The average wind speed in Uganda is about 3 metres per second although speeds of up to 6 m/s have been recorded in flatter areas especially around the Lake Victoria and the Karamoja region as well as hill tops. Pereira da Silva et al. (1999) noted that analysis that have been conducted in the country indicate that there are areas where wind speeds could support power generation. But on the whole, wind energy has not been widely used, possibly because of the limited awareness on the way wind energy could be used to produce electricity. 3.5. Geothermal Energy Uganda theoretical geothermal potential by 1982 was estimated at about 450 MW. Several prospecting trials in different parts of the country have identified varying potential of the geothermal capacity in Uganda. Over the years, subsequent studies have identified an even more potential for geothermal energy. 3.6. Cogeneration Energy Bagasse-based Cogeneration a) Kakira Sugar Works Cogeneration Project Cogeneration at the Kakira Sugar Works will generate 14 MW of electricity from bagasse, and sell 7 MW to the grid and use the remaining 7 MW in the sugar factory. This project is expected to be completed in 2006. Cogeneration has not been attempted in the coffee and wood industries where a lot of biomass waste is produced. Installed and expected increase in Cogeneration (MW) Sugar Factory Current Cogeneration Proposed increments in Total Capacity Uganda - Part B - Energy and policy - 060330.doc Page 18 of 20
capacity (MW) cogeneration within 2-5 years (MW) after increment (MW) Kakira Sugar Works 4 10 14 (1985) Ltd Sugar Corporation of 4 0 4 Uganda limited (SCOUL) Kinyara Sugar Works 2 1 3 Limited (KSWL) TOTAL 10 11 21 The low levels of cogeneration can best be explained by the poor pre-liberalization policies of the energy sector. Before liberalization, existing policies restricted the private sector from generating power for sale and limited them to producing power for their industrial consumption. But although the power sector has been liberalized, some obstacles still continue to affect effective cogeneration in the country. Almost all transmission lines in areas that have the potential to utilize electricity are a monopoly of UEDCL, other power producers in areas where UEDCL enjoys a monopoly remain at the mercy and the ability of UEDCL to secure a market for their electricity. Although cogeneration has a high potential of creating employment opportunities its critical that power producers are assured of a market for the power they produce. Power from Cogeneration RETs DISSEMINATION NUMBERS (Time series data) Technology 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Household 1116 2023 2564 3004 3163 3804 3381 4107 3557 4060 4461 4463 4774 stoves Institutional 1 5 12 15 98 100 124 stoves/kilns Biogas units 60 10 20 PV units 138 416 420 600 515 852 932 1016 1531 2134 2365 Solar water heaters 17 15 22 20 Uganda - Part B - Energy and policy - 060330.doc Page 19 of 20
Power Produced From Cogeneration KwH Power 50000000 40000000 30000000 20000000 10000000 0 Years (1990-2002) Cogeration Uganda - Part B - Energy and policy - 060330.doc Page 20 of 20