Power policy

In 2007, Uganda set renewable generation and capacity targets for 2017. The country has achieved its renewable energy generation capacity targets for all technologies except for large hydro (855 megawatts against a target of 1,200 megawatts) and geothermal (zero against a target of 45 megawatts). The country generates more than 90% of its power from renewable sources, including large hydro and biomass, and has 1,216 megawatts of renewables connected to the grid.

Uganda’s highly successful Global Energy Transfer feed-in tariff (GET FiT) program launched in 2014, becoming the first competitive auction program for renewables in East Africa. The program successfully procured 20 megawatts of solar and more than 100 megawatts of small hydro projects. With GET FiT, Uganda became the first Sub-Saharan African country outside of South Africa to implement competitive auctions for renewables. However, there is no auction program in force now and none is planned, as the country has significant overcapacity.

Power prices and costs

Uganda has relatively high retail power prices compared to neighboring countries. This is largely due to the combination of cost overruns and expensive take-or-pay contracts with renewables (mostly large-scale hydro) projects. Umeme, the country’s transmission and distribution utility, guarantees shareholders a 20% return on investment, further boosting prices. Residential, industrial and commercial rates have all increased more than 50% in real terms since 2010.

Power market

Uganda began unbundling its power market at the turn of the century, splitting up the utility’s generation, distribution and transmission arms. So far, more than 10 different independent power producers (IPPs) have commissioned projects on the grid. They compete alongside the state developer, Uganda Electricity Generation Co. (UEGCL). The country's transmission remains under state monopoly, with the Uganda Electricity Transmission Co. (UETCL) being the sole operator of the system. Distribution is liberalized, with Uganda Electricity Distribution Co. (UEDCL) licensing eight different electricity distribution companies. However, Uganda’s main electricity distribution company (Umeme) controls almost all of the retail electricity sales on the grid via a concession from UEDCL. Concessions are granted to other distributors in areas of the country outside of Umeme’s concession as sole providers of electricity in these regions. Customers cannot choose their power supplier. The Electricity Regulatory Authority (ERA) oversees all three segments of the power sector.

Uganda continues to develop its abundant hydro resources, pushing the power sector further down a low-carbon trajectory. The country's outlook for procuring other renewables, such as wind and solar, is more mixed. Uganda’s successful feed-in tariff program led to development of the region's largest solar projects outside of South Africa. However, government decisions to contract several massive hydro projects have raised concern about oversupply and dampened prospects for future wind and solar procurement. The 600-megawatt Karuma hydro project is expected online in 2022, and some of the country's oldest power plants have undergone retrofits in recent years.

Doing business and barriers

Offtakers are generally secure in receiving payments for contracted power. The transmission system operator, UETCL, is the sole offtaker for all grid-connected power in the country. Grid-connected projects to date have signed 'deemed energy' (take-or-pay) contracts, and UETCL's commitments are understood to be backstopped by the Ministry of Finance. As long as projects are delivering to UETCL at the designated delivery point, they are paid whether or not UETCL is able to evacuate the power. This has increased the ability of projects to secure finance and boosted their profitability.

Official investment and policy are expected to focus on expanding access via off-grid generation, as well as transmission and distribution infrastructure, rather than on growing renewables capacity. There are plans to develop a comprehensive legal, regulatory and commercial framework for mini-grids, as well as a net metering framework for rooftop solar.

Uganda has a thriving off-grid solar industry, with many companies using pay-as-you-go and mobile money applications to power strong growth. Most of Uganda's energy access initiatives are focused on rural electrification, as a large portion of the country's capital, Kampala, already has grid access. The national electrification rate is low at 24%, while the rural electrification rate stands at just 8%. The country has introduced various strategies and plans with universal access targets that range from 2030 to 2040.

EV market

Uganda’s EV market remains at a very early stage. Two and three-wheelers seem to be the route for electric vehicle investments in Uganda as they are the most common EV type in the country. In 2020, electric motorcycle sales were less than 500 units.

EV policy

Uganda does not have an explicit clean transport target. However, the country has aspirations to be an automobile producer, both conventional and electric. The country's domestic Kiira Motors Corp. grew out of a university research project in 2007 and has since designed a number of internal-combustion-engine vehicles and EVs, including the 47-seater Kayoola bus, which will have both electric and diesel-powered versions. Construction on the Kiira Vehicle plant began in February 2019, and it is expected to be operational by year-end. Kiira receives technological support from China’s state-owned China Hi-Tech Group Corp. and aims to produce 30,000 buses in total by 2030.

Buildings market

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains irrelevant in the tropical country.

Buildings policy

The government has yet to implement any substantive policy support in this sector.