SMALL INDEPENDENT POWER PRODUCERS IN UGANDA BY BARBARA ASIIMWE KASULE REA 4/1/2017

BACKGROUND In 1997, the Government of Uganda through the Ministry of Natural Resources then, drew up a Strategic Plan for the power sector in Uganda. The objective was to strengthen and enlarge the power sector, so that it is able to provide adequate and reliable energy in order to ensure sustainable social and economic development. 4/1/2017

BACKGROUND (Contd) This plan resulted into the enactment of the Electricity Act of 1999. The Act ushered in changes like the unbundling of Uganda Electricity Board (the Government owned parastatal that had a monopoly in electricity operations), liberalization of the power sector and the introduction of competition in the sector, a regulatory framework for players in the sector and rural electrification. 4/1/2017

SMALL IPPS Renewable Energy Sources Co-generation - Bagasse As part of the Renewable Energy Policy framework, the Government promotes the development of small electricity generation projects. Renewable Energy Sources Co-generation - Bagasse Kakira Sugar Works (1985) Ltd – Generates 20MW, sells 12MW to the main grid (UETCL) and consumes 8MW internally. Kinyara Sugar – Generates 2 to 4MW consumes some and sells to UETCL. 4/1/2017

SMALL IPPS (Contd) Mini hydros Kilembe Mines Ltd – Generates 3 to 5MW depending on the hydrology and sells to the main grid. Kasese Cobalt Limited – Generates 10.5MW (Mostly for own use and sell 2MW surplus to the main grid). Tronde Power (Bugoye) – Has a capacity of 13MW. Is currently producing 6 – 10 MW depending on the hydrology and sells to the main grid.. .Kisiizi Hospital – Generates 374KW, uses some and distributes and sells surplus in neighboring environs. 4/1/2017

SMALL IPPS (Contd) Non-Renewable Energy Sources Thermal Electromax (Heavy Fuel Oil plant) – capacity 17.5MW but is currently producing 8MW cause of technical problems. It is connected to the main grid and sells power to UETCL. WENRECO (Heavy Fuel Oil plant) – Not connected to the main grid. It generates 1.5MW and distributes to consumers in West Nile. 4/1/2017

Mini –hydros in the Pipeline SMALL IPPS (Contd) Mini –hydros in the Pipeline Mpanga – Capacity of 18MW , has signed a PPA with UETCL. Commissioning scheduled July 2010. Ishasha – Capacity of 6.5MW, has signed a PPA with UETCL. Commissioning scheduled Aug 2010. Early production in April 2010 of 3 to 4 MW. Buseruka, Hoima – Capacity of 9MW, connected to the main grid and under construction. Nyagak – Not connected to the main grid. Is to generate 3.5MW and distributes to consumers in West Nile. 4/1/2017

PPA ARRANGEMENTS Under the Electricity Act there is the single buyer model. UETCL is designated as the bulk supplier of power and has a license to perform this functions. It transmits and sells electricity in bulk to distribution and sales companies. All the IPPs that are connected to the main grid sell electricity to UETCL The IPPs that are not interconnected to the main grid are licensed by the Regulator to generate, distribute and sale electricity. 4/1/2017

INCENTIVES OFFERED BY THE GOVERNMENT A subsidy was initially extended to small IPPs to buy down the cost of generation. So the feed in tariff was low. The situation was such that the feed in tariff and PPA were negotiated on a case by case basis. This increased the transaction time, costs and resulted into low investor turn out. In some instances investors abandoned at the negotiation stage. 4/1/2017

INCENTIVES OFFERED BY THE GOVERNMENT (Contd) The subsidy was replaced by published standardized feed in tariffs that give a certain Internal Rate of Return of about 15%. (Go to Table for Standardized Tariffs) 4/1/2017

Simple Weighted Average Published feed-in-tariffs Uganda Electricity Transmission Company Ltd in consultation with the Electricity Regulatory Authority for capacities under 20 MW Time of Use Year 1 to 6 Year 7 to 20 Simple Weighted Average Year 1 to 6 (Bagasse) Year 7 to 20 (Bagasse) Weighted Average Peak (1800-2400hrs) (US Cents/KWh 12.00 9.00 8.00 9.60 Shoulder (0600-1800hrs) (US Cents/KWh) 6.40 5.40 5.70 6.00 4.50 5.10 Off-Peak (0000-0600hrs) (US Cents/KWh) 4.00 1.50 2.25 4.10 4.04 Average Tariffs 7.20 5.33 5.89 7.03 5.25 5.96 4/1/2017

INCENTIVES OFFERED BY THE GOVERNMENT (Contd) With the removal of the subsidy the tariff is higher but the business environment has become more predictable and actually investments have increased. Most of the above IPP’s have been done after the event of subsidy. A standard PPA for all IPPs to have uniformity. An interconnector to evacuate electricity from the generation source is constructed by the Government. 4/1/2017

HOW IPPs ARE INITIATED According to the Electricity Act there are two ways: 1) An investor notifies the Regulator in writing about project. Notice contains aspects like description of project, technical and industrial competence of investor plus financial and legal status. The Regulator invites public to give comments about notice. After receipt of comments a permit can be issued by Regulator for investor to conduct studies. After studies an investor can proceed to apply for a generation license from Regulator. 4/1/2017

HOW IPPs ARE INITIATED (Contd) 2) Through solicitation. A project is packaged and advertised through a fair, open and competitive process by the Regulator. 4/1/2017

THANK YOU 4/1/2017