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Energy Sector Profile in Uganda

The energy sector is one of the key sectors in Uganda’s economy. The country has a total energy consumption of approximately 11 million TOE (tonnes of oil equivalent) 2012. This consumption is partially met by a number of energy resources including solar power, biomass and fossil fuels. Biomass is 92% of the total primary energy consumption, in form of firewood, charcoal or crop residues, petroleum with 6% and electricity 2%.

Uganda has abundant unexploited energy sources including renewable and non-renewable energy sources .The renewable sources include the following:

  • Hydro
  • Wind
  • Solar
  • Geothermal
  • Biomass
  • Peat

 The non –renewal resources which the country has are as follows:

  • Bio fuel
  • Fuel wood

 Characteristics of the sector

  • Uganda energy is comprised of biomass (92%), petroleum (6%) and about 2% electricity.
  • Electrification coverage in rural Uganda is still very poor with less than 1% of the rural population having access to the national grid yet 88% of people are in rural areas.
  • The majority of Ugandans live in rural areas where traditional biomass (mainly wood fuel) has remained the leading source of energy
  • Uganda receives 2500 – 3200 hours of sunshine per year and a mean solar radiation of 5.1 kWh /m
  • The average solar flux in some parts of the country based on 24 hours can be as high as 300W/m

Current situation in the energy sector

  • Investment opportunities exist for biomass, solar and mini hydro power generation to provide electricity
  • Private sector participation is quite significant in both rural and urban electrification
  • Export opportunities for energy exist in the Great Lakes Region and the COMESA, Africa’s single regional economic group with an estimated population of over 389 million in 19 countries
  • Uganda has a fully liberalized energy sector. Electricity generated by a private producer can be sold to the national grid.
  • The government has prioritized solar energy development as a way of speeding up rural electrification.
  • Generation of power from garbage does not exist in Uganda.

Current supply of Energy

  • Hydropower from Kiira and Nalubaale180 MW
  • Thermal 50 MW at Lugogo and 50 MW at Jinja
  • Sugar factories generate about 20MW
  • Mini hydro about 16 MW
  • Imports from Kenya 5 – 10MW
  • Power markets in the country and in the region

Market for solar energy
Solar energy is being utilized at various levels. The key market includes non-electrified rural households, schools, businesses and non-commercial establishments such as churches, mosques, health centres and community canters.

Market for micro hydro power
The market segments include electrifying rural households, schools, businesses, health centres, hotels, real estate housing projects, industries and non-commercial establishments such as churches, mosques, and community centres.

Market for charcoal briquettes
The key market segments for briquettes rural and urban households, schools and institutions like prisons and hospitals.

Investment opportunities in Uganda’s energy sector

  • Design, construction, sales and service support of biomass plants
  • Assembly and marketing of solar units in Uganda
  • Manufacture and marketing of charcoal briquettes
  • Acquisition, installation and services of micro hydro dams in Uganda

The challenges in the energy sector

The challenges faced by the energy sector include the following:

  • Biomass energy source remains dominant for cooking and other household uses .The supply side has to be more productively managed and charcoal more efficiently produced and used.
  • The country requires funding for the development of the energy sector. There are unfavourable conditions attached to the loans and grants from suppliers of funding
  • There is an urgent need of developing adequate  local expertise to management the energy sector
  • The high costs of transports of imported oil products for the production of power. The transports are higher than in the neighbouring countries.
  • The challenge of ensuring efficient and safe use of oil products especially in the transport sector.
  • There is insufficient standardization and quality control of petroleum products and inadequate enforcement and uncoordinated safety measures.
  • There is need for awareness by both consumers and producers of the renewable energy alternatives and technology availability.
  • Low generation capacity to meet the increasing demand and low access to electricity
  • Lack of sufficient institutional, legal & regulatory  framework and human capacity
  • The country does not have adequate energy to support heavy industries
  • Ineffective modalities for implementation and management of shared generation resources in case Uganda  was to partner with other neighbouring countries.
  • There are high upfront costs of renewable energy technologies which makes the energy quite expensive. This has slowed down the development of hydropower, solar power and geothermal sources of energy.
  • The development in the energy sector requires mobilisation of funds from both public and private sector and the mobilisation of funds exercise takes some time.
  • The energy development exercise must be made in an environmental friendly manner and requires consultations with environmental groups. The consultation process has of recent become challenging and is taking a bit of time.
  • There is at the moment no adequate power for heavy steel, textile and aluminium processing plants.
  • There is a challenge of low consumption levels of modern energy as the majority of Ugandans depend on wood fuel.  The income levels of the households in the rural sector are at moment quite low to afford electricity.
  • There is also a challenge of the ability for both the public and private sector investors to supply the required energy within the timeframe, in the volume needed and at affordable cost by the consumer.
  • The cost of finance of financing projects has also become high leading to increased costs of projects and the price of the energy.
  • Lack of   inadequate and efficient power supply system with the main issues arising from stunted generation capacity growth, a poor transmission and distribution infrastructure and poor utility commercial practices.
  • Sustainable development is difficult to achieve  in the short run because of  challenges  of addressing  poverty issues in order for the rural community to afford to use r the power.
  • There are institutional and legal weaknesses, especially in the areas of the downstream petroleum industry, renewable Energy, Energy conservation/efficiency and atomic Energy applications. There is need for continued sector reform
  • High start up costs for renewable energy technologies.
  • Rising international oil prices which makes it expensive to generate electricity
  • The demand for  power is continuously increase hence the need of massive investment to meet the demand.
  • Energy supply is unequally distributed across the country and the provision of electricity has been limited to mainly urban and semi-urban areas

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