Renewable Energy Technologies in Uganda - AFREPREN

Renewable Energy Technologies in Uganda:

The potential for Geothermal Energy Development

A Country Study Report under the AFREPREN/HBF study

Supported by the Heinrich Boell Foundation

By Geoffrey Kamese

March, 2004

EXECUTIVE SUMMARY The purpose of this study was mainly to examine the viability of attaining a half of the 10% renewable energy technologies (RETs) target -proposed at the Johannesburg World Summit on Sustainable Development (WSSD), and to assess the benefits and drawbacks of the target in Uganda. Other correlative objectives included the review of the status and potential of renewable energy technologies; RETs impact on national debt, balance of payments and other social sectors like health, education, water and agriculture and also the gender dimension of RETs and its benefits including job and enterprise creation. The study does also consider the potential of available RETs in Uganda, which needs promotion in order to meet the country’s energy consumption and demand. Currently, Uganda’s energy consumption matrix stands at about 93% biomass, 5% petroleum products and 2% of electricity produced from two large hydro dams. The total generation capacity of electricity in the country is 326 MW. However, only 6% of the total population is estimated to have access to electricity of which only 1% comprises the rural population. Further the study also found out over 95% of Uganda’s population depend on biomass for their energy yet the cost of improved household and institutional stoves remain higher than many communities can afford. The major reasons for this low 6% access can be traced to the Siamese twin problem of access and affordability, coupled with policy framework biased towards big hydros and petroleum sources. Others include inadequate and/or absent institutions (including institutional capacity), socio-economic factors and lack of adequate data on energy sources (in terms of the resource characteristics, its quality, quantity, and availability). These has been further been aggravated by the inefficient supply and use of Renewable Energy Technologies, which have not been given a higher priority in national energy programmes and planning. The Renewable Energy Technologies (RETs) considered in this studies are mainly Geothermal and cogeneration, but also the status of other renewables including, Solar, Bio-fuels and Small hydro are outlined. The RETs study found out that there is political will and moral support extended to firms and organizations that produce, promote, or manufacture RETs in Uganda. The Ugandan government has also taken initiative to promote some of the RETs although, little has been achieved, so far. The study considered the attainment of the 5% of the WSSD target using geothermal and cogeneration. It found out that Cogeneration plants can produce 10 MW currently but need to additional 6.3 MW in order to meet the 5% WSSD targets. While for geothermal they can meet the target of 5% by installing a 16.3 MW plant. The analysis shows that installing a 16.3 MW plant would led lead to a creation of 11 jobs/MW for a geothermal plant and 10 jobs/MW for a cogeneration plant, as compared to setting up a 200 MW conventional big hydro plant which would generate 2 jobs/MW. Further analysis based on the foregoing plant sizes; indicate that cogenerating and geothermal power plants have a lower investment costs / MW than the hydro plant considered above. A 16,3 MW geothermal power plant costs 12% less, while for a 16.3 MW cogenerating plant would cost 9% less, when they are compared to a 200 MW plant costing US$ 2.9 million. The geothermal and cogenerating plants will also have additional benefits of generating more jobs/MW, creation of more enterprises / MW and more importantly lead to more savings on foreign exchange and the subsequent advantage that they being green technologies they can be used in Uganda’s debt relief strategies. Considering these benefits, the study recommends of first importance increased capital flows and incentives to enable investment into this two technologies which have low running costs but high initial set up costs. Further it recommends policy and institutional changes to enable market access by electricity generators of geothermal and cogeneration power plants. Further still, the study strongly proposes enhancement of research development and dissemination in the general area of RETs, and more specifically with respect to geothermal and cogeneration. Such RD & D will target a broad array of stakeholders including manufacturers and marketers. Additionally the study points out the need for policy changes to allow for diversification, investments, guaranteed market prices, and distribution mechanisms that allow the setting up of Cogeneration and geothermal plants. It also indicates significant resources be channelled towards public awareness raising about RETs, capacity building of RETs institutions and human resources and lastly defining the roles and encouraging various stakeholders (civil society and private sectors) to be more active in the sector.

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TABLE OF CONTENTS EXECUTIVE SUMMARY ......................................................................................................................... I ABBREVIATIONS AND ACRONYMS .................................................................................................. III LIST OF FIGURES ................................................................................................................................IV LIST OF TABLES ..................................................................................................................................IV 1.0 INTRODUCTION........................................................................................................................1

1.1 Overall Status of Energy Sector in Uganda...........................................................................1 1.2 Overall Status of Renewable Energy Technologies ..............................................................3 1.3 Status of geothermal and Cogeneration..............................................................................12

2.0 METHODOLOGY.....................................................................................................................15

2.1 Data Collection and Constraints ..........................................................................................15 2.2 Data Treatment....................................................................................................................15

3.0 ANALYSIS ...............................................................................................................................16

3.1 Technical Assessment.........................................................................................................16 3.2 Economic, Policy and Gender Considerations ....................................................................18

4.0 KEY CONCLUSIONS ..............................................................................................................27

4.1 Overview of Uganda’s Electrical Sector ..............................................................................27 4.2 Technical Viability of 5% Geothermal and Cogeneration Target.........................................27 4.3 Economic Viability of 5% geothermal Target.......................................................................27 4.4 Benefits and Drawbacks of 5% Geothermal Target ............................................................28 4.5 Merits of Geothermal and Cogeneration .............................................................................28 4.6 Demerits of Geothermal and Cogeneration.........................................................................29

5.0 STUDY RECOMMENDATIONS ..............................................................................................31

5.1 Recommendations for policy makers ..................................................................................31 5.2 Recommendations for Implementers...................................................................................32 5.3 Recommendations for Lobbyists (civil societies, CBOs, NGOs etc) ...................................33 5.4 Recommendations for End Users........................................................................................33

6.0 REFERENCES.........................................................................................................................34

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ABBREVIATIONS AND ACRONYMS ADB African Development Bank AERDP Alternative Energy Resource Development Program AES Applied Energy Services AES-NP AES Nile power BCSE Business Council for Sustainable Energy CBO Community Based Organization DANIDA Danish Development Agency EAP Energy Advisory Project ECA Export Credit Agency EDF European Development Fund ERT Energy for Rural Transformation GEEP Geothermal Exploration GoU Government of Uganda GSMD Geological Survey and Mineral Development GTZ Gezellschaft fuer Technische Zusammenarbeit (German Technical Corporation) HIPC Highly Indebted Poor Countries IDA International Development Association IMF International Monetary Fund IRDI Integrated Rural Development Initiative IRN International Rivers Network KDA Karamoja Development Agency KSWL Kakira Sugar works limited MEMD Ministry of Energy and Mineral Development NAPE National Association of Professional Environmentalists NEAP National Environment Action Plan NEMA National Environmental Management Authority NGO Non-Governmental Organisation PV Photovoltaic REF Rural Electrification Fund RESP Rural Electrification Strategy and Plan RETs Renewable Energy Technologies SCOUL Sugar Corporation of Uganda Limited SMEs Small and Medium Enterprises TOE Tonnes of Oil Equivalent UAERAUS Uganda Alternative Energy Resources Assessment Utilisation Study UBOS Uganda Bureau of Statistics UEB Uganda Electricity Board UEDCL Uganda Electricity Distribution Company Limited UEGCL Uganda electricity Generation Company limited. UETCL Uganda Electricity Transmission Company limited UNDP United Nations Development programme UPPPRE Uganda Photovoltaic Pilot Project for Rural Electrification URDT Uganda Rural Development Training UREA Uganda Renewable Energy Association

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LIST OF FIGURES Figure 1.1 :- Energy Consumption in 2001 ................................................................................................. 2 Figure 1.2 : Per Capita consumption fluctuations of Petroleum products (1983 – 2001) ........................... 3 Figure 1.3: - Biomass Trends in Uganda (1993 – 2001)............................................................................. 4 Figure 1.4:- Dissemination of improved household stoves in Kampala...................................................... 4 Figure 1.5:- Small Hydro Power Generation Trends (1990 – 2002) ........................................................... 7 Figure 1.6: - Number of Solar Units Disseminated (1992 – 2002)............................................................ 10 Figure 1.7: - Location of geothermal prospects of Uganda.......................................................................13 Figure 3.1:- Power produced from Cogeneration at Kakira Sugar works ................................................. 17 Figure 5.1 :- Electricity market structures by degree of privatisation........................................................ 31 Figure 1.10:- PSP model to bring in other stakeholders into the energy market ...................................... 32

LIST OF TABLES Table 1.1: Electrical generation capacity from main sources as at 2002 ................................................... 1 Table 1.2 :- Estimated potential of some Small hydro sites in the Uganda ................................................ 7 Table 3.1 :- Installed and expected increase in Cogeneration (MW)........................................................ 17 Table 3.2 : Eastern Africa geothermal specialist trained under the UNU/GTP (1979 – 2003) ................. 17 Table 3.3 :- Number of Jobs created in the Cogeneration plants (Jobs/MW)........................................... 18 Table 3.4 :- Creation of Jobs per MW for both geothermal, cogenerating and Hydro plants ................... 19 Table 3.5 :- Comparisons of investment costs of various power plants ................................................... 22 Table 3.6 :- Projected investment costs of geothermal with other hydropower plants ............................ 22 Table 3.7 :- Energy sector loans as proportion of the external debt......................................................... 23 Table 1.10 :- Savings on geothermal and cogeneration power plants ..................................................... 23 Table 1.11 :- Current electricity generating capacity in Uganda............................................................... 27 Table 1.12 :- Attaining the 5 % WSSD targets using various RETS......................................................... 27 Table 1.13 :- Economic aspects of meeting the 5% WSSD targets using geothermal and cogeneration 27 Table 1.14:- Benefits and drawbacks of the 5% target ............................................................................. 28

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1.0 INTRODUCTION As at 2002, the three east African countries had more or less similar energy mix (Table 1.1) in terms of electricity generation, with Kenya leading, followed by Tanzania and lastly Uganda. Table 1.1 Electrical generation capacity from main sources as at 2002

Country Hydro Geothermal Coal Thermal Diesel Total

Kenya 64% 8% 28% 1,141 MW

Uganda 99 % 3 % 303 MW

Tanzania 64% 1% 35% 902 MW

Source: - CEEST and GTZ, 2002

Uganda is endowed with many forms of energy sources that include large hydro, small hydro, geothermal, biogas, biomass, biomass-based cogeneration, wind, solar and more recently, petroleum - which is being explored in the rift valley region. However, sustainable use of these resources has been declining due to a number of factors. First are the numerous civil wars, which not only did affect its economic growth but also other development sectors like energy. The wars in the country affected the policy framework and implementation arms of government. NEAP (1994) noted that, each of the energy sub-sectors were seriously affected by the economic decline of the 1970s and early 1980s characterized by deforestation, inadequate maintenance, low investment, distorted pricing mechanisms and environmentally unsustainable policies and laws. The country is still experiencing the shock and the distortions that took place in the energy sector. This first reason has inter-alia led to a second reason of dependency on biomass energy. Secondly, Unsustainable utilisation and dependency on biomass energy sources has led to many environmental problems and to scares of desertification. This energy consumption pattern is a major threat to the country’s economic development. NEMA (2000/2001) noted that over 90% of the national energy demand is met from wood fuel. Today the country is facing serious denudation and degradation of its forests and woodlands, which is leading to severe environmental consequences. According to FAO estimates (ibid) Uganda is loosing 50.000 ha (0.8%) of its forestland per year through deforestation, most of which occurs in woodlands outside the protected areas. The situation, has further been exacerbated by the high costs of RETs, its poor dissemination rate and the lack of awareness about the available renewable energy technologies, which have contribute greatly to the low levels of utilization and acceptability of RETs to many communities. There is also lack of financial support and market incentives to the institutions involved in RETs production and dissemination and the lack of comprehensive energy policy that encourages decentralized technologies in the same framework as commercial / conventional energy technologies. Consequently, the enhanced use of renewable energy sources would provide clean energy and help preserve the environment and are locally available. Their subsequent development and utilization would change the status energy sector in Uganda (NEMA, 1998). 1.1 Overall Status of Energy Sector in Uganda 95% of Uganda’s 25.4 million people do not have access to electricity. This coupled with annual population growth rate of ~ 3% in a framework where electricity demand growth is 7-8% per annum, spells trouble for the energy sector. This sector is characterised by biomass, fossil fuels, and hydro electricity power generated from two large dams. The annual energy consumption is estimated to be 20 million tonnes of wood, 430,000 tonnes of oil products, hydropower installed capacity of 300 MW from two large dams, another 13.05 MW from small hydro projects; located in the west and one in the West Nile region in northern Uganda and 10 MW from cogeneration. The country also generates 3 MW 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. This brings the total electricity generation capacity in the country to ~326 MW. Uganda’s per capita energy consumption of 0.3 toe (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

Renewable Energy Technologies in Uganda: The potential for Geothermal Energy Development 1

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’s energy consumption is low compared to some of the countries in Europe and America, which have an average of 5.0 toe /a. In terms of per capita of total energy, Uganda’s average in 1994 was 25 kg compared to 34 kg for Tanzania, and 110 kg for Kenya, while South Africa had 2,146 kg. In 1995, the domestic energy consumption was estimated at 12 million tones (about 1 toe), and demand was projected to increase by 65% by the year 2000. Figure 1.1 shows the energy consumption in 2001.

Figure 1.1 Energy consumption in 2001

Fuelwood 82.79%

Gasoline 2.14%

Charcoal 4.75%

Residues 5.21%

AV gas 0.47% Kerosene 0.68%

Diesel 2.32% Fuel Oil 0.49%

LPG 0.03%

Electricity 1.12%

Source: MEMD (2002)

The majority of the communities both urban and rural largely depend on fuel wood and charcoal for their energy. About 72% of the total grid-supplied electricity is consumed by only 12% of the domestic population concentrated in Kampala, and nearby cosmopolitan towns. Domestic electricity consumption can be categorised as follows, residences (55%), industries (20%), commercial end-users (24%) and street lighting (1%).

1.1.1 Some Challenges in the Energy Sector There are problems associated with extension of power lines to the various parts of the country. It is costly for the government to transmit electricity from the Owen Falls dams to the various districts of Uganda. Line construction typically accounts for 80 – 90 percent of the expenses of a rural electrification project. The cost of lines of medium or low voltage can be estimated to cost about US $ 20,000 per kilometre. There is an increasing pressure to produce more energy to meet the growing electricity demand for her rapidly growing population, industry and for rural electrification. The annual per capita consumption of petroleum products (Figure 1.2) is also increasing; all petroleum products are imported. The cost of these products has become unpredictable with increases every now and then on the international market. A World Bank/ESMAP study carried out in 1997 indicated that there are more people using “self-electrification” (diesel generator-sets, car batteries, solar PV, etc) than those connected to the national grid. The annual expenditure on the import of petroleum products is very high and continues to rise. These products take a considerable percentage of Uganda’s per capita income. During 1996, the total importation cost for these products was US$ 116 million, equivalent to about 15% of the total export earnings. Currently the annual importation cost of petroleum products is estimated to be more than US$ 212 million. In addition, the high petroleum tariffs in the country have also contributed to high costs on the local market. This has meant that, the country has to spend a lot of its meagre foreign exchange on these products at the expense of other development programmes.


Figure 1.2 Per capita consumption fluctuations of petroleum products (1983 – 2001)

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

% o

f tot

al p

etro

leum

GasolineKeroseneAV GasDieselFuel OilLPG

Source: MEMD (2002)

1.2 Overall Status of Renewable Energy Technologies Uganda is a resource rich country and has a very high potential of renewable energy resources like geothermal, biomass, biomass-based cogeneration, small hydro wind, and biogas. Some of these renewable energy resources have never been developed while others are not fully developed. Developing and harnessing of the country’s renewable energy potential is still demanding if the country’s energy needs are to be met. Power generation in the country has improved over the years but with limited impact on electrification of rural areas. Energy problems in rural areas have not enabled the creation of an atmosphere conducive for investments in these areas. According to NEMA (1998), whereas the generation capacity has tripled in the last 10 years the country still suffers from power deficit despite the estimated 2700 MW potential along the River Nile and 22 other mini hydro-sites identified in other parts of the country. The growth in industry and population has meant an increase in power demand. In Uganda the construction of large dams is also coming under criticism because of their negative social, environmental and economic problems. The industrial sector has been growing at about 14% per annum, yet investment in power generation has largely remained stagnant for the last 25 years (1972 – 1997) (NEMA, 1998). This power situation can be best handled by increased investment in renewable energy resources, which do not require large capital investments. Following then is a positional synopsis of several decentralised renewable sources of energy in Uganda, which, would help meet the energy needs of its rural communities.

1.2.1 Biomass Energy Fuel wood and charcoal still remain the most affordable source of energy to most rural and urban households for over 95% of Uganda’s population. The decrease in biomass energy resources and the increase in energy demand are a big challenge to the population and to the country as a whole. The Energy Assessment Mission Estimates noted that, although there was an apparent high rate of growth of demand for energy, of between 6% and 8%, Fuel wood is also highly utilized in small-scale industries (for example, brick and tile production, agro-processing and fish processing). This is due to in part to an increase in population pressure. However, lack of affordable alternative sources of energy, lack of awareness of energy efficient technologies, increased influx of refugees, increased fuel wood demand, and poverty, are contributing factors to increased biomass harvesting. The rapidly growing industrial sector also relies to some extent on biomass-derived energy. Agro based-industries in Uganda consume nearly 457,000 cubic meters of wood every year (World Bank, 1986). In addition, the increased rate of urbanization and low household incomes may further


increase household consumption of biomass energy. The daily per capita consumption of woody biomass for energy is about 4 Kg (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. Biomass energy resources are becoming over stretched, due to the increasing demand resulting from the rapid population growth (Figure 1.3). Figure 1.3 Biomass trends in Uganda (1993 – 2001)

92

92.5

93

93.5

94

94.5

95

95.5

96

96.5

97

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

Biom

ass

%

Source:- MEMD (2002) This is however mitigated by an improvement in the dissemination of improved bio-fuel stoves in the country (Figure 1.4) especially in the urban areas. The main improved stove types are the Usika charcoal stove and Black power stove. Several adoptions including Rocket stove that is a fabrication of the Urban Community Development Association (UCODEA), have come on the market. It is estimated (ibid) that a total of about 52,000 of these stoves have been disseminated. The number of improved stoves currently disseminated in Kampala alone is estimated to be more than 43,727 which compared to the national figure of 52,000 in 1997 reflect an improvement nationally. But brings to question on the rural dissemination strategies - since very little stoves are disseminated there where the need is greater. Figure 1.4 Dissemination of improved household stoves in Kampala

No.

of S

tove

s 6000 Improved household stoves

4000

2000

0

Years (1990 - 2002)

Source: Author


Today women spend many hours in search for fuel wood while some families have turned to agro-waste such as cow-dung, banana fibres and even leaves for fuel, depriving their small farms of essential nutrients to the soils and, causing land degradation (IRDI, 2000). RETs businesses continue to face market problems and stiff competition from the cheap non-energy saving traditional stoves. There are some efforts in place to disseminate improved stoves to rural communities using local materials. Bio-fuel stoves have also had support from GTZ (EAP), which has helped the dissemination of the stoves. A medium size stove today goes for Ushs. 15,000/= (~US$ 8) compared to the traditional stove which goes for about Ushs. 3.000/- (~US$ 2); this cost is a major obstacle to dissemination of improved stoves. Karekezi et al (1997) noted that, the commercial household stove producers do not carryout awareness programs for customers, and there are no well-organized retail outlets. As Ugandans become increasingly affluent, the demand for charcoal is also expected to increase, partly because of its low price in relation to other forms of energy (NEMA, 2000/2001). In 1970 charcoal consumption was estimated at 100,000 – 150,000 metric tonnes. Increased consumption of fuel wood and charcoal will result into increased in-house pollution, with the biggest exposure being mainly to women and children especially the girl child. To this end some women’s groups, Civil Society Organisations, and some housewives (homemakers) are adopting some simple technologies like briquette making from domestic wastes. The moulding of the briquettes is manually done, which produce very small quantities. Commercial briquette production is very limited and it is insignificant on the energy market. There is thus, need to revive and revitalise the briquette industries if progress is to be made in this sector.

1.2.2 Wind Energy The average wind speed about 3 m/s, but in flatter areas like around Lake Victoria and the Karamoja regions as well tops of hilly areas, the speed may varying reaching up to 6 m/s – which is quite sufficient to run small wind generators of around 50 kWp. However, the wind speeds have been recorded at low metrological heights and not the standard 10 meters, implying that the wind regime may be much higher than indicated. (Da Silva et al. (1999)). However, in many parts of the country this technology has had low dissemination rates. This has mainly attributed to the initial costs involved - which most of the local communities cannot afford, the lack of availability of the technology on the local market and the lack of awareness on the wind energy application. According to Karekezi et al (1997), the Roman Catholic Mission, the Church of Uganda and the Karamoja Development Authority (KDA) have installed wind pumps in Karamoja in the Eastern parts of the country. There are some other parts of the country; like Kalangala and some parts of Mubende and others, which have sufficient wind for harvest as a source of energy.

1.2.3 Small Hydropower Uganda is endowed with a number of small rapids that are ideal for small hydro1. Today the country has an installed capacity of 13 MW that are generated from small hydro in some rural areas. Many sites, with varying potential of generation capacity, located in areas far away from the grid have been identified (


1 Various definitions are given for small hydros, but contextualising this in the East African framework we can thus group small hydros into Pico hydros (schemes up to 5 kW), micro hydro (less than 5 kW up to sometimes 1 MW), mini hydros (operationally between 1 MW to about 10 MW) and lastly big/large hydros (above 10 MW). Nevertheless, these definitions tend to change operationally, depending on specialists and purposes in mind.

Table 1.). A survey funded by the European Development Fund (EDF) focusing on the West Nile region, identified 76 sites with potential ranging from 120 kW to 566 kW (Karekezi et al, 1997).


Table 1.2 Estimated potential of some small hydro sites in Uganda Site District/region Estimated potential (MW)

Rwizi Mbarara 0.70

Kakaka Kabarole 1.5

Nzongezi Mbarara 2.00

Nyamabuye Kisoro 0.70

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

Source: - Author For over a decade, since 1990, there has been a less than 20% increase in power generation trends (Figure 1.5) which may be attributed to lack of funds particularly for some projects have been ear marked for development and also the lack of government’s serious commitment to promote the small hydros for development by the private sector. Nevertheless, despite the limited experience in small hydropower, Uganda has demonstrated the viability of the technology in most commercial activities such as mining and social services. The Kasese Cobalt Company for example has generated its on 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 10 MW of electricity (NEMA, 1998). Figure 1.5 Small hydro power generation trends (1990 – 2002)


020406080

100

1990 1992 1994 1996 1998 2000 2002Years (1990 - 2002)

Gw

hr P

owe

Source: - Author Generally, small hydros have also not been fully developed, but hold the promise of improving rural productivity. They offer a reliable supply of electricity that is essential for long-term economic development of rural communities. Rural electrification has a key part to play in the progressive transformation and economic development of rural communities (NEMA, 1998). It can also provide a stimulus to economic activity, especially in the service sector. It (Ibid) is indicated that most of the potential for small hydro lies at the extreme ends of the power grid in the western and eastern parts of the country where 22 sites for development have been identified.

1.2.4 Solar Energy Uganda is located along the equator and receives a high level of solar insolation for more than 8 hours of sunshine per day all year round. The incident radiation is estimated to be between 5–6 kWh/m2/day. However, solar energy in Uganda has for some time had a very slow level of dissemination (


Figure 1.6), as it has been mainly affordable to government institutions and NGOs that would import them without having to pay taxes. According to NEMA (1998), NGOs enjoying tax exemptions ranked among the highest buyers of PVs. Karekezi et al. (1997) found out that, solar energy sources were 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 about 152.5 KW, being used by the Ministry of Health and other government corporations. By the same time (1992) there were 238 PV vaccine refrigerators, amounting to about 60 kW of installed capacity. 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 (1998) also found out that, PVs were mainly found in large institutions and international Non-Governmental Organizations. Today however, the number of solar units in the country can be estimated to be more than 10,919 PV installations and is slowly being disseminated in the rural areas.


Figure Number of solar units disseminated (1992 – 2002) 1.6

0

5001000

15002000

2500

1992 1994 1996 1998 2000 2002Years (1992 - 2002)

No. U

nits

Source :- Author The biggest set back to solar energy in the country has mainly been the initial costs of the solar equipment. The current cost of a solar home system - solar unit that can be used for lighting and probably a radio set is about US $ 550; many Ugandans cannot afford the upfront costs of solar panels. There is also a problem of accessibility of solar technologies in rural towns of the country (almost all solar businesses are based in the capital city), profiteering by some private firms, and failing to give advice about the capacity of PV; very few programmes are in place to disseminate solar energy countrywide. A pilot project, the Uganda Photovoltaic Pilot Project for Rural Electrification (UPPPRE) was formed within MEMD with goal of developing a sustainable market for solar PV technology. The aim of the project was to address the various constraints related to marketing and use of PVs; which include financing, awareness about the potency of PVs, and technology transfer (NEMA, 1998). It targeted areas that are a long way from the national grid, and where it may not be possible to connect to the grid or any other source of electricity within the next 5 – 10 years or more. In order to boost the solar energy sub-sector, government has waived taxes on importation of solar PV equipment and solar thermal. The World Bank has also given grant to at least three companies that are dealing in solar related products of about US $ 16.000. The companies to benefit from this grant include:- Solar Energy for Africa, Solar Energy Uganda Limited and Energy Systems Limited Uganda. This grant is an indication that solar is gaining recognition of the World Bank as being vital in the rural electrification process. Plans are also under way to construct a multi-million shilling solar assembly and manufacturing plant that is expected to go into production early 2004. The project will cost US $500,000 funded by the Danish Development Agency (DANIDA) as a joint venture between a Ugandan company, RAcell Uganda and a Danish company RAcell Denmark. The factory will be assembling and sizing solar panels using raw material imported from Europe. This if accomplished will help reduce on the price of solar equipment and make dissemination of the solar energy technology in the country more possible. Support for solar energy is crucial if it is to pick up; it may require legislative and policy provisions that encourage households in a given location, to utilize solar and other alternative sources. According to NEMA (1998) a piece of legislation requiring a certain category of houses in urban areas to include solar heaters in their construction as is the case in Botswana, is being considered by the Energy Department.

1.2.5 Improved Bio-fuel Stoves Since wood is still the most important source of fuel for 95% of Uganda’s population, efforts that promote sustainable use of biomass energy require serious attention. IRDI (2000) notes that, since the oil crisis in the 1970’s the mud stove together with other renewable energy conservation


technologies have received marginal attention in the developing world and therefore minimal funding. For sustainable use of biomass, it is important that communities are provided with improved energy saving stoves so as to minimise on the rate at which they consume the available biomass. NEAP (1994) observed that there is need to acquire or develop, test and disseminate appropriate alternative energy technologies as well as increase efficiency of conversion in fuel wood utilization (e.g. cook stoves, charcoal kilns, brick oven etc). According to Karekezi et al (1997), production and dissemination of institutional stoves in Uganda started in the mid-1980s with two producers who designed the stove models they disseminated, mostly adopted from models produced in different parts of the region, particularly Kenya and Tanzania. However, MEMD (2002) observed that, many improved stoves efforts have been an on-and-off affair; lacking necessary commitment and zeal (monetary and physical terms) to sustain efforts for longer periods for recognisable impact. There is need for government to show its commitment; both through policy and funding to local small-scale producers. It is further noted (op. cit) that, government policy and commitment for stove programmes has also been lacking for a long period. As Ugandans become increasingly affluent, the demand for charcoal is also expected to increase, partly because of its cheapness in relation to other forms of energy (NEMA, 2000/2001). According to MEMD (2002), emphasis and resources have always been committed to modern forms of energy e.g. electricity and petroleum. Although efforts have been put in place to promote improved stoves, a lot of dissemination is still required if they are to be accepted and used by the communities. Improved stoves have had competition from the low cost of the non-energy saving traditional stoves. Most producers of improved stoves have often had problems to get market for there products. According to Karekezi et al (1997), there is no organized strategy for marketing household improved stoves. Use of fuel wood energy using poor stoves promotes uncontrolled exposure to smoke leading to a growing number of respiratory disorders (IRDI, 2000). To reduce on this problem, efforts have to be made to raise awareness to the communities on the dangers of stoves that expose them to smoke. MEMD (2002) recognises the need to develop awareness about the values and benefits of improved stoves adoption (better methods of Biomass utilisation), for better health, savings, reduction in drudgery and improved environment. Lack of affordable alternative sources of energy, awareness of energy efficient technologies, increased influx of refugees, increased fuel wood demand, and poverty, are contributing factors to increased biomass harvesting. The rapidly growing industrial sector also relies to some extent on biomass-derived energy. In addition, the increased rate of urbanization and low household incomes may further increase household consumption of biomass energy (NEMA, 1998). Need also arises for users to understand and change there attitudes towards use of improved stoves. Today unsustainable use of biomass is having a great impact on the environment and the agricultural activities in the country. Many people in different parts of the country are finding it difficult to get fuel wood to prepare their meals. IRDI (2000) found out that families were turning to agro-wastes such as cow-dung, banana fibres and leaves for fuel. This has deprived their small farms of essential nutrients to the soils causing land degradation.

1.2.6 Biogas Energy Biogas has so far been spread to five districts across Uganda. These include Mpigi, Kabarole, Iganga, Tororo and Mbale. An average of ten biogas plants have been installed in each district, which brings the total number installed to 50. Whereas this is an achievement, 50 plants in plants in five district is still a small number that requires immediate attention It is also important to note that the remaining more forty districts in the country have not been availed with this service. Biogas has had a very slow dissemination in the country due to the costs involved in constructing a biogas plant. According to Karekezi et al (1997) this technology was introduced by the church of Uganda in the early 1980s when two Indian - type (floating drum) biogas digesters were installed on church property in Mbarara. Most of the plant designs that were initially introduced, were not affordable to many people and had complicated technology. This affected the spread of this technology and limited its use to only those who could afford the high costs involved in installing it. In addition, the few communities that could afford the installation costs lacked expertise to maintain these plants. This is attributed (ibid) to inadequate technical capacity to monitor and maintain these digesters leading to most of them being run down. Lack of involvement of local personnel occurred in


the expatriate run biogas plants in the country because there were no trained technicians to offer proper maintenance (Karekezi et al, 1997). The biogas technology introduced by the church of Uganda in the early 1980s acted as good demonstration units to the construction of several more digesters in Ankole districts. Available information indicates that these digesters worked for a number of years, after which, they developed problems that were abandoned due to lack of maintenance. A Nepalese digester was also installed at Mbarara, but never functioned. A government pilot project implemented by the former Ministry of Animal Husbandry and Fisheries with technical assistance from the Republic of China, in which seven digesters were installed in Eastern Uganda. Because of adequate technical capacity to monitor and maintain these digesters was not developed, all but one functioned after 1987. This remaining digester (in Tororo district) is still operational (Karekezi et al, 1997). Another Programme funded by the World Bank and implemented by the ministry of Natural Resources established 10 biogas digesters with a total gas capacity of 262 cubic meters. The Programme employed an expatriate biogas expert who designed and supervised the construction of the digesters. The recipient provides all the necessary materials and pays for all the local labour. Around 1997-98, the Chinese Government, through a memorandum of understanding with government of Uganda, committed about US$ 170,000 for construction of 20 demonstration biogas digests and training of Ugandans in their design, construction and maintenance. The Indian government has expressed interest in participating in biogas development in the country, in collaboration with the Ministry of Energy and Mineral Development (MEMD) (NEMA, 1998). The Government of Uganda, through funding from various donor agencies has tried to disseminate the biogas technology in the country but with limited success. Failure of the technology has mainly been due to inability to transfer and develop local maintenance expertise including lack of managerial skills to maintain the installed plants. Implementation of some biogas programmes has had limited involvement of the local experts and at times, where local experts are involved, they do not understood the foreign experts. According to Karekezi et al (1997), lack of involvement of local personnel occurred in the expatriate run biogas plants in the country because there were no trained technicians to offer proper maintenance. More recently, smaller technologies that do not require a lot of costs in construction have been introduced to boost its dissemination to poor communities. Biogas has so far been spread to five districts across Uganda. These include Mpigi, Kabarole, Iganga, Tororo and Mbale. Some communities practicing zero grazing have successfully adopted the technology and maintenance skills. IRDI (2000) gives an average of ten biogas plants as having been installed in each of the five districts, bringing the total number of biogas installed to 50. Whereas this is an achievement, 50 plants of biogas plants in five districts is still a small number that requires additional efforts for wider coverage, for many districts in Uganda do not have even a single biogas plant. 1.3 Status of geothermal and Cogeneration

1.3.1 Geothermal Uganda’s geothermal is one of the renewable energy sources2 that has not been developed. Geothermal studies in the country started in the 1930’s and by 1935 46 hot and mineralised springs were listed (Figure 1.). Uganda’s geothermal resources are estimated to be about 450 MW (BCSE, 2003). The country’s reserves is not yet known


2 Geothermal energy sources can be considered renewable only in the sense of sustainable use. Poor planning and utilisation can lead to the steam wells for instance not getting recharged and running the risk of drying up – thus making the geothermal sound more like a conventional energy source and not a renewable

Figure 1.7 Location of geothermal prospects of Uganda

Source:- MEMD, 2002

1.3.2 Cogeneration Cogeneration is one of the least used forms energy in the country. For some time now, it has been only practiced in the sugar industry but little was known about its potential to generate power for commercial purposes until recently. There are three sugar factories in the country namely Kakira Sugar Works, Lugazi Sugar Works and Kinyara Sugar Works, little is known and published about their enormous potential to generate power that is much needed for development of rural communities. According to NEMA (1998), Kakira Sugar Works has an installed capacity of 4.5 MW, the sugar company now generates 2 MW which is used in the factory and excess sold to UEB. Although the company had an installed capacity of 4.5 MW by 1998 and could use only 2 MW, six years down the road, it has not succeeded to sell its excess electricity to government or any other buyer. The company can produce more energy than what is currently installed but can only do so if the market for the energy is available. Recently, Kakira Sugar Works (1985) Ltd entered into a Power Purchase Agreement (PPA) with government to supply electricity to the national grid. This is in line with government’s policy of liberalising the power sector and to encourage participation of the Independent Power Producers. However, from the study findings the other two factories do not have an immediate plan of expanding their cogeneration plants beyond producing the power needed for their industrial consumption. Kinyara Sugar Works is in the pipeline of being privatised, according to the factory management, increased cogeneration by the factory will depend upon the plans of the new owners.

1.3.3 Conclusion The current energy problems in the country and the ever increasing energy demand require an integrated approach that puts due focus on both the conventional and renewable energy sources. Renewable energy sources can play an important role in offsetting the energy supply deficit in the country. Uganda’s geothermal and cogeneration potential can play a vital role in supplying the country with this energy balance and in creating employment opportunities for the population.


The energy status today does not favour easy access to affordable and more sustainable energy sources. Efforts are being made to set up investments in the energy sector with an aim of increasing access of many Ugandans to various energy resources. Emphasis is needed to ensure sustainable supply and efficient utilization of energy sources, at least cost to the national economy. The bias towards the electricity sub-sector in the energy country’s strategy has had a negative impact on other energy sources. There is need for a less biased and comprehensive assessment of the least cost energy options as well as need to acquire, test and disseminate appropriate alternative energy technologies. Other barriers that hamper the exploitation and use of renewables in Uganda should also be addressed. Such barriers include institutional, policy, socio-economic and marketing. There is also lack of adequate data on the various aspects of the energy resources (availability, quantity, quality-resource characteristics) and the lack of a sustainable framework within which the country’s renewable energy resources can be promoted and developed. Local artisans do not have sufficient funding and expertises to enable them produce efficient RETs. Most renewable energy resources depend on imported raw materials, machinery as well as expertise, making them unaffordable to the local communities. There has been an increase in levels of dissemination and use of RETs and this has been made possible through easing of accessibility and tax elimination on some RETs.


2.0 METHODOLOGY 2.1 Data Collection and Constraints Data collection for this study was carried out mainly through interviews, administering questionnaires and observations. to stakeholders involved in the manufacture and distribution of RETs and also small hydropower projects in the districts of Kasese. The three factories involved in cogeneration namely, Kinyara Sugar works limited (KSWL) in Masindi district, Kakira Sugar works in Jinja district and Lugazi Sugar works in Mukono district were visited for data collection and questionnaires administered, interviews as well as observations made. Efforts were also made to meet SMEs involved in the manufacture, assembling and dissemination of solar equipment, improved stoves, biogas as well as other renewable energy technologies in the country. Secondary data were important in this study as some of the SMEs had already run out of business or had poor / “cooked” data and their RETs dissemination could only be found in such secondary records. Data was also obtained from the department of Geological Surveys and Mines in the Ministry of Energy and Mineral Development (MEMD), the Uganda Bureau of Statistics (UBOS) and publications earlier made on RETs. The Internet was an important source of information especially on the Uganda and other country’s energy projects and there costs as some of this information could not be easily locally accessed. Several books have been used in this study among which, the following are included: the State of Environment Report for Uganda, NEMA Reports produced in 1998 and 2000 / 2001. Reference has also been made from the East African Geothermal Workshop held in April 2003 in Nairobi Kenya. The workshop addressed comprehensively geothermal development in East Africa where country reports were presented. A geothermal report of the Uganda geothermal workshop by NAPE has also been used; it addresses studies so far carried out on geothermal in Uganda and the region as a whole. The data collected from the field was mostly raw data and required being processed. Processed data in hard copy form was however obtained from some SMEs like Kakira Sugar Works 1986 Limited, UBOS and the State of Environment Reports for Uganda from the National Environment Management Authority (NEMA). The challenges encountered are that some SMEs do not have a culture of record keeping; very little is recorded - the information is very scanty, it does not cover long periods of time and in some instances unreliable. Most SMEs do not advertise themselves, making it difficult to locate them. There was also problem in accessing information from some government departments due to the bureaucracies involved in these departments, which required long periods of time before data could be secured. In some instances, the required data was not available in the format suitable for the study. Although everything was done to avoid suspicions, a few respondents were unwilling to disclose their business information, and it required a lot of time and explanation before they could release any information. In addition, there was a time constraint. 2.2 Data Treatment The data from the collected questionnaires was entered and processed. It was then tabulated and analysed so as to get an interpretation and explanation as to why it had taken the trend. From the data collected, the geothermal and cogeneration installed capacity in the country has been worked out and the total national installed capacity of power generation. This was used to work out the country’s total generation capacity required to meet 5% of the national installed geothermal and cogeneration capacity and other study parameters.


3.0 ANALYSIS 3.1 Technical Assessment

3.1.1 Uganda’s geothermal and Cogeneration Resources and Reserves Uganda has a geothermal resource3 of 450 MW, mainly located in the western Rift Valley parts of the country Most of the areas where this potential is located are not connected to the national grid. The country’s geothermal resources is likely to increase as new sites different from those earlier known continue to be discovered like the discovery of the Karamoja and west Nile sites which were not earlier known. The exact figure of reserves is still unknown. However, explorations are under way, which will eventually determine the country’s proven geothermal reserves. However, the process is making slow progress since a lot of emphasis has been put on hydropower development. However pressure is building up on government from local Civil Society Organisations and other stakeholders for government to develop the countries geothermal potential so as to tap its numerous benefits. Despite the enormous current geothermal resources, the country has not been able to install any geothermal plant. Nevertheless, studies done on three sites of Katwe, Buranga and Kibiro by the Geological Survey and Mineral Development (GSMD) and the United Nations Development Programme (UNDP) between 1993 - 1994 indicate that with commitment, Uganda’s potential to meet the 5% target is possible. Based on the 326 MW total installed electricity (from hydros, cogeneration and thermal) it is realized that the required geothermal capacity required to meet 5% generating capacity is 16.3 MW (i.e. 5% of 326 MW). This is only a 3.62 % of the current 450 MW geothermal resources in Uganda. This is contrastingly different from cogeneration. Uganda’s cogeneration potential is not fully known. There are several biomass-based industries that would have played an important role in cogeneration; especially the wood, tea and coffee industries, their potential is however unknown. Currently cogeneration is only being carried out in the three sugar industries; even for these industries, little is known about their full cogeneration potential. There exists only three sugar factories namely Kinyara Sugar works Limited (KSWL), Sugar Corporation of Uganda Limited (SCOUL) and Kakira Sugar Works (1985) Limited (KSW). That are engaged in small-scale cogeneration primarily to meet their industrial energy needs. The low levels of cogeneration in the country can best be explained by the poor policies before liberalization of the energy sector. Before liberalisation, the existing policies restricted the private sector from generating power for sale and limited them to producing power for their industrial consumption. Kakira sugar Works for example has shown interest in expanding its cogeneration plant to supply power to the national grid. According to factory management, plans are under way to up grade the cogeneration plant to produce more (Table 3.1) Plans for expansion were earlier frustrated by the poor policies existing before liberalization of the energy sector.

3 Energy sources can be classified either as resources (i.e. the total occurences of any amount of known energy sources in any recognisable form). This is usually called its theoretical potential. In this report theoretical potential and resources are used interchangeably. Of these resources, those which under today’s technological and/or economical conditions are available or can be extracted are known as reserves (or as used in this report it can refer to the technical potential).


NB:- It is necessary to consider the terms reserves and not technical potential, since when a resources has been proven to exist and be extractable under current Technical and economic conditions, one then refers to it as proven reserves. Consequently talking of technical potential does not capture the full story of ground realities of proven and unproven reserves and its difference from the total resources base.

Figure 3.1 Power produced from cogeneration at Kakira Sugar works

Cogeneration

Years (1990 - 2002)

0000000

0000000

0000000 3

4

5kW

h Po

wer

20000000

10000000

0

Source :- Data collected from the factory Table 3.1 Installed and expected increase in cogeneration (MW)

Sugar factory Current cogeneration capacity (MW)

Proposed increments in cogeneration within

2-5 years (MW)

Total capacity after increment (MW)

Kakira Sugar Works

(1985) Ltd

4 10 14

Sugar Corporation of

Uganda limited (SCOUL)

4 0 4

Kinyara Sugar Works

Limited (KSWL)

2 1 3

TOTAL 10 11 21

Source: Data collected from the factory The amount of power produced in these factories does not vary very much although variations from one factory to another are likely to increase depending on the purpose of production ( Table 3.1). Currently all the factories practice cogeneration primarily for their industrial consumption. The country currently produces 10 MW of energy from cogeneration from the three sugar factories. The required 5% cogeneration in relation to the current national installed capacity is 16.3 MW (based on the total installed electrical capacity of 326, from hydros, cogeneration, and thermal). From Table , it is noticed that current cogeneration production is only 10 MW, meaning a deficit of 6.3 MW still remains. Thus for the country to meet its 5% cogeneration installed capacity, it would require only 6.3 MW, and the proposed increments at Kakira Sugar works Ltd (KSWL) would meet this target.

3.1.2 Technical Staff Kenya leads the rest of Africa in geothermal research and development in Africa, with most of her geothermal specialist having been trained in Iceland4 (Fridleifsson, 2003). The National energy Authority of Iceland, indicates that of its student trained in the collaborative programme of the United Nations University geothermal training programme, Kenya leads the list of eastern Africa countries (Table 3.2). Table 3.2 Eastern Africa geothermal specialist trained under the UNU/GTP (1979 – 2003)


4 Iceland obtains 50% of her total primary energy supply from geothermal. (Ragnarrsson, 2000), of which 86% is used for space heating

Country

Geo

logi

cal

expl

orat

ion

Bor

ehol

e ge

olog

y

Geo

phys

ics

Expl

orat

ion

Bor

ehol

e ge

ophy

sics

Res

ervo

ir en

gine

er

Che

mis

try

of

ther

mal

flui

ds

Envi

ronm

enta

l st

udie

s

Geo

ther

mal

ut

iliza

tion

Dril

ling

tech

nolo

gy

Tota

l

Eritrea 1 1

Ethiopia 3 3 1 4 3 4 2 20

Kenya 1 4 7 5 6 5 1 4 33

Tanzania 1 1

Uganda 2 1 1 2 6

Source: - Fridleifsson, 2003 Table 3.2 is illustrative of the low technical capacity of Uganda in various fields of geothermal energy resource management, assessment and utilisation. Unlike some countries in the developed world, cogeneration in Uganda is not considered a separate part of the sugar plant, thus obtaining numbers for people directly trained and/or employed solely for cogeneration is difficult. However, it is taken, that, a specific number of people spend at least some time in the cogeneration plant. In KSWL for instance, it was estimated that out of the 300 workers at the factory at any given time, about 1/3 are usually assigned duties to the cogeneration plant. (Table 3.3). Table 3.3 Number of Jobs created in the Cogeneration plants (Jobs/MW)

Number of employed by plant Sugar Factory

Female Male

Kakira Sugar Works (1985) Ltd 0 55

Sugar Corporation of Uganda limited (SCOUL) 0 40

Kinyara Sugar Works Limited (KSWL) 0 65

TOTAL 0 160

3.2 Economic, Policy and Gender Considerations

3.2.1 Policy Considerations Geothermal and some cogeneration energy projects are usually capital intensive since the initial cost includes the lifetime supply of fuel energy. They are also typically less than 100 MW and hence considered as small. This creates a natural reluctance on the part of leaders and policy makers to make long-term loans for such projects. This is particularly true in Eastern Africa, where the potential for geothermal development is enormous. For example both Kenya and Uganda, with a combined population of 50 Million, could be 100% geothermal powered. With this tremendous geothermal potential, power sectors, which are beginning to undergo reform, should capitalize on this underutilized resource. However, the private sector lenders and investors who are normally involved in such projects are quite reluctant to invest to provide financing due to the perceived country risks in the eastern Africa countries. Since geothermal and cogeneration development has not been a priority in the country, no efforts have been made to develop skills to locally manufacture these plants. Therefore, currently there is no portion of these plants that can be manufactured and assembled locally in Uganda. This can be attributed to the lack of government commitment to develop geothermal in the country. This in a way has not given opportunity to local artisans and engineers to develop skills of locally manufacturing any form of geothermal or cogeneration plant.


Further there has also been a wrong concept in the country, that geothermal development is a very costly undertaking as compared to hydropower development, which the country has been accustomed to. This concept has played a very significant role in discouraging any efforts that would have otherwise been made towards the development of geothermal and the consequent inhibition of any local initiatives of developing skills to manufacture or assemble geothermal plants. There are also on-going NGO lobby activities in the country that are aimed at influencing government to put geothermal exploitation in Uganda on its priority list. Different geothermal developers have expressed interest of investing of developing this potential. Seemingly, there is commitment to develop the country’s geothermal potential however, for several decades; this commitment has failed to be translated into reality. One of the factors that have led to the low cogeneration levels in the country is partly because the factories are located in areas that are effectively served by the national grid. Although the power sector has been liberalised, there still some obstacles that continue to affect effective cogeneration in the country. Cogeneration has a high potential of creating employment opportunities and to reduce on the country’s debt burden. If these factories are to practice commercial or large-scale cogeneration, they must be assured of the market of the power they produce. In Uganda today almost all the transmission lines are a monopoly of UEDCL, all other power producers remain at the mercy and on whether UEDCL can get market for the electricity they produce. Kakira Sugar Works has found a lot of difficulty in selling its co-generated power to UEDCL on grounds that it had enough power for the available market. The company was also frustrated when it was denied use of the existing power lines to supply its power to its estate by UEDCL.

3.2.2 Economic Considerations The commercial viability of a geothermal power plant is influenced by capital costs for land, drilling, physical plant, operating & maintenance costs, amount of power generated and sold, market value of that power and also cost of exploration, design and drilling of test holes. This gives geothermal high initial costs as compared to the conventional power plants.

3.2.3 Creation of Jobs (jobs/MW) and Comparison to Conventional Power Plants In considering probable job creations for Ugandan geothermal5 and cogeneration plants; a comparison was made of almost similar sized plants in both the developed and developing countries, to obtain a probable figure of number of jobs created per MW. In some of these cogeneration factories however, the number of employees is even higher than the stated number because, cogeneration is not considered a separate part of the sugar plant (Table 3.3). Comparing a geothermal power plant with a larger sized yet-to-be-built Bujagali Hydropower project (Table 3.4), it emerges that Big hydros create less jobs per MW as compared to slightly smaller geothermal power plants. This is a direct indication of need to consider economies of scale when comparing hydros and geothermal It can thus be predicted, (Table 3.4), that between 4-11 jobs can be created per MW for geothermal plants The higher figure being more likely, since the Kenyan socio-economic situation more easily identifies with the Ugandan. In the case of cogeneration plants it can be inferred that around 10 -12 jobs/MW are created. These figures are in direct contrast to a conventional power plant (the Bujagali hydro power plant) which creates only 2 jobs/MW. From the comparisons, all the two cogeneration plants have created more jobs / MW produced than the proposed Bujagali hydroelectric power plant. Small and large-scale cogeneration plants create more employment opportunities and would be for Uganda since unemployment is very high. Table 3.46 Creation of Jobs per MW for both geothermal, cogenerating and hydro plants Country Country

type Plant identification Installed

capacity (MW)

Number of people directly employed (jobs)7

Jobs/MW

5 (of which none exists at the moment – hence the use of the a Kenyan and United States of America geothermal plant)


6 Comments indicted for Table 3.4 also apply to Table 3.5

Uganda Developing Kakira Sugar Works (1995) Ltd

(KSWL) cogeneration plant

[Feedstock – Bagasse]

4 55 ~12

Uganda Developing Sugar corporation of Uganda Ltd

(SCOUL) cogeneration plant

[feed stock – Bagasse]

4 40 10

Ugandan Developing Bujagali Hydropower company 200 400 ~2

Kenya Developing Olkaria I geothermal plant 458 500 ~11

USA Developed Glass mountains Geothermal

plants

49 200 ~4

USA9 Developing Okeelanta Sugar mill,

cogenerating plant, near South

Bay [Feedstock – Bagasse and

wood waste]

74 34 (full time) and 80

(part time) Total

workers = 114

~2

3.2.4 Comparison of geothermal and conventional energy technologies in terms of enterprise creation (jobs/MW)

Geothermal has been known to directly lead to creation of several enterprises. Its ability to create enterprises is mainly derived from the chemical composition of the brine and the high temperatures coming from the rocks underneath the ground. Investing in geothermal facilitates the recovery of these chemicals and the heat, thereby creating investment opportunities in the several industries created. These enterprises include; mineral water industry, the chemical recovery industry, the salt processing industry, agro processing industry, fish processing, hot water supply and boosting of the tourism industry. All the above industries create jobs to the communities. Cogeneration plants produce steam; part of this steam is normally used in the sugar industry for drying the sugar. This steam can also be developed into an investment and supplied to other industries that would require its use. The steam from the cogeneration plant can also be used in heating and pumping hot or cold water for supply to households near the plant. Cogeneration can lead to the creation of the sweet industry and whereas the sugar industry is in most cases responsible for the installation of cogeneration, cogeneration is also very important for the successful creation of a sugar industry.

3.2.5 RETs investment Cost (US$/MW) compared to that of conventional power plants A comparison is made again using Kenya’s Olkaria II geothermal power plant and Bujagali power plant (

7 Jobs created can be considered in two different categories for the developing and developed countries. These are the short & long term jobs and/or permanent and temporary jobs. In the study, total jobs created (whether short/temporary or long/permanent ) are considered. 8 Only for Olkaria I and not considering Orpower (8 MWe) which is an independent power producer (Bw’Obuya, 2002)

Renewable Energy Technologies in Uganda: The potential for Geothermal Energy Development 20 9 www.westbioenergy.educ

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Table 3.5), which indicates that the hydropower plant is about 12% more expensive than the geothermal, while the cogeneration plant is 9% less expensive than the hydro .


Table 3.510 Comparisons of investment costs of various power plants Country Country type Plant

identification Installed capacity (MW)

Total project costs including transmission lines (US$)

US$/MW

Kenya Developing Olkaria II geothermal power plant

64 163, 500, 000 2,554,687.50

Ugandan Developing Bujagali Hydropower company

200 580,000, 000 ,900,000

USA11 Developed Okeelanta Sugar mill, near South Bay

74 194,500,000 2,628,378.40

Uganda Developing Bujagali Hydropower plant

200 580,000,000 2,900,000

Cogeneration has not taken root, as commercial undertaking in the country and therefore, the cost of cogeneration is not considered independent of the total factory cost. However, the Okeelanta Cogeneration Plant in Florida can be used to compare the cost of cogeneration with the cost of hydropower12. This cogeneration plant generates 74 MW, and was constructed at a cost of US $ 194.500.000. For hydropower, the Bujagali Hydropower Power Project in Uganda that is expected to generate 200 MW at cost of US $ 580.000.000 will be used. From the comparison, the cost of cogeneration in relation to hydropower is lower. Investing in cogeneration saves US $ 271,622 (US $ 2.900.000 - US $ 2.628.378) per mega watt. From this, we can therefore conclude that developing cogeneration is better than developing conventional energy. The same applies for the geothermal plants. The projected cost (using Olkaria II estimates) required to meet 5% of geothermal development in Uganda would thus be US$ 41, 641,406.25 [i.e. US$ 2,554,687.50 x 16.3 MW]. Assuming thus that government would add this project in the list of its planned projects; the following (Table 3.6) would be the simulated investments in the energy sectors for the next couple of years. Thus, a new 16.3 MW geothermal power plant obviously compares favourably in terms of costs with extension projects and the smaller hydropower projects. Table 3.6 Projected investment costs of geothermal with other hydropower plants

Project energy investment Project costs (US$) % of total investment

Bujagali Hydropower project 580,000,000 43.6%

Karuma Hydropower project 300,000,000 22.5%

Rukiga Power extension project 150,000,000 11.3%

Owen Falls extension project 230,000,000 17.3%

Power II (Old Owen falls Dan) 28,800,000 2.2%

16.3 MW geothermal power plant 41, 641,406.25 3.1%

Total project investment in conventional energy projects in

Uganda

1,330,441,406 100%

3.2.6 Conventional energy sector loans as a proportion of external debt and the Projected reduction in external debt arising from geothermal investments

Uganda is among the Highly Indebted Poor Countries (HIPC) of the world. Its external debt burden can be estimated at US $ 4.000.000.000. This debt has been accumulating over time and the 10 It would be more intresting to use levelised costs, which would also take into consideration the life of the power plant, and even lead us to cost the electricity produced. 11 www.westbioenergy.educ


12 But this should only be taken as a guide, since the difference in technologies and infrastructure will definitely skew the outputs between results from a developing and a developed country.

http://www.westbioenergy.educ/

conventional energy sector has been one of the key sectors, which have benefited from these loans. In addition, a national energy plan developed in 1999 by British consultants and approved by government of Uganda will require it to secure loan funding amounting to US $ 1.6 billion to meet the plan requirements. Almost all the projects under this energy plan are hydropower projects including the Bujagali and Karuma hydropower projects. A number of loans have been secured, the proportions below do not include all the loans secured on the conventional energy sector but it is just a fraction of the total loans secured by government of Uganda in the sector (Table 3.7). Table 3.7 Energy sector loans as proportion of the external debt

Project energy investment Project costs (US$) Bujagali Hydropower project 580,000,000 Karuma Hydropower project 300,000,000 Rukiga Power extension project 150,000,000 Owen Falls extension project 230,000,000 Power II (Old Owen falls Dan) 28,800,000 Total project investment in conventional energy projects in Uganda

1,288,800,000

Uganda's debt burden 4,000,000,000 Proportion of conventional sector loans 32.22%

Basing on Bujagali Dam project for every MW produced as per the cost of the project geothermal would help save. Table 3.8 Savings on geothermal and cogeneration power plants Project Costs

(US$/MW)

Savings (US$/MW) [Bujagali

costs – project costs]

Savings for 200

MW plant

Bujagali Hydropower project 2,900,000 0 0

Olkaria II geothermal power plant 2,554,687.50 345,312.50 69,062,500.00

Okeelanta Sugar mill, near South

Bay

2,628,378.40 271,621.60 54,324,320.00

From Table 3.8, it can be seen that instead of building a 200 MW hydro plant more savings can be obtained by construction of a geothermal power plant or a cogeneration one. This will results in the reduction of Uganda’s total debt burden of US$ 4.000.000.000. A further advantage is that for cogeneration, the government does not have to borrow the money externally because the plants are privately owned by companies.

3.2.7 Geothermal investment as % of current/projected debt relief funds Uganda is one of the Highly Indebted Poor Countries of the world (HIPC) that are expected to benefit from debt relief from the World Bank and from other rich and developed countries. According to a press release of February 8, 2000, the International Monetary Fund (IMF) and the International Development Association (IDA) agreed to support a debit reduction package for Uganda under the enhanced HIPC Initiative. In net present value terms, total relief under the enhanced HIPC Initiatives is worthy nearly US $ 700 million, equivalent to 38 percent of total NPV debt outstanding at the end –June 1999. This was expected to translate into debt service relief over time of about US $ 1.3 billion. This amount is in addition to the US $ 650 million of relief provided in April 1998 under the original HIPC Initiative. Total debt service relief under the original and enhanced HIPC frameworks will yield approximately US $ 2 billion. Current and projected debt relief = US $ 2.000.000.000 Olkaria II plant cost = US $ 163.500.000 5% Geothermal for Uganda = 16.3 MW Unit cost of Geothermal = US $ 2,554,687.5

Renewable Energy Technologies in Uganda: The potential for Geothermal Energy Development 23 Total geothermal investment cost required to meet 5%

= 16.3 X US $ 2,554,687.5 = US $ 41,641,406.25 Geothermal investment as a percentage of funds from debt relief = US $ [(41,641,406.25 / 2.000.000.000) X 100] = 2.08% Uganda’s total debt service relief under the original and enhanced HIPC frameworks will yield approximately US $ 2 billion. For the country to meet the 5% cogeneration target it requires an investment that is equivalent to US $ 16,558,781.4. This therefore means that; the percentage of cogeneration to the current and projected debt relief is US $ 16,558,781.4 And the Cogeneration investment as a percentage of funds from debt relief = (US $ 16,558,781.4 / 2,000,000,000) X 100 = 0.83% The country would require less than 1% of its debt relief to meet the 5% cogeneration target. Mindful of the fact that government is know longer directly involved in the generation and sell of electricity, from the debt relief fund government would set aside this percentage so as to lend it to companies that are involve in cogeneration as a way of encouraging them to produce more power. The applications of resources from the debt relief are expected to benefit the country’s poverty reduction programme. Given its location and potential to create new enterprises, geothermal investments will help provide jobs in rural areas and improve rural household incomes for better rural livelihoods. It would be important therefore for geothermal to benefit from the debt relief funds given the important role it can play in the development of rural areas. In relation to the debt relief funds, if Uganda used part of the funds to develop part of her geothermal potential; at least for a plant similar to that of Olkaria II in Kenya the country would require;

3.2.8 Estimate foreign exchange savings on fossil imports from geothermal installation Geothermal development in the Rift Valley districts of the country will lead to easy access to electricity by rural communities in these districts. Increased access to electricity and its consequent use will lead to a decrease in consumption of fossil fuel; more especially paraffin. Geothermal development will also increase on amount of power available on the national grid, since it would feed the national grid in addition to the power that would have otherwise been transmitted to these areas. The available power would be used to serve other parts of the country thus, saving these communities from using fossil fuels for their energy and also saving on the amount of foreign exchange used to import fossil fuel. There are numerous petrol and diesel run mills and generators in the country side, which when provided with electricity will help reduce on the amount of fossil fuels imported in the country. On average of the total petroleum products imported about 10% is paraffin. Paraffin is mainly used in rural homes as the main source of light. It is also used for cooking in some affluent rural and urban homes, in some towns that are not connected to the national grid. Based on the importation of petroleum products worth approximately US $ 173.791.000 in the year 2002 (UBOS 2003); The approximate total import cost of paraffin is; = 10% X US $ 173.791.000 = US $ 17.379.100 The population of districts of Kasese, Bushenyi, Kamwenge, Kyenjojo and Kabarole, which are in close proximity to the geothermal prospects, is 2,277,006 and the population of Masindi and Hoima, which are close to the Kibiro geothermal prospect, is 809,246 Total population close to geothermal prospects; = 2,277,006 + 809,246 = 3,086,252 Proportion of geothermal area population to national population of 25.4 million = [3,086,252 / 25,400,000] x 100 = 12.15% If the 12.15% population were able to access and use electricity generated from the geothermal prospects in the area, then decline in fossil fuel consumption would be; = 12.15% X US $ 17,379,100 = US $ 2,111,560.65 per annum This excludes savings from mills and thermal generators that currently depend on diesel and petrol. It also does not consider the amount of fossil fuel saved as a result of increased supply of electricity to other parts of the country due to increases in available energy to distribute to other parts.


Of the three sugar factories the country, two of them; Kakira Sugar Works (1985) Ltd and SCOUL are located in areas that are close to the national grid while Kinyara Sugar Works Limited although connected to the national grid, has most of the areas in its surrounding not connected to electricity. It is more viable for the factories that are involved in cogeneration to generate power and supply to the national grid. From the field study, it was found out that Kisiizi Power Company upon upgrading its power plant would be able to supply about 800 families from the 0.3 MW. This there fore implying that; 1 MW would supply 2667 families and so the cogeneration 16.3 MW would supply 43, 467 families [(i.e. 800 families / 0.3 MW) x 16.3 MW]. If a family on average consumes 4 litres of paraffin per month then, the amount of paraffin that would be consumed in a year per family would be = 43,467 X 4 X 12 = 2,086,416 litres of paraffin. The volume of petroleum products13 that were imported in the country in the year 2002 were 571,143 M3

and cost US$ 173,791,000 then; unit cost of paraffin is 30 US cents / M³ and consequently the costs of paraffin consumed by each family per year is US$ 634,867.85.

3.2.9 Impact of increased geothermal on other development sectors e.g. water, health, agriculture and education

Geothermal development will lead to job creation directly in the geothermal plants and in other enterprises that will come up as a result of the geothermal development. These jobs will help improve on rural household incomes since geothermal in Uganda is rural based. This will create an atmosphere conducive for development of micro projects, which are a major source of employment and income for most urban and rural women since most of them do not have formal employment. Many rural communities near the geothermal sites do not have access to safe and clean water. Development of geothermal will help improve provision of power required for pumping of treated water, which is safe and clean. Geothermal will also provide hot water thereby saving on the time women spend looking for fire wood to boil water and demand for fuel wood thereby help in the conservation of the environment. Improved quantity and quality of water supply will greatly improve the livelihoods of many of these rural communities. In Uganda many rural women and children die due to lack of easy access to good medical facilities. Geothermal will facilitate the provision of improved medical services and facilities thereby reducing on the high maternal and infant mortality rates in rural areas. Improved health will not only save lives of rural women, but it will also help improve on their level of productivity. There is a high level of in house pollution in the country resulting from the use of fuel wood. In house pollution has been identified the major cause of respiratory problems especially to women and children who are major victims of exposure to this kind of pollution. By developing geothermal clean energy for cooking lighting would be provided to the communities thereby, reducing on the use of fuel wood which is the major cause of this problem. Many rural women depend on farming for their livelihoods while their husbands look for casual or formal employment and do not depend on agriculture for their income. Provision of agricultural processing plants will greatly improve incomes of rural women and consequently their livelihoods. The processing plants will not only improve on market access for the produce but will also improve on food security in the country. Geothermal will make electricity accessed and will greatly enhance on the education standards in rural areas; especially the girl child’s education, whose work-load on fuel wood collection and cooking will be reduced. By providing good and efficient light rural children will be enabled to read and effectively compete with their counterpart in urban areas who are supplied with electricity. Access to and use of computer and Internet facilities will be improved thus enabling rural communities to share and learn from experiences world over.

13 These estimates exclude fossil fuels, which are widely used in many of these areas in generators, mills and

others in diesel run engines.


3.2.10 Total cogeneration investment cost required to meet 5% and % of Cogeneration investment cost as current and projected investment in conventional power sector

Uganda has an installed capacity of 10 MW of cogeneration and the total national installed electricity generation capacity is 326 MW. Five percent cogeneration of the total nation installed capacity is 16.3 MW, but the balance deficit required to meet the 5 % target is 6.3 MW. For the country to meet the balance on the 5% target of national installed cogeneration the cost would be; US $ 16,558,781.4 (i.e. 6.3 MW x US$ 268,378). To obtain 5% national installed capacity of cogeneration, it would cost the country about US $ 16,558,781.4. However, unlike for geothermal this target is likely to be achieved as soon as Kakira Sugar Works (1985) Ltd and Kinyara Sugar Works Limited upgrade their cogeneration plants. The increase in the demand for energy has created the need of increasing on the amount of electricity that is generated in the country. Government has ear marked a number of hydropower sites for development on R. Nile. It has also invested in the rehabilitation of the Old Owen Falls Dam (Nalubale) and into the construction of the New Owen Falls Extension Dam (Kiira). Several projects are being proposed in the conventional power sector under the ERT programme including the extension of the national grid to districts currently not served. Below are some ongoing and proposed projects in the conventional energy sector. Based on Table 3.6, the cost of investing in cogeneration so as to attain 5% energy as % of current and projected investment in conventional energy is 1.29% [i.e. 16,558,781.40 / 1,288,800,000) x100] The proportion of cogeneration that is required to meet 5% of the national installed capacity is only 1.29% of the ongoing and projected projects in the conventional energy power sector. Unlike conventional energy, the cogeneration-installed capacity can be increased without heavy government borrowings but through encouraging the private sector to increase on their capacity. This could be done through good policy frame work, helping factories secure funding for better and efficient machinery or even giving them incentives that attract them to produce more energy.


4.0 KEY CONCLUSIONS 4.1 Overview of Uganda’s Electrical Sector Table 4.1 Current electricity generating capacity in Uganda

Energy source14 Current installed capacity (MW) % of total installed capacity Large hydros 300 92% Small hydros 13 4% Co-generation 10 3% Thermal diesel 3 1% Total 326 100% WSSD target 16.3 5%

The Ugandan energy sector is clearly dependent on big hydros, followed by small hydros. 4.2 Technical Viability of 5% Geothermal and Cogeneration Target Table 4.2 Attaining the 5 % WSSD targets using various RETS Energy source Energy Resource Current Installed capacity 5% WSSD target Geothermal 450 MW None 16.3 MW Co-generation unknown 10 MW 6.3 MW

• Very few technical people trained in geothermal fields- one institution in Iceland [UNU/GTP] has since 1979 – 2003 trained only 6 Ugandans as contrasted to Kenya’s 33 and the total number of trained people of 61. No data exists for cogeneration

• But for people employed in cogeneration we have a total of 160 people 4.3 Economic Viability of 5% geothermal Target Table 4.3 Economic aspects of meeting the 5% WSSD targets using geothermal and

cogeneration Big hydro15 Geothermal16 Co-generation

Job created (Jobs/MW) 2 11 10-1217

Enterprise creation Few Moderate Many

Investment costs (US$/MW) 2,900,000 2,554,687.50 2,628,378.4018

Size of plant to be constructed (MW) 200 16.3 6.3

Investment costs to meet WSSD 5 % target

(US$)

47,270,000 41, 641,406.25 16,558,783.92

Savings made instead of building a big hydro

(US$/MW)

Baseline 345,312.50 271,621.60

Debt relief ( at a projection of 2 billion) in % Baseline 2.08% 0.83%

14 Table considers only electricity source indicated, other sources not accounted for in table 15 Bujagali Hydropower company 16 Olkaria I and Olkaria II were used in this simulations and the figures obtained can be a fairly modest representation of the situation in Uganda 17 Cogeneration plants in Uganda used for this particular part


18 Okeelanta Sugar mill, near South Bay in USA was used for this cogeneration simulation, so the figures should only act as a guideline due to the significant policy, economic and infrastructural differences between Uganda and USA

Big hydro15 Geothermal16 Co-generation

Foreign exchange savings (based on paraffin

imports)

2,111,560.65 p.a. Area near grid

lines

4.4 Benefits and Drawbacks of 5% Geothermal Target Table 4.4 Benefits and drawbacks of the 5% target

Benefits Drawbacks

• Environmental benefits in terms of clean energy

• Renewable if well managed

• Can lead to significant savings on the debt relief programmes, foreign exchange

• Has a lower investment cost per MW (in the order of 10-12%) as compared to conventional big hydro

• Creates more jobs per MW and also enterprises

• Requires proper training of personnel to run and maintain the plant

• Has exceptionally high set up and even (for geothermal) exploratory costs

• If not well managed can lead to destruction of environment

• Requires a lot of synergy and policy changes among the key players in the industry particularly the generators and distributors

• A lot of public awareness and de-culturing of public attitudes and practices need to be done

4.5 Merits of Geothermal and Cogeneration Geothermal development in Uganda will be the most benefiting undertaking for the country. Several benefits, both direct and indirect are expected to accrue from its development both to government and to the local communities. Geothermal lends itself to a number of industrial applications among them fish and crop processing (BCSE 2003). Geothermal resources are located in rural areas and will facilitate government to attain rural electrification at a low cost. The districts of Kasese, Bushenyi, Kamwenge, Kyenjojo and Kabarole, which are in close proximity to the geothermal prospect (Buranga), have a total population of 2,277,006 (population census, 2002) and offer a good market for the geothermal energy. It will contribute towards governments’ plans to fight against poverty through enterprise creation and creation of employment opportunities directly in the plants and in the new enterprises. Improved employment opportunities in rural areas will greatly improve on the socio-economic status of the communities and their livelihoods hence result into real development of rural areas. Geothermal will lead to the establishment of agro-processing industries in rural areas thereby reducing on post harvest crop losses in the country. Post harvest crop losses have a great impact on the on the agriculture sector and a major contributing factor to food insecurity in the country. Providing agro-processing industries will improve on the food security status, as post harvest crop loss will be minimised. It will provide power security to the country, which for a long time has mainly depended on two hydropower stations along the R. Nile, which would lead to blackouts in case of a significant drop in the waters of Lake Victoria. In addition, the modular increment that is offered by geothermal will help the country produce power that is required at different times and increase power production as and when the power is needed on the market. Geothermal will improve power generation for the rapidly growing industrial sector in the country. It will also provide reliable and clean power for the export market since the country will have sufficient and surplus power that could be exported. The geothermal resources are close to areas of neighbouring countries that do not have access to electricity; especially in the eastern Democratic Republic of Congo.


It will help the country reduce on its current debt burden, as it is cheaper to produce geothermal per mega watt compared to hydro electricity power. In addition, it will help government save on its foreign exchange earning on from the importation of fossil fuels. This savings will help the country develop other development sectors and help improve on peoples livelihoods and reduce on their poverty. Most prospects are characterized by an ancient salt industry utilizing saline water, which percolates through the sediment, which could be upgraded to a modern industry. In addition to salt extraction and power generation, geothermal energy could be used to substitute use of the scarce wood to dry fish, tea and crops, cure tobacco, process sugar and mineral recovery. Some of the waters in these areas with low total dissolved solids could be used as mineral water. According to IRN (2003), geothermal energy is clean, renewable, uses little land, decreases deforestation, increases energy diversity and provides local jobs for construction, operation and maintenance. Use of little land in a geothermal investment reduces on social misery on the part of the local communities as opposed to large hydro projects that have large social, economic and environmental impacts. The modular incremental of energy at remote sites and the low risk in case of plant accident are an added advantage of geothermal development. In Uganda, cogeneration has a very high potential of employing many people given the high level of biomass-based industries that are available. When compared to hydropower, cogeneration is better investment in terms of job creation. For every mega watt, produced in Uganda cogeneration currently employs about 15 people while electricity can only employ about 0.125 which is more than a 100% of the current cogeneration potential in the country. Today cogeneration employs more than 150 people to generate 10 MW and if fully developed, cogeneration will lead to employment of many other people in the in the cogeneration plant and in other enterprises that will have resulted from the cogeneration plant. Investments created especially in the water sector will greatly improve the health and sanitation of the communities of many people. The cost of cogeneration per mega watt is cheaper than the cost of hydropower per mega watt. Promoting cogeneration will help local investors in the country to develop the resource and help reduce on borrowing thereby reduce the country’s debt burden. Cogeneration in Uganda is done by private companies meaning that what would have been a national debt burden would be a responsibility of private profit making business people who would work hard to pay back borrowed capital; government businesses are usually prone to embezzlement and do not make profits to service loans. Uganda currently spends more than US $ 170 millions on the importation of fossil fuels, which are used by households for lighting, running generators, in meals and other uses. These petroleum products are imported into the country using the country’s foreign exchange and consume a big percent of the country’s export earning. Cogeneration would help in saving more than US $ 600.000 per annum. Cogenerations as part of the sugar industry would help reduce the cost of producing sugar and consequently reduce the prices to enable it favourably compete with imported sugar. The sugar prices in Uganda are high and are often out competed on the market by imported sugar. Bagasse as a resource from sugarcane when used in the generation of power helps in subsidising of sugar. Like geothermal, cogeneration will also improve power generation for the rapidly growing industrial sector in the country. It will make supply more reliable for on the local market and surplus power for the export market. Since the country will have sufficient power for domestic consumption, the excess power could be exported. The cogeneration resources are close to the national grid and could supply the grid at a very minimal cost to country. 4.6 Demerits of Geothermal and Cogeneration Development of geothermal in the country has had numerous drawbacks. Although seemingly there is government a will to develop it, little has been done to harness this promising energy source. Uganda being a country that largely depends on donor funding, it has been easy to secure funding from the World Bank to develop the potential. Today, after more than sixty years of study, the country’s technical potential is not yet known. The country’s energy sector policy is currently oriented towards hydropower development with limited attention being given to geothermal and renewable energy resources. Geothermal development does not enjoy much government support like hydropower. Lack


of political will from government to develop the enormous geothermal potential in the country has greatly affected its development. The geothermal exploration processes in the country are very slow; this has largely been because of limited funding and lack of local expertise on geothermal. Much of the donor funding in the energy sector has mainly benefited the conventional energy sector and some few renewables. There is also lack of locally developed technologies on geothermal. There has also been lack of information on the available modern environmentally friendly geothermal technologies that recycle the brine (the closed system). This has made policy makers reluctant to promote the development of geothermal. The aggressive and strong “lobby” of proponent of large hydropower projects world over has also negatively affected. Most lending institutions are often influenced by proponents of large hydropower in favour of their projects leaving other energy options without funding. Cogeneration has also not enjoyed support from government and has been left to progress without any form of government intervention. Lack of support from government has not motivated the private companies to generate more power to supply on the market. Like any other renewable, cogeneration has also been affected by government’s bias in favour of hydropower. Upon the privatisations of the power sector in the country, three companies were formed to Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Transmission Company Limited (UETCL), Uganda Electricity Distribution Company Limited (UEDCL) responsible for generating, transmitting and distributing respectively. The creation of these companies in a way created a monopoly especially in the areas of transmission and generation. This monopoly has had a negative impact on cogeneration as these companies can only buy power when they feel the market is available for the power being bought from those involved in cogeneration. There is also problem that cogeneration is located in areas that are served by the national grid. This means that the power from cogeneration has to be supplied to the national grid for transmission and distribution to other parts of the country. This implies that the cogeneration industry cannot look for market for their power but have only one option of selling it to UEDCL, which would look for its market. The cogeneration process is seasonal in the sugar factory and is only operational when the factory is in production. Kinyara Sugar Works Limited for example stops production for two month every year. This however would probably change when the factories go into commercial cogeneration. Lack of appropriate and comprehensive policy guidelines that promote cogeneration, the disbanding of UEB seems to have created smaller monopolies in the power sector especially in transmission and distribution. Those involved in cogeneration are meeting problems in distribution and transmission. Development of geothermal in the country has had numerous drawbacks. Although seemingly there is government will to develop it, little has been done to harness this promising energy source. Uganda being a country that largely depends on donor funding, it has been easy to secure funding from the World Bank to develop the potential. Today, after more than sixty years of study, the country’s technical potential is not yet known. The country’s energy sector policy is currently oriented towards hydropower development with limited attention being given to geothermal and renewable energy resources. Geothermal development does not enjoy much government support like hydropower. Lack of political will from government to develop the enormous geothermal potential in the country has greatly affected its development. The geothermal exploration processes in the country are very slow; this has largely been because of limited funding and lack of local expertise on geothermal. Much of the donor funding in the energy sector has mainly benefited the conventional energy sector and some few renewables. There is also lack of locally developed technologies on geothermal. There has also been lack of information on the available modern environmentally friendly geothermal technologies that recycle the brine (the closed system). This has made policy makers reluctant to promote the development of geothermal. The aggressive and strong “lobby” of proponent of large hydropower projects world over has also negatively affected. Proponents of large hydropower in favour of their projects often influence most lending institutions.


5.0 STUDY RECOMMENDATIONS A number of recommendations stemming from the study are suggested to enable not only the attainment of the 5% WSSD target but to enable the increased use of RETs in Uganda. 5.1 Recommendations for policy makers

• Ensure the implementation of the RESP and ERT

• Reduction of country risks particularly for capital intensive investment projects like geothermal and cogeneration. Such risks include enhanced security and good governance

• Provision of risk guarantee for implementers and end-users wishing to invest in the RETs

• Policies enactment that ensure a portion of the power distributed by utilities comes from renewable energy sources

• Policy to ensure a profitable minimum price/kWh is paid to any person(s) or institutions wishing to supply power to the grid

• Enact new and / or harmonise existing policies to allow the setting up of decentralized mini grids

• Barrier removal policies particularly on taxation of equipment / technology , raw materials and expertise in the area of RETs especially geothermal and cogeneration

• Consider further privatisation of the market in a more domesticated way by the movement from the current single buyer energy market to retail competition energy markets (

Figure 5.1 Electricity market structures by degree of privatisation

Source : Allen and Upadhyaya, 2003

• Set up mechanisms to ensure continual Research, development and dissemination (RD & D) and also training and gaining of expertise of locals in RETs.


• Enact policies to encourage end-user shift (for relevant uses) from petroleum energy sources to geothermal and other efficient biomass based technologies / sources(e.g. cogeneration and bio-fuels)

• Enact policies to encourage the active participation of other stakeholders in the sector. This also includes that encourage independent power producers to invest and develop RETs in the country. Possible use can be made of the Private sector participation (PSP) models- which again one needs to consider and implement it very carefully, allowing for localisation

Figure 5.2 PSP model to bring in other stakeholders into the energy market

Source : Allen and Upadhyaya, 2003 For successful PSP in Uganda’s electricity sector, there are a number of conditions precedent which must be in place: including Viability of the infrastructure, Political will, Legal, institutional and regulatory framework conducive to PSP, Implementation capacity within government and lastly revamping of Uganda’s image. 5.2 Recommendations for Implementers The implementers considered in this study include amongst others the manufacturers, SMEs, financial institutions, informal investors, micro entrepreneurs, micro finance institutions and large private sector. The study’s concomitant recommendations include:-

• Training of SMEs and manufacturers on manufacture and repair of parts and portions of RETs like improved stoves, cogeneration and geothermal parts

• For micro-finance and financial institutions, informal investors and the larger private sector, it is recommended that development of renewable energy investment portfolios be made for geothermal and cogeneration plants amongst other RETs

• Development of an electricity spot market19 where any supply can sell to anyone else electricity.

• Investing in geothermal exploration with guarantee of shares in the event of resources being found

• Decentralization of implementers from urban areas to rural areas

• Setting up of demonstration model centres for RETs


19 This is only possible when within the country there is more electricity supply than demand, but it is something that can be considered on a regionally or geographically level. –like for instance if electricity supply to a city or town is greater than the demand, then a spot market can develop.

• Incentives be given to sugar factories should be encouraged to produce more electricity from Cogeneration and reduce their cost of producing sugar.

• Clear policies that allow independent power producers to market their own electricity should be made to encourage investment.

• Geothermal studies and consequently exploration should be expedited so that government can attract investors in geothermal development. Other benefits derived from geothermal should also be boosted.

• Local manufacturers or those who assemble RETs should be promoted and the quality of RETS disseminated be controlled.

• Government should also offer subsidy on RETs and introduce hire purchase or other forms of credit to the consumers.

5.3 Recommendations for Lobbyists (civil societies, CBOs, NGOs etc)

• Lobbyist should work hard at awareness creation about appropriate RETs for different communities and end users

• Lobby for change particularly on energy technologies that affect health

• Undertake monitoring and evaluation of RETs policy formulation and implementation to ensure they take cognisance of the situation at grassroots and that they are pro-poor

• Build capacity of grass root communities to enable them engage both the implementers and policy makers on RETs issues affecting them

• Lobby government for greater access and affordability of RETs

• Facilitate continual on-going RD & D between policy makers, implementers, and end-users for purposes of sustainable energy supply and utilisation. Research areas include for instance data on energy sources (resource characteristics, quantity, quality and availability)

5.4 Recommendations for End Users The end users considered by these recommendations include existing and potential users and customers.

• Diversify and simplify credit access on RETs purchase and installation

• Enhanced use of improved stoves

• Each household or end user to ensure to have more mix in in the energy matrix to avoid dependency on only one source

• Special consideration be given to users staying near generating plants like geothermal and cogeneration be given electricity access

• Ensure end-users play role in RETs policy formulation, implementation and its continual change based on experiential grassroots engagements

• There is need to educate the communities about RETs and establish demonstration units at grass root levels that would used as models for the communities to learn from.



6.0 REFERENCES Bw’Obuya, N. M., 2002. The socio-economic and environmental impact of geothermal energy on the rural poor in

Kenya, A report of the AFREPREN theme group on special studies of strategic significance, Nairobi. Fridleifsson, I. B., 2003. Twenty five years of geothermal training in Iceland. Paper presented at the International

Geothermal conference Reykjavik, September, 2003. Lund, J. W. and Freeston, Derek H. (2000). Worldwide Direct Uses of Geothermal Energy 2000. Proceedings of

the World Geothermal Congress, Tohoku, Japan Lund, J. W., Freeston, D. K., 2000. World Direct uses of Geothermal Energy 2000. Geothermics 30 (2001) 29 –

68 [online] available at <www.elsevier.com/locate/geothermics > [accessed on 20.03.2004]. National Association of Professional Environmentalists (NAPE) 2003. Report on Geothermal Energy for Uganda,

April 2003, Kampala, Uganda. Ragnarsson, A., 2000. Geothermal development in Iceland 1995 – 1999. World Geothermal congress, 2000.

Japan. In Lund, J. W., Freeston, D. K., 2000. World Direct uses of Geothermal Energy 2000. Geothermics 30 (2001) 29 – 68 [online] available at <www.elsevier.com/locate/geothermics > [accessed on 20.03.2004].

Allen, N., Upadhyaya, R. 2003. Building Kenya, Background paper in Electricity for the conference on Private

sector participation. Safari Park Hotel, - 15TH May, 2003. Price Water coopers, Nairobi, Centre for Energy, Environment, Science and Technology and GTZ, 2002. Greenhouse gas mitigation and other

benefits from integrated East African power development. [online] Available at < www.ceest.com/eappSummary.pdf > Accessed on [15.03.04]

http://www.elsevier.com/locate/geothermics

http://www.elsevier.com/locate/geothermics

http://www.ceest.com/eappSummary.pdf

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