Partnerships key to achieving universal energy access in Uganda

USEA, UNCDF Empower Ugandan Energy Journalists
March 16, 2022
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Last year, the World Bank reported that over 600 people in sub-Saharan Africa lacked access to affordable and sustainable energy. This same population spends a great potion of its meagre resources utilizing unhealthy means of cooking, lighting and transportation such as charcoal/ firewood, kerosene candles (Tadooba) and petroleum. Others engaged in small scale business activities in remote off grid communities also use energy sources that endanger the environment, for instance many maize mills are powered by diesel generators. Given the importance of energy in the economic and social value chain (it powers cross-sector activities like mining, telecoms, agriculture, food processing and cooling, health center lighting, vaccine cooling and clean water, among others), its provision cannot be left to government and energy industry players alone.

Continents like Europe and Asia that have realized their energy access targets as set out in the Sustainable Development Goal 7 (SDG7) have done so through collaborative partnerships with other sectors that need energy to power their daily operations. For instance, while Asia projected to reach 99% access by 2030, by 2018 the International Energy Agency (IEA) reported that it was already at 94%. This was largely driven by deliberate efforts by all sectors and stakeholders to have energy at the core of their development strategy.

Sectors like health, ICT/Innovation, transport and agriculture that receive global funding annually from multi-national corporations and countries that support efforts towards decreasing energy poverty can work with local Small and Medium Enterprises (SMEs) by providing them with investment opportunities to expand energy access and utilization. This coupled with progressive energy policies at national level would help Africa catch up with the rest of the world.

A good example of a collaborative partnership that has worked in Uganda is the 172kW industrial solar power plant commissioned by the National Union of
Coffee Agri-businesses and Farm Enterprises (NUCAFE) at their coffee processing factory in Namanve in August this year. The first of its kind in Uganda, the plant, apart from producing and exporting carbon neutral coffee will also save 241.3 tons of carbon dioxide emissions per year from the earth and atmosphere. A project of this magnitude is only possible through partnering with funding institutions that ease the burden on already capital stressed enterprises that most times receive little or no support from their governments.

Collaborative partnerships allow those involved to leverage each other’s strengths in the form of skills, experience, knowledge, resources and networks. For the case of NUCAFE, support came through the Nordic Development Fund, the Agriculture Business Initiative and the NIRAS International Consulting.

Similar projects can propel Uganda closer to realizing SDG7 as well as making greater use of its vast renewable energy potential. This would for instance mean utilizing renewable energy sources such as solar to power productive use business activities like irrigation, water pumping, refrigeration in fisheries and dairy farms, food drying, among others.

There is an increased awareness and curiosity among Ugandan farmers on how the use of solar energy can improve their yields. However, many of them face limitations due to the high initial cost of the energy system. For instance, at a recent media learning session on “Productive use of Renewable Energy for Agriculture”, hosted by Power for All, Tulima Solar, a member of the Uganda Solar Energy Association (USEA) revealed that they were prospecting about 5000 farmers, 60% of whom were ready to utilize their solar water pumping technology but were struggling to access funds to make the down payment. Through collaborative partnerships that provide financing incentives, farmers would restore the agricultural sector’s lost glory through embracing technology based farming practices like solar water pumping that make irrigation sustainable, result in high yields and improve household incomes. In addition, solar based technology is climate resilient which means that farmers do not have to depend on unreliable rainfall patterns and can therefore plant throughout the year for as long as the sun is available. The easiest way for especially small holder farmers to benefit from this technology would be through partnering with solar companies and financial institutions that have climate smart or solar loan facilities which allow them to pay back based on their yields.

In other sectors such as health, rural communities still must travel far for basic health services. Off-grid health centers are often marred with a lack of reliable power therefore cannot operate machines like x-rays and scans. Diesel generators break down often and the cost of maintaining them is high. A solar powered health center can provide all the needed health services to the community at the same or lower cost. However, health facilities have long been viewed with little consideration for energy. A local SME contracted to install and maintain a health center’s solar powered system can do so quickly and effectively thus, ensuring reliable power supply throughout the year. A partnership between the local governments and SMEs would avail financing and ensure reliable health services to the community.

However, local farmers and solar companies must be ready to embrace such partnerships because they come with stringent requirements to ensure value and return on investment. They should endeavor to close existing loopholes in their systems and management structures in order to attract large scale financing and investment opportunities.
Governments working with the private and development sectors should promote cross-sectoral financing to support increased energy access and utilization for Uganda and Africa as a whole.




COVID-19: Time to Give Off-Grid Solar Energy a Chance
Uganda received its first COVID-19 case in March this year setting off a series of weekly government directives that led to the redefinition of life, work and social interaction as we know it.
As the government urged people to stay home and stay safe, non-essential businesses had to shut down while essential ones were reduced to operating with a thin human resource under stringent standard operating procedures.

Public and private transport was banned, shopping centers were closed and international borders closed for all passenger travel. This chain reaction has created fear in the community and curtailed movement, thus lowering public spending. Many are crying foul due to the looming economic situation.

Renewable energy companies especially those dealing in solar products and services have not been left out. With unclear government directives on whether solar service providers were an essential service, solar companies and their clients were left stranded. During the lockdown many were forced to work remotely or completely close which affected their operations and cash flows.
Suddenly, technicians could not reach clients to provide maintenance and servicing support while many clients remained unable to buy new solar products or even remit their monthly installments on existing ones. These challenges were part of the findings from a member needs assessment survey conducted by the Uganda Solar Energy Association (USEA) between April to May 2020, to gauge the impact of the corona virus pandemic on the solar sector.

The above trend of events prompted solar companies to rethink the way they do business innovating new solutions such as use of call services, online outreach like email and social media and site visits to support customer service requests and make new sales. These measures were however limiting since most clients are not active on social media and solar was not listed among the essential services.
With most solar products being sold on credit to the informal sector, companies had to further improvise by offering grace periods to clients and revising payment plans to better manage debt collection. Through such solutions, many rural Ugandans have over time been able to meet their energy access needs and engage in business for longer hours hence contributing to Uganda’s economic growth.

For the health sector, off-grid solar has become a breath of fresh air given its ability to power operations in last mile rural communities that are nowhere close to accessing on-grid electricity due to the poor infrastructure and cost of getting it there. With schools closed and many communities having no access to print media, school children can learn through affordable solar powered televisions and radios.
Access to energy for many rural Ugandans is estimated at only 8% according to the Rural Electrification Agency (REA) which hampers enterprise development and improvement of livelihoods. The situation has further been compounded by recent media reports that 200,000 Ugandans would remain without power due to failure by REA to pay power distributor UMEME $25m for earlier completed connections under the Electricity Connections Policy.

Development partner support has also been affected by the corona virus which brought many planned projects to a standstill and reduced demand for on-grid electricity. With governments recognition of energy as critical for the realization of Uganda’s Vision 2040 and the attainment of middle-income status (NDPII), off-grid solar becomes essential now more than ever.
Simple activities such as phone charging, household lighting (this allows children longer reading hours), lighting remote health centers (eases births for pregnant women hence reducing maternal and infant mortality), as well as powering small business like kiosks have been made possible thanks to reliable solar which is not limited by physical barriers. Agriculture, which is the back bone of Uganda’s economy is also increasingly being supported by solar which transcends climatic changes such as drought.

In a bid to return Uganda’s economy to pre-COVID-19 status and propel it further, government needs to make its commitment towards renewable energy transition a reality by facilitating the sector’s growth alongside on-grid power plans. Solar power will reduce the country’s reliance on hydro-power which is highly costly to set up and maintain, not to mention leaves out many vulnerable Ugandans.
The resilience of the off-grid solar sector in these turbulent economic times has shown its values therefore government should increase investment, access to financial incentives and budgetary allocations towards renewable energy.

Now is the time to give off-grid solar a chance!

Innovex: Sustainable solar systems through remote monitoring.
Last week, USEA caught up with the Innovex team led by Douglas Baguma, the company’s managing director. This as USEA’s continued with its annual member monitoring visits. The discussion centered on Innovex’s work using Remot, a technology that demystifies last mile distribution of solar energy.

Remot is an energy management system that is unlocking the potential of solar businesses. It is used by solar contractors/companies enabling them to remotely monitor and automatically switch ON/OFF a solar system in addition to remote bill collection supported   money integration on the Innovex platform.
With Remot, Douglas noted that companies do not need much investment in last mile reach infrastructure which means that solar companies and other development partners are able to cut costs from 40% to under 10% of their monthly budgets on top of reducing any chances of fraud as there is no physical exchange of cash.

With 5 country locations (Uganda, Kenya, Tanzania, Democratic Republic of Congo and Ethiopia) and currently supporting 22 businesses, Innovex has also won over 10 prestigious innovation and entrepreneurial awards but is not about to stop. The company is looking at setting up a local manufacturing solar facility aimed at supporting Ugandan youth through job creation and skilling.

According to Douglas, solar has the ability to electrify the 30 million Ugandans lacking access to energy and Innovex is ready to support its clients close this gap by providing customized solutions to reduce their operational costs. “We are looking at sustainability and reparability of solar products to minimize waste” he adds. He also credits USEA for the improved trust in the solar industry, noting that despite the existence of fake products on the market, clients are increasingly choosing where to buy their products from and this is usually from USEA members.
For this young and creative team, this is only the beginning and renewable energy is the backbone on which they will ride into the future.

Members agree on new strategic direction for USEA
Last week, USEA with support from the Global Green Growth Institute (GGGI) held a strategic planning workshop at Skyz Hotel in Naguru, to enable members deliberate on the direction of the association for the next five years
The event featured members from various companies and other industry stakeholders who reviewed the association’s outgoing strategic plan (2018-2020) implementation, and identified new areas of focus for the new one.
According to USEA’s Board Chairman, Emmy Kimbowa, although the association has a fast growing membership base, currently standing at 186, there is still a lot of potential for expansion given that over 400 companies exist within the industry.

He added that the plan needs to focus on promoting the relevance of solar energy, proposing that districts integrate solar in their annual plans and budgets so as to increase solar awareness and distribution in Uganda.
Amos Tamusuza a Senior Energy Officer from the Ministry of Energy commended USEA’s work on creating awareness and developing a strategic plan to provide a sense of direction to its members.

He however encouraged the association to increase its capacity building interventions for members and spread awareness about renewable energy at all different levels in the country.

The new plan will be the second in the history of USEA.

Extend financing to solar companies to achieve SDG7

Energy is an important factor for human development as underscored in the United Nations Sustainable Development Goal 7 (SDG7). SDG7 seeks to ensure access to affordable, sustainable, reliable, and modern energy for all by the year 2030. Despite this target, 789 million people worldwide, the majority of whom live in sub-Saharan Africa lack access to electricity. This is according to the State of the Global Mini-Grids Market Report 2020 published by Sustainable Energy for All (SE4ALL) and Bloomberg.

For centuries, energy has fostered economic development and created wealth for nations. For example, the eighteenth-century British industrial revolution was heavily driven by coal. In the Middle East and the United States, sectors such as aviation, agriculture, health, manufacturing, education, and most recently the technology revolution have been largely powered by proceeds from oil and gas. There is therefore a clear correlation between energy and economic development. World economic powerhouses like the United States, Britain, Germany, and China whose energy access levels are high score very highly on the human development index in comparison to those with low energy access like Uganda.

Globally, past decades have seen over-reliance on fossil fuels to power industries and households. However, with technology innovations and climate change awareness and adaptation measures taking root, there is a shift towards renewable energy utilization with sources like solar, wind, water (hydro- which is the major energy source for Uganda), biomass, and geothermal gaining prominence. Development partners are leading the transition to renewable energy given its affordability and ease of maintenance, especially for small scale businesses and households. For instance, at the recent Global Off-grid Forum and Expo, held in Nairobi, Kenya, organized by GOGLA – the global association for the off-grid solar energy industry and the World Bank’s – Lighting Global, investors agreed to support the growth of the off-grid solar market and accelerate universal access to affordable and sustainable energy by 2030.

The solar sector in Uganda is only two decades old but its impact on the overall economy has not gone unnoticed in terms of employment, powering agriculture, lighting up schools, homes, businesses, and health centers in remote off-grid communities. Despite the government’s emphasis on increasing grid connections through heavy investment in the construction of hydro-power plants over the years, only about 5% of rural Ugandans have access to energy as per the Electricity Connections Policy 2018-2027. This has affected household incomes and left many Ugandans stuck in abject poverty as they are unable to engage even in the most basic economic activity. It is impossible for a rural farmer to improve production and add value to his produce without a reliable energy source.

Solar companies in Uganda have sought to change this narrative by providing affordable solutions such as pay-go, where customers pay for solar power systems in daily, weekly, or monthly installments. Although the pay-go model has spurred increased access to energy due to its ability to include low-level earners, it has not been without pitfalls. Lack of access to affordable and patient financing is a major hindrance to the growth of many solar energy companies in Uganda making business expansion difficult. It limits the number of clients they can offer products on models such as pay-go and remain operating. Unfavorable taxes by the government, with companies being taxed differently for a similar item also makes importation of solar products and accessories burdensome. Other challenges include poor, regulatory and policy environment which pits off-grid energy solutions against on-grid electricity hence creating a negative perception that deters investment; limited collaboration between government and the private sector when implementing the off-grid strategy as well as limited consumer awareness on the value of off-grid products.

The government can, however, remedy this situation and ensure that the country meets its SD7 target by extending financial subsidies to the solar sector and integrating off-grid solutions in its rural electrification plans. While a big chunk of Uganda’s budget goes towards the energy sector, only a paltry sum is set aside for off-grid electrification programs. With 80% of Uganda’s population living in rural areas, the quickest solution to Uganda’s energy access problems is through off-grid solar solutions. The Uganda Solar Energy Association (USEA) in its 2019 position paper termed “Increasing Energy Access through Off-grid Solar Solutions” notes that Uganda’s standalone solar market is at risk of failing to grow fast enough for the country to achieve universal energy access. The market will fall into a shrinking trend if urgent action is not taken to improve the policy environment and support the sector. The government should, therefore, make the sector’s tax regime more conducive to growth and improve access to finance for off-grid solar companies in the shortest time possible so that the country does not lose the strides so far made in realizing rural electrification. Such a commitment will endear the government to the electorate as energy has a direct and immediate impact on their livelihood.

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