Let’s develop geothermal technology to meet electricity need of Ugandans

Recently the media reported that the government had signed a power purchase agreement with a major American infrastructure firm AAE systems that will take on a $1.2 billion, 150Mw, geothermal power plant in Kasese District. It is commendable that the government is taking such a huge stride in trying to meet the electricity needs of Ugandans.

Such developments are needed for the country to fully exploit the existing geothermal potential estimated at 450MW (Renewable Energy policy 2007). Aside from the proposed Katwe Geothermal Power Project, another remaining 300 MW could be developed at Buranga-Kabale District, and Kibiro-Hoima District.

Ranked 10 on the list of the 24 global producers of geothermal technology, Kenya is the leading producer of geothermal energy in Africa. In 2010, geothermal energy accounted for almost 20 per cent of Kenya’s total electricity generation, all coming from the rich reservoirs of Olkaria I, II, III and IV. Currently, Kenya generates over 200MW from geothermal technology. An additional 512MW is forecast to be added to the Kenyan Grid by 2020. To achieve this, the Kenyan government has had to undertake several Institutional and Policy reforms geared towards promoting geothermal energy development. At Institutional level, Geothermal Development Company (GDC), a semi-autonomous state-owned company, was established and charged with financial risk mitigation, appraisal and production drilling in the early stages of geothermal exploration and development.

GDC also works with domestic and international financial institutions to underwrite and spread risk through Joint Ventures with investors. Deterrent capital investment risks associated with this technology have been assumed by the government’s investment in exploration and feasibility studies as an assurance to potential investors.

A 20-year feed-in tariff policy benefits all the Independent power producers generating power not exceeding 70 MW this acts as a market incentive. The above highlighted bold policy initiatives continue to attract both domestic and foreign investment into the country’s geothermal resource sector in Kenya.

Uganda is on the brink of yet another loadshedding roaster due to electricity demand outpacing supply, while the procurement standoff between the IGGs office and Ministry of Energy and Mineral Development continues to delay the development of Karuma Power Project, cloning the Kenyan success story in geothermal technology would be a welcome relief to Ugandan electricity consumers.

Unlike hydropower, the technology is not affected by drought and climatic changes, it is green and clean energy with almost no adverse effects on the environment with less carbon emissions compared to fossil fuel technology and has predictable low operational and management costs compared to other forms of renewable technology.

By addressing the existing bottlenecks to the development of geothermal technology, will be a precursor to attracting more investment into the sector.In a country where the electrification rate is only 12per cent for the whole country and six per cent for rural areas, the Katwe geothermal project will enable substantial increase in the provision of additional reliable and clean power generation capacity to Ugandan households, businesses and industries. This in turn will also improve electricity coverage in Uganda.

Africa's small scale renewable energy entrepreneurs need incentives

Mega hydro power plants tend to grab headlines when it comes to renewable energy in Africa. However, there are many less celebrated small scale renewable energy  startups on the continent. These have the potential to fuel businesses, reduce the carbon footprint, enhance environmental conservation, create employment and income. Uganda’s newvision newspaper recently carried a story about a woman making millions through energy saving stoves. The stoves optimally utilise special stones (other than charcoal) which in turn conserve the environment.

The stoves, apart from being environment friendly, solve the problem of wood shortage. They reduce deforestation and wood consumption by 95 per cent and cooking time by 75 per cent. They protect the eco-system and reduce emission of harmful gases. The stoves can also be used to charge phones and light bulbs. The renewable energy sector has a growing market that remains untapped. Supporting these projects will help meet multiple objectives as stipulated in Uganda’s renewable energy policy 2007. The objectives include: Increasing access to clean energy, improving security of energy supply, contributing to inclusive social and economic development, protecting the environment and creation of employment in the emerging green economy- In essence, setting Uganda on a low carbon pathway.

The last few years have seen a growth in small scale renewable energy projects. These have mainly been triggered by increased awareness of climate change and environmental issues. However, the key problem remains in financing such projects. These projects are often perceived as too risky for investors and too costly for the economy. This and other challenges such as in-house technical expertise, project coordination, and up-front funding at the planning stage, have hindered their growth.

Small scale renewable projects respond to the urgent need to cut Carbon emissions, boost the economy, diversify the energy supply, increase resilience and security of supply.

Therefore government of Uganda should create incentives to encourage roll out of these projects like providing finance at beneficial rather than off-market interest rates, flexible grants or ‘soft’ loans, project preparation support to those that demonstrate potential and profitability and help those with promising project concepts develop their ideas into bankable proposals.