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.