Africa's 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.

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Addressing energy needs in Africa – solar power

Three years ago, Rehema Kanama nearly left from her off grid rural home in western Uganda for a better life in the city. But the 35-year old single mother quickly changed her mind after signing a lease agreement with Solar Now, for a solar connection.Today she no longer has to buy kerosene to light her home, a major relief for her three children who have in the past struggled for light to do their homework.”The children are very happy” she says. “I never imagined I would be able to live in house fully connected to electricity,”

Supported by income from her five-acre farm and a herd of around a dozen cows, Ms. Kanama is able to pay a monthly installment of $30 to Solar Now. After 18 months, she will fully own the system installed on her property.In recent years, East Africa has been emerging as a lucrative market for alternative sources of power such as solar energy. This has been driven by the limited electricity infrastructure and the more of than not, constant sunshine.

The International Energy Agency estimates that 580 million people in sub-Saharan Africa lack proper access to electricity, with the electrification rate as low as 14.2% in rural areas.In Uganda, figures from the Ministry of Energy and Mineral Development indicate that electricity access is at 16% nationwide and only 7% in rural areas. This indicates that less than half of Uganda’s population is on the grid, and many have to buy and burn kerosene for power.

This situation makes the region a big market for investments in alternative sources of power especially clean energy by both regional and international firms.Solar Now, a Kampala based firm, has over the past five years, connected more than 10,000 rural households with electricity. The company offers a range of high-quality solar home systems and electrical appliances that are designed to fit the needs of low income rural households and small entrepreneurs

“We’re not just a solar product company; we see ourselves as asset finance and distribution Company with a focus on renewable energy, and bringing together affordability and distribution” said Willem Nolens, CEO of Solar Now .With over 45 branches country wide, Solar Now plans to expand to other East African countries. So far it has sold 6,100 solar systems. The average system costs US$800, but its most popular product costs US$500.

The Nairobi-based firm M-Kopa Solar is another company venturing into this emerging market. So far, the company has connected more than 250,000 homes in Tanzania, Uganda and Kenya, with the hope of reaching one million customers by 2018.Jesse Moore, M-Kopa Solar’s founder and managing director estimates the market for solar energy in East Africa at 20 million people.

 While buying a solar system saves users money spent on kerosene, the recurring argument is usually that solar energy systems are expensive for many rural households that struggle to save up enough money for this one off purchase. However, these companies have found innovative ways to make these solar systems affordable to the rural low income earners. 

Solar Now is selling solar systems to rural households and businesses in Uganda with an 18-month credit facility in order to make them affordable.M-Kopa allows customers to put down a $35 deposit through M-Pesa a mobile payments system that allows customers to transfer money through mobile phones. Through M-Pesa, the user pays the company the equivalent of 43 US cents over 365 days until they have transferred the full $180 to own the equipment outright.

 In Rwanda, Gigawatt Global Company has succeeded in financing, constructing and interconnecting a $23.7 million solar energy field, the first of its kind in the region. The field is now supplying 6 per cent of Rwanda’s power needs.Recently, the United Kingdom’s Department for International Development launched the Energy Africa campaign that aims at expanding the use of solar power across Africa as part of efforts to reduce millions of people without access to electricity.Speaking at the launch of the campaign, former UN secretary general Kofi Annan said: “This campaign addresses one of the great injustices of the 21st century ‒ an injustice that robs millions of our fellow citizens of the dignity, opportunity and freedom that comes with access to modern energy.”

 dianakarakire@gmail.com

Renewable Energy Developers Power Energy –Hungry Uganda

Uganda has commissioned a 10 megawatt solar power plant, as the East African nation continues efforts to boost its electricity generation capacity and exploit its vast renewable energy potential, officials said Monday.Constructed by renewable energy developers Access Energy Group from Dubai and France’s Eren RE, the $19 million plant is the largest in East Africa, providing clean electricity to 40,000 residents in eastern Uganda, according to David Corchia, Eren’s chief executive.

It’s Uganda’s first grid-connected solar plant as the country continues efforts to raise power generation capacity to 1,500 MW by 2020, from the current 850 MW.The power plant has the potential to increase its net output capacity by a further 20mw of solar energy.

“We are ready to double generation capacity as soon as the national grid is ready,” Mr. Corchia said. “Renewable projects are mostly suited for countries like Uganda, where most people are off the grid.The Dutch development bank, FMO and the London-based Emerging Africa Infrastructure Fund provided the debt facility for the project, which includes panels fixed across a 34-acre field. 

 “We are really proud to have the project here in Soroti, some of us had even lost hope in expanding our businesses” says 30-year-old Daniel Owundo, who owns a restaurant in the outskirts of Soroti, plagued by soaring costs of using a diesel-powered generator.

According to Owundo, for years, government has promised but not delivered electricity to his small township of Ongori, located some 10 kilometers from the main town. Since the connection of solar three weeks ago, Mr.Owundu has retired his generator and is looking forward to introducing a fast food section on his restaurant that has previously concentrated on only local dishes.

“More people are visiting this area now, business is picking up,” Mr.Owundu says. From phone charging to powering small businesses, the plant is seen as crucial to the development of rural Uganda, according to Reda El Chaar, the executive chairman for Acess Energy Group.Small processing plants dealing in raw commodities such as coffee, tea and cotton consume the bulk of Uganda’s generated power from hydropower dams along the Nile River.

 Government of Uganda has been keen to develop alternative energy sources to diversify away from the hydro power plants, currently beset by unstable water levels blamed on dry spells and changing weather patterns.But with the sun shining every day in the country, analysts say solar is the way to go.

“Its an un tapped potential, while there is uncertainty about fuel prices, we are assured of daily sunshine” said David Mutambi, the head of the Electricity Regulatory Authority ERA.Also demand for electricity has been growing spurred by the increasing population. Statistics from ERA indicate that peak demand for power is growing by 15% every year. All this is crucial in an economy that is expanding fast and aims to give half its 34 million people access to electricity by 2017.

Government has long regarded solar energy as a viable option for  renewable energy generation .According to the Renewable energy policy, the country has a solar electricity potential of about 200mw, 1650 mw from biomass, 800 mw from peat ,2200 mw from hydropower stations and 400mw from geothermal energy .

Uganda recently signed a 90 million-euro ($95.55 million) loan deal with German development bank kfw and French government finance agency AFD to build a 45 megawatt (mw) power plant. According to the Ministry of energy, 85% of the population does not have access to electricity and that number is rising, there is a desperate need for more energy.

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