Uganda slow at seizing solar energy opportunity amid high energy costs
Posted Tuesday, March 19 2013 at 02:00
Slow penetration. With only about 450,000 Ugandans connected to the national grid, there is great potential for the growth of solar energy. However, only a handful have adopted the system with many kept away by up-front payment costs and unreliable equipment
Despite the immense benefits associated with solar energy, its adaption in the Ugandan market continues to be slow, with only a handful of Ugandans having access.
Not even a tax waiver on the importation of solar equipment and funding from agencies like the World Bank has helped to increase its usage in the country.
The government abolished import duty on solar equipment under the East African Community framework as well as exempting value added tax in order to make it affordable.
Mr Dirk Kam, the Barefoot Power Uganda managing director, says not more than 5 per cent of Ugandan households that are not connected to the national grid, have access to solar power.
Using the Lighting Africa (a World Bank initiative that seeks improve access to clean, affordable lighting in Africa) formula, each household consists of a minimum of five people, meaning that with a population of about 34 million, there would be about 6.8 million households in Uganda.
“We have so far scratched the tail of the elephant and we need to do more to tap into the late adopter segment,” Mr Kam whose company targets to reach 1 million Ugandans by the end of this year and 2 million by the end of 2016 told Prosper in an interview.
Emancipating end users
Using off-grid solar energy could promote decentralised generation of electricity which could emancipate end users by enabling them to harness the power of the sun and convert it into electricity.
Although the government launched the Energy for Rural Transformation (ERT) programme, a 10 year government but private led initiative in 2012 with an aim of increasing rural energy accessibility to 10 per cent by 2012, Mr David Sekalegga, the operations director Energy Systems says the targets were never achieved.
Mr Abdeel Kyezira, the publicity secretary of Uganda National Renewable Energy Association (UNREA) says though still low, there has been a steady and significant growth in uptake and usage of solar energy solutions in Uganda over the past few years and that the number of players dealing in solar has increased to about 50.
It is estimated that about 600 kilowatt-peak (kWp) – 1 megawatt-peak (MWp) of solar capacity is imported into Uganda on a monthly average, up from about 50 – 100kWp per month in 2002.
Solar energy as a mode of power generation is said to be a cost-effective source of off-grid energy as opposed to the conventional way where huge capital investments have to be made in putting up transmission and distribution networks.
For instance, Umeme, Uganda’s largest electricity distributor’s capital expenditure – which includes putting up a distribution network and maintenance, stood at about Shs78 billion in 2011, up from Shs51 billion in 2010.
The slow adoption of solar energy is a result of the high upfront cost required to invest in a “useful” solar system, according to Mr Kyezira and Energy state minister, Eng Simon D’Ujanga.
“The government is trying all possible ways to make solar affordable and accessible to Ugandans including waiving taxes and subsiding solar equipment for the end-user,” Eng D’Ujanga notes.
Mr Kam, however, disagrees with this notion, saying the systems are affordable by all classes of people.
According to Mr Kam, the slow uptake of solar energy is due to the conservative nature of Ugandans, especially those living in rural areas.
He says while a homestead using fuel-based source of lighting such as kerosene to light up a candle could spend about Shs8,000 a month and Shs40,000 after five months, one can get the smallest solar kit consisting of a one watt panel, lantern and battery at Shs39,000.
The panel has a 10 year life span and three years for a lantern. All these can be replaced at a lower cost.
There is also a four lamp solar kit, retailing at Shs341,000, a village kit – consists of four LED tubes, two matrics lamps and a security light – at Shs890,000 while a school kit – three LED tubes and a security light – costs Shs2 million.
Mr Kyezira, however, notes that although overall prices have fallen significantly over the years – both international and local – it is still expensive for rural households to invest in a ‘useful’ solar systems, limiting the level of application to basic lighting and phone charging.
“Solar module price has on the average fallen from $10 per watt-peak (Wp) to about $2 per Wp in Uganda. So of course it is heading towards parity in terms of cost with traditional sources of electricity,” Mr Kyezira explains.
He, however, adds theft of installed systems which result in loss and the expectations of access to the national grid hence a tendency to hesitate before investing in a solar system have also played a big part in slowing down the pace of solar energy adoption.
Even to those who are currently connected to the national grid, installing a solar power system would save them the payment of the never ending electricity bills to generation and distribution companies.
On average, a household using four lights, television, radio and ironing pays about Shs50,000 monthly for electricity and this cost could be reduced or eliminated by investing in a solar system that can last for years before being serviced or replaced.
So instead of paying monthly bills to electricity generation and distribution companies, one can decide to make a one-off investment at once in solar system installation to generate his own electricity and say good bye to monthly payments.
Access to electricity from the national grid is also, however, still low at 15 per cent, according to the Uganda Bureau of Statistics’ 2011 Uganda Demographic and Health survey.
For solar to breakthrough as the main source of energy in Uganda, Mr Kam says, there is need for a fundamental shift in the way people think, which to him will take quite some time for people to see value of solar energy.
By enabling local action and empowering individuals and communities as producers, decentralisation has the potential to bring about a massive cultural shift in relation to attitude and use of energy.
“A long term change is required to ponder the breakthrough of solar decentralisation. We will not need the Umemes of this world anymore under the decentralised system,” Mr Kam says.
Mr Kyezira, however, adds that more subsidies from the government are needed to the end users.
“The subsidies should not be limited to the current 50 Wp as it is the case under the Energy for Rural Transformation (ERT) Photovoltaic Targeted Market Approach (PVTMA) initiative.
The focus for solar should be at household level other than the institutional level as it is the case in the subsidies programme,” he says.