At least 25 villages in Lamwo district will benefit from a new solar-powered mini grid project targeting to increase access to electricity.
GIZ Uganda, in partnership with the European Union and the German government, is implementing the project. On the government side, the ministry of Energy and Mineral Development, the Rural Electrification Agency (REA) and Electricity Regulatory Authority will jointly support the project.
According to Benon Bena, the acting deputy executive director of REA, the government of Uganda will finance the distribution network for the 25 mini grids in Lamwo. GIZ will subsidise the power to ensure it is affordable.
“There is a subsidy of up to Euros 1.25 million for this project that will be handed over to six selected developers after the tender process. Feasibility studies have been carried out in the last one year,” Bena said.
According to Aurelien Agut from GIZ, more mini grid projects are expected in the future as private companies take interest in the sector.
The subsidy scheme and long-term concessions that will be offered by GIZ are meant to incentivize the investments so as to make the end user tariff to the community affordable, ac- cording to Ziria Tibalwa, the chief executive officer of ERA.
“The consumer is looking out for low tariffs that are competitive and can enable them enjoy the service. It’s important that we balance the interest of all stakeholders,” Tibalwa said.
About 10 mini grids are currently registered in Uganda and are being operated mainly by communities and non-profit organizations.
Government intends to connect about 22 per cent of the population to electricity through the rural electrification programme by 2022. Today, just about 15 per cent of the population in Uganda has electricity.
Tibalwa explained that the tariff that investors for the off-grid projects applied for in the past were as high as US 30 cents per unit. As a result, she explained to mini grid developers that the regulator has only been able to license only those slightly below US 20 cents.
“The challenge is that the communities we are targeting are those that are living below an average income earner... even when they extend the grid to these areas, the affordability to connect and to sustainably pay their bill is still in question,” Tibalwa said.
For this tender project, developers are expected to submit a bid for a price per kilowatt-hour and the project will be awarded to the developer with the best offer, based on the required technical concept and performance forecast.
According to Robert Kasande, the acting permanent secretary in the ministry of Energy and Mineral Development, government, together with development partners, are planning to establish 15 mini grids in western Uganda which will be financed by the German government and another six by the EU.