Uganda’s Smart New Feed-in Tariff Could Ease MENA Energy Issues

Under new sophisticated new renewable energy policy in Uganda and a recent World Bank grid expansion connecting to Africa, soon it could be Uganda keeping the lights on in Egypt and the UAE

Feed-in Tariffs (FIT) are increasingly being offered by governments and utilities worldwide, because they simply are the fastest, most efficient way to get more renewable energy installed. The UK is the latest to show record growth as a result of offering to pay for clean power produced. In just the first six months since offering their FIT, UK official figures published by UK energy regulator Ofgem show that an astounding 15,468 installations have been registered. Both Israel and Turkey recently offered FITs. Today it is Uganda’s turn.

What is exciting about the Uganda offering is its position on the map relative to a recent World Bank grid extension that we covered here to expand the grid in order to facilitate load sharing of peak energy demand as air conditioners rev up on hot summer afternoons throughout the Middle East.

The World Bank grid plan connects up the profligate energy user MENA nations like Saudi Arabia and extends the grid across the Suez and down through Egypt, into the African nations of Eritrea and Ethiopia.

These two nations are right on Uganda’s border. This gives Uganda potential to be a renewable energy exporter – with a good renewable development plan. And that is exactly what Uganda has just published.

Uganda’s Renewable Energy Feed-in Tariff (REFIT) offering lays out a very specific plan by the type of renewable energy sought, by the year desired, by the MW required (by capping the total by year), and importantly: including the rate at which the payments will predictably step down as more megawatts are added, as adoption spreads.

Given how how detailed and well thought out the Ugandan plan is, this could be a very good driver of growth in renewable power, and lead to Uganda becoming a regional energy exporter.

FIT pioneer Spain has provided lessons in what not to do, to the rest of the world following in its FIT footsteps, and Uganda is no exception. Spain had to reduce its payments retroactively – and even to reduce the operating hours of solar power plants! – because it was taken by surprise by the success of its FIT in driving renewable investments, to far more installations than it budgeted to buy power from.

“The key in phasing out FITs – along with subsidies for conventional energy, which the International Energy Agency estimates far exceed renewables subsidies worldwide – is a gradual reduction in subsidies, to avoid any sudden shocks that would send investors fleeing, and to avoid retroactive cuts,” says Platts Renewable Energy Report editor, David Jones, as reported by Andrew Williams at Renewable Energy World.

Uganda’s 20 year power payment offers under its REFIT program will be administered by its Electric Regulatory Authority.

According to Feed-in Tariff expert Paul Gipe, Uganda seeks installations totaling just 7.5 MW of solar power by 2014, but will pay the most for that at $0.362 cents a kwh. The next highest paid power is for wind, and Uganda wants much more: 150 MW by 2014, and will pay $0.124 cents a kwh for the power. Biogas is the next highest paid renewable energy source at $0.118 cents a kwh, and it is looking for 50 MW by 2014.

It also has similar amounts and payment rates for biomass, landfill gas, bagasse (a biofuel from sugarcane waste) and three different small hydro power offerings, from micro systems of a few kilowatts to 20 MW systems. It wants 75 MW of geothermal power, and is offering $0.077 cents a kwh over the 20 year FIT.

An exciting development for the first African nation to develop renewable policy.

Image: Gamesmuseum

More on MENA Feed in Tariffs:
Israelis and Investors to Benefit from Feed-in Electricity Tariffs
Turkey Joins 78 Others to Pass Feed-in Tariffs To Encourage Renewable Energy
Israel Offers a Too-Low Rate For Wind Feed-in Tariff

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