attaining higher temperatures which led to partial gasification thus reducing the overall efficiency of the
gasifier. Ultimately, the consumers didn’t benefit in the
long run as the running costs couldn’t allow for further
generation (Owen & Ripken, 2017). It thus becomes
a cautionary tale to involve several concerned actors
during the planning, implementation and the operation
of MGs (Warneryd et al., 2020).
5 CHALLENGES AND PRIORITIES TO MG
DEVELOPMENT IN UGANDA
Rural electricity access is a complex issue and monumental challenge that calls for the need to address
several factors collaboratively (Narayan et al., 2020).
This is because the prospective sites vary on a case
by case basis and there is no one size fits all procedure and solution. This poses several challenges to MG
development however, consideration of several priorities beforehand provide necessary insights for the up
scaling of MGs.
5.1 Financial barriers
Irrespective of the reducing technology costs, the
expense of energy generation and supply with regard
to operational, maintenance and management costs
still remains high in developing countries (Bhatia &
Angelou, 2015). This has stalled five MGs meant
to be constructed by Absolute energy in Wakiso,
Namayingo, Mukono and Kalangala Islands (ERA,
2018). This impediment amplifies the revenue risk
leading to longer payback times yet private sector
investment is reliant on grants, equity and debt financing (Mugagga & Chamdimba, 2019). Tackling the balance between the scale of anticipated risks and returns
thus remains a key aspiration to private developers
(Williams et al., 2015). Compounding the project risks
is the difficulty in supporting developments in poor
investment climates where the returns on investment
would be more or less uncertain leading to large capital
outlays (Gambino et al., 2019). The customers’ willingness to pay (WTP) and ability to pay (ATP) also
vary rather disproportionally within different regions
of the country as most un-electrified areas are predominantly agrarian based which limits their income levels.
While corrective factors are critical in arriving at
a commercially viable project as they help normalize the anticipated demand load profile, they also help
maintain the balance of the tariff structure. Also, favorable political motivation helps secure private as well as
public sector investments in addition to promoting subsidies (SEforALL BNEF, 2020; Shrestha et al., 2020).
Reasonable tariffs and power subsidies are a reality in
MG development as they stimulate and ensure project
sustainability. Subsidies usually take the form of either
capital or operating subsidies (Williams et al., 2015).
The Ugandan government offers 50% capital subsidies as they tend to be more attractive for RE based
generation due to long term sustainability (SEforALL
BNEF, 2020).
5.2 Institutional barriers
Aside from the upfront costs, the role of efficient,
robust and established regulatory frameworks are of
great essence in expediting the stages of MG development (Lane et al., 2018). The existing frameworks
in the country are characterized by lengthy bureaucratic stages which are not necessary. This red tape
deters investment, increases transaction costs which
prolongs project timelines leading to inherent in line
ramifications (Chessin, Cook, Gessesse, & SolanoPeralta, 2017; Weston et al., 2016). Since MGs are
regulated by ERA, those below 2MW are issued
with certificates of exemption from annual licensing fees (ERA, 2019). However, for those projects
above the 2 MW range, project developers have delineated the challenges of navigating through the existing
frameworks; the lengthy durations within which the
licensing permits are processed, unclear approval processes, with tariff adjustments varying on a case by
case basis though on a positive note, the REA is
either entirely responsible for distribution infrastructure development or reimbursement of 50% of the
construction cost to the developer (Chessin et al., 2017;
Nygaard et al., 2018). Guaranteed and clear long-term
policies that are consistent over time avert damage,
increase confidence to the projects in the pipeline and
those under execution which is crucial in providing
fair and equitable environments for MG development
(Romankiewicz et al., 2014).
The regulatory environment with regard to MG
development in Uganda is less mature compared to
neighboring Kenya and Tanzania. This represents the
biggest bottleneck in encouraging private investment
in Uganda and this therefore explains the limited number of MG established so far (SEforALL BNEF, 2020).
Benchmarking from government initiatives such as
setting cost reflective tariffs – in Kenya, Rwanda
and Tanzania, objectively defined projects like the
Kenya Off-grid Solar Access Project (KOSAP) meant
to increase modern energy access to 14 underserved
counties – in Kenya, and clear regulations with respect
to grid arrival as is the case in both Tanzania and
Rwanda (Weston et al., 2016). This shall help address
this eminent challenge
5.3 Community acclimatization and involvement
The primary energy sources utilized in MG power generation are usually prone to availability and reliability
concerns due to the intermittent nature of the sun, wind
and the hydro resources (Mohapatra et al., 2019). This
is characteristic of most MGs in the country as most
do not incorporate the hybrid (several RE resources)
setup which would otherwise increase cost efficiency,
competitiveness, flexibility and reliability (Parhizi,
Lotfi, Khodaei, & Khodaei, 2015). Proper demand
side management comes into perspective though it is
252
gasifier. Ultimately, the consumers didn’t benefit in the
long run as the running costs couldn’t allow for further
generation (Owen & Ripken, 2017). It thus becomes
a cautionary tale to involve several concerned actors
during the planning, implementation and the operation
of MGs (Warneryd et al., 2020).
5 CHALLENGES AND PRIORITIES TO MG
DEVELOPMENT IN UGANDA
Rural electricity access is a complex issue and monumental challenge that calls for the need to address
several factors collaboratively (Narayan et al., 2020).
This is because the prospective sites vary on a case
by case basis and there is no one size fits all procedure and solution. This poses several challenges to MG
development however, consideration of several priorities beforehand provide necessary insights for the up
scaling of MGs.
5.1 Financial barriers
Irrespective of the reducing technology costs, the
expense of energy generation and supply with regard
to operational, maintenance and management costs
still remains high in developing countries (Bhatia &
Angelou, 2015). This has stalled five MGs meant
to be constructed by Absolute energy in Wakiso,
Namayingo, Mukono and Kalangala Islands (ERA,
2018). This impediment amplifies the revenue risk
leading to longer payback times yet private sector
investment is reliant on grants, equity and debt financing (Mugagga & Chamdimba, 2019). Tackling the balance between the scale of anticipated risks and returns
thus remains a key aspiration to private developers
(Williams et al., 2015). Compounding the project risks
is the difficulty in supporting developments in poor
investment climates where the returns on investment
would be more or less uncertain leading to large capital
outlays (Gambino et al., 2019). The customers’ willingness to pay (WTP) and ability to pay (ATP) also
vary rather disproportionally within different regions
of the country as most un-electrified areas are predominantly agrarian based which limits their income levels.
While corrective factors are critical in arriving at
a commercially viable project as they help normalize the anticipated demand load profile, they also help
maintain the balance of the tariff structure. Also, favorable political motivation helps secure private as well as
public sector investments in addition to promoting subsidies (SEforALL BNEF, 2020; Shrestha et al., 2020).
Reasonable tariffs and power subsidies are a reality in
MG development as they stimulate and ensure project
sustainability. Subsidies usually take the form of either
capital or operating subsidies (Williams et al., 2015).
The Ugandan government offers 50% capital subsidies as they tend to be more attractive for RE based
generation due to long term sustainability (SEforALL
BNEF, 2020).
5.2 Institutional barriers
Aside from the upfront costs, the role of efficient,
robust and established regulatory frameworks are of
great essence in expediting the stages of MG development (Lane et al., 2018). The existing frameworks
in the country are characterized by lengthy bureaucratic stages which are not necessary. This red tape
deters investment, increases transaction costs which
prolongs project timelines leading to inherent in line
ramifications (Chessin, Cook, Gessesse, & SolanoPeralta, 2017; Weston et al., 2016). Since MGs are
regulated by ERA, those below 2MW are issued
with certificates of exemption from annual licensing fees (ERA, 2019). However, for those projects
above the 2 MW range, project developers have delineated the challenges of navigating through the existing
frameworks; the lengthy durations within which the
licensing permits are processed, unclear approval processes, with tariff adjustments varying on a case by
case basis though on a positive note, the REA is
either entirely responsible for distribution infrastructure development or reimbursement of 50% of the
construction cost to the developer (Chessin et al., 2017;
Nygaard et al., 2018). Guaranteed and clear long-term
policies that are consistent over time avert damage,
increase confidence to the projects in the pipeline and
those under execution which is crucial in providing
fair and equitable environments for MG development
(Romankiewicz et al., 2014).
The regulatory environment with regard to MG
development in Uganda is less mature compared to
neighboring Kenya and Tanzania. This represents the
biggest bottleneck in encouraging private investment
in Uganda and this therefore explains the limited number of MG established so far (SEforALL BNEF, 2020).
Benchmarking from government initiatives such as
setting cost reflective tariffs – in Kenya, Rwanda
and Tanzania, objectively defined projects like the
Kenya Off-grid Solar Access Project (KOSAP) meant
to increase modern energy access to 14 underserved
counties – in Kenya, and clear regulations with respect
to grid arrival as is the case in both Tanzania and
Rwanda (Weston et al., 2016). This shall help address
this eminent challenge
5.3 Community acclimatization and involvement
The primary energy sources utilized in MG power generation are usually prone to availability and reliability
concerns due to the intermittent nature of the sun, wind
and the hydro resources (Mohapatra et al., 2019). This
is characteristic of most MGs in the country as most
do not incorporate the hybrid (several RE resources)
setup which would otherwise increase cost efficiency,
competitiveness, flexibility and reliability (Parhizi,
Lotfi, Khodaei, & Khodaei, 2015). Proper demand
side management comes into perspective though it is
252