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Beyond the grid: How East Africa is navigating the path to rural electrification

A rural house with solar panels

A rural house with solar panels

On Sunday, March 24, 2024, the West Nile district of Yumbe recorded scorching temperatures of 34 degrees Celsius.

There was no chance of rain in Yumbe that day. Despite the heat wave across the country, this is a staggering 12 degrees above Uganda’s annual average and it can soar even higher, approaching the 40 degrees Celsius mark. While the searing heat has destroyed gardens, the abundant sunshine is a blessing in disguise, as it provides off-grid solar energy for the district.

Yumbe receives on-grid power supply from WENRECO which, like other private companies in Uganda’s electricity sector, is keen to pursue profit from its investments. In October 2023, for instance, WENRECO wrote to the Electricity Regulatory Authority asking for amendments to its performance parameters, all of which pointed to safeguards against losses.

Uganda Electricity Distribution Company Limited, which is in charge of the last-mile connections in Yumbe, is bogged down by a weak financial base to undertake investments in the grid network. The company has struggled to get new customers in the district.

The alternative to WENRECO’s frequent power outages is a thermal generator that uses heavy fuel oil, owned by Electromaxx Limited in Arua City in West Nile. Thermal power is the most expensive option available in Uganda’s energy industry today.

PROHIBITIVE COSTS

For the predominantly poor population of Yumbe, who pay a tariff of 21 US cents/kWh, according to the rates published by the Uganda Electricity Distribution Company Limited, these on- grid electricity supply solutions are too expensive. Beyond the prohibitive costs, the power supply is unreliable, which has forced people to seek cheaper alternatives.

Data from the Uganda Bureau of Statistics reveals that close to 60 per cent of Ugandans have access to electricity. However, in rural areas, the percentage reduces to less than 20 per cent. This is attributed to poor infrastructure, unreliable power supply and high tariffs.

Accessibility drops even further with off-grid solar solutions, with government estimates putting it to around 14 per cent. To illustrate the magnitude of the problem, picture this scenario: Uganda’s Ministry of Finance, Planning and Economic Development allocated a budget of Shs 1 billion to cover electricity bills in Yumbe’s health sub-sector for the second quarter (October to December, 2023) of the financial year 2023/2024.

However, the district did not spend a single shilling from the allocated funds as grid electricity was not supplied to the facilities. As a result, some health facilities are seeking more reliable options. Mijale village in Yumbe district, for instance, demonstrates a shift from unreliable grid electricity by acquiring 10 solar batteries during the last financial year to meet their energy needs.

Similar off-grid solar energy solutions have also been implemented to operate water pumping systems in the district, including in Tokuro village in Ariwa sub-county. Despite cases like Mijale village, the people of Yumbe remain susceptible to the burden of costly and unreliable electricity.

This scenario is not unique to Yumbe. It is apparent in most of rural Uganda, yet there is little evidence to prove government’s commitment towards promoting off-grid solar despite its recognised benefits.

WHAT HAS GOVERNMENT DONE?

The government has in the past created entities such as the Uganda Energy Credit Capitalisation Company to promote off-grid solutions.

The latest initiative – the Electricity Access Scale Up Project – launched early this year, aims to promote solar off-grid technologies, among other objectives. However, these programmes rely heavily on support from development partners who provide most of the funding.

In spite of a new energy industry strategy, the government of Uganda is yet to put money where its mouth is by backing pronouncements with financial obligation to boost off-grid solar energy.

ENERGY TRANSITION PLAN

Uganda’s new Energy Transition Plan, a policy document that was launched in Dubai, United Arab Emirates, during the 28th UN Climate Change Conference in December 2023, falls short of specifics on supporting off-grid solar energy in rural areas. It simply glosses over the issues.

The plan notes that “in more remote communities, off-grid solar PV systems and mini-grids offer a feasible alternative due to lower cost, faster deployment and easier scalability compared to a traditional grid extension.”

It adds that “considering the significance of the off-grid component, robust and transparent policies and regulations are essential to encourage the mini-grid developers and Solar Home System distributors’ involvement in electricity access. Pilot projects and pre-feasibility studies, led by government and international partners, are vital to demonstrate the viability of investments in areas where, due to lower incomes and limited payment capacities, returns on investment might appear challenging”.

The Energy Transition Plan seeks to drive Uganda towards achieving net zero emissions by 2065 through promotion of cleaner energy sources like solar power. It lays out the size of investment that Uganda needstoattracttorealisethisgoal. However, the government says investors are hesitant to commit capital to energy projects in rural areas where returns seem too low.

Rural consumers largely use electricity for lighting and phone charging – the kind of usage that may not generate sufficient returns for investors to regain their investments. Energy projects connected to the grid depend on heavy demand and usage, which is lacking in rural areas. Off-grid solar systems are seen as the most viable solution to rural electricity challenges.

The ETP notes that “the country will need to prioritise and commit to significant annual investments of around $850 million per year if it is to achieve universal access to electricity and clean cooking by 2030.” It adds that “for electricity access, an estimated 25 per cent of the required investments target grid infrastructure extensions and improvements, while off-grid solar home systems (SHSs) and multi-light systems (MLS) each account for nearly 30 per cent, with mini grids making up the rest.”

A lot of this investment is expected to come from the private sector. Currently, private sector providers are leading the implementation of solar power solutions. Commercial banks such as Equity bank and Centenary bank are also involved in bridging financial gaps, helping rural communities to access credit.

EAST AFRICA COMPARISON

To appreciate the difference in access to electricity across East Africa, comparison of power tariffs suffices. Statistics show that Tanzania has the lowest tariff, with domestic consumers paying 15 US cents/ kWh. Uganda’s tariff stands at 21.6 US cents/ kWh, while Kenya’s is slightly higher at 24.7 US cents/kWh.

However, these numbers can be misleading. A deeper look into the tariffs triggers the question: are they cost- reflective? Governments continue to heavily subsidize their electricity sectors by offering room for lower tariffs, while other countries impose high monthly service charges and high maximum demand charges, which might not be reflected in the tariff. These concealed charges partly account for
the need for off-grid solar energy solutions for rural areas.

KENYA’S STRATEGY

Kenya has grand plans for its energy industry. East Africa’s biggest economy launched its Energy Transition and Investment Plan 2023-2050 with a target of achieving net zero emissions by 2050. Up to $38 billion is targeted for clean energy infrastructure by 2035. Kenya’s investment plan projects that the entire population will have access to electricity by 2030, a major increase from the current nearly 80 per cent.

The plan, which was also launched during the COP 28 conference in Dubai last year, makes no mention of off-grid solutions. This does not imply that Kenya disregards the need for off-grid solar solutions. The country created the Rural Electrification and Renewable Energy Corporation, which is committed to promoting off-grid solar energy.

Like other countries, Kenya also seeks financial support from development partners for solar off-grid solutions. The corporation aims to initiate investments in solar mini grids, through the Kenya Off Grid Solar Access Project. The project targets 20 per cent of the rural population in underserved communities who have no access to electricity.

The World Bank, as the main funder, has committed $150 million to the project. The initiative has four key components, with off-grid solar solutions taking two. The installation of standalone solar systems and clean cooking solutions for households is budgeted at $15.7 million, while standalone solar systems and solar water pumps for community facilities are allocated $21.3 million. The programme, which has been running since 2017, is due to end by May 2025.

WHAT TANZANIA IS DOING

Tanzania, the country with the lowest electricity tariff in the region, also has some of the largest reserves of gas in Africa. With an estimated 50 trillion cubic feet of gas under exploration, this reserve is more than enough to power the entire Tanzanian economy and offer surplus supply to neighbouring countries.

Gas accounts for the highest percentage of Tanzania’s energy requirements, but it is also responsible for some of the highest carbon emissions, which has drawn sharp criticism from environmental activists. Tanzania has just tested the first 235MW turbine of the 2115MW Julius Nyerere hydropower project, which is expected to transform the country’s electricity outlook.

Together with its gas reserves, Tanzania ideally has sufficient power to meet its entire population’s needs. However, the lack of transmission lines to distribute electricity from generation plants and the unreliability of the grid network makes off-grid solar solutions a necessity, more so in areas such as islands that lack transmission lines.

Though there is no comprehensive blueprint for its energy transition, many rural households in Tanzania continue to rely on solar solutions to power their homes.

This explainer is produced as part of ACME’s two-year project, implemented in partnership with the Charles Stewart Mott Foundation, to enhance communication channels, foster better engagement with stakeholders, and improve public awareness of renewable energy technologies.

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