THE JUST ENERGY TRANSITION IN UGANDA; OPPORTUNITIES, RISKS AND BOTTLENECKS

1. Introduction

The global imperative to address the triple planetary crisis, that is; climate change, biodiversity loss and pollution, has led many nations across the globe to embark on a transition from heavy reliance on fossil fuels, to wit coal, oil and natural gas, to strategic investment in sustainable, clean and low-carbon renewable energy sources. These renewable energy sources primarily include, solar, wind, hydro, geothermal and bio-energy.

Uganda is no exception. The Just Energy Transition essentially refers to the shift from conventional, fossil-fuel-based energy systems to cleaner, more sustainable alternatives while ensuring social equity and economic development. At the 28^th Session of the United Nations Conference on Climate Change (COP28), Uganda rolled-out her Energy Transition Plan (ETP). The ETP lays out a roadmap for Uganda to sustainably develop her energy sector, meet her climate targets, deliver universal energy access and realize equitable economic returns.

2. Status quo

According to data and reports from the Ministry of Energy & Mineral Development (MEMD) and the Uganda Bureau of Statistics (UBOS), Biomass is the most dominant energy source in Uganda, accounting for 90.5% (2021) of the primary energy consumed. Hydro-power remains Uganda’s dominant source of electric energy, with a potential of over 4100 MW. The rate of electricity connectivity access is 28% (June 2019), with a total installed generation capacity of 1,378.1 MW (December 2022) and peak electricity demand of approximately 650 MW. Households comprise the largest energy consumer group, followed by industry and transportation. In 2022, hydro-power contributed 88% of Uganda’s power production.

Uganda’s energy resource potential stands at an estimated 450 MW of geothermal, 1,650 MW of biomass co-generation, 460 million tons of biomass standing stock with a sustainable annual yield of 50 million tons, an average of 5.1 kWh/m² of solar energy, and about 250 Mtoe of peat (800 MW). The overall renewable energy generation potential is estimated to be 5,300 MW. In the next three years, energy demand will stand at 7,664 GWh with a peak demand of 1,250 MW. Uganda’s Least Cost Generation plan envisages growth in generation from 872 MW in 2018 to 3,127 MW in 2027 on the base case scenario.

3. Opportunities

• Enhanced Energy security

By transitioning to renewable energy sources, Uganda can reduce her dependence on finite and often geopolitically sensitive fossil fuel reserves. This diversification of the energy mix not only mitigates the risks associated with global energy market volatility but also strengthens resilience against supply disruptions. Decentralized and localized renewable energy systems contribute to a more robust energy infrastructure, capable of withstanding natural disasters or geopolitical tensions. Moreover, the just energy transition encapsulates the development of energy-efficient technologies and smart grids, further fortifying energy systems against physical vulnerabilities.

• Rural Electrification and Inclusive Growth

A just energy transition in Uganda presents an opportunity to address energy poverty by extending access to electricity in rural areas. This, in turn, can spur economic activities, improve education and healthcare, and contribute to overall inclusive growth, across the country.

• Renewable Energy employment opportunities

The transition to renewable energy sources can stimulate job creation in various sectors, including manufacturing, installation, and maintenance of renewable energy infrastructure. This can lead to a more dynamic, diversified and resilient job market.

• Global Partnerships and Financing

Uganda, like many other developing nations, can leverage international partnerships and financing mechanisms aimed at facilitating and expediting the transition to clean energy. This can alleviate the financial burden on the government and facilitate the implementation of large-scale renewable energy projects. Renewable Energy deployment has proven to be a pivotal incentive for Public-Private Partnerships (PPPs) across the globe, which have gone a long way in mainstreaming private sector participation in the just energy transition.

• Renewable Energy induced foreign exchange savings

As Uganda transitions away from traditional fossil fuels and embraces clean energy alternatives, she reduces her dependence on expensive imported fuels. This shift not only contributes to a more sustainable and environmentally friendly energy landscape but also translates into substantial savings in foreign exchange expenditure. By harnessing the abundant renewable resources available, the nation is able to generate affordable and locally sourced energy. This not only bolsters energy security but also curtails the need for importing costly fossil fuels, thereby conserving local foreign exchange reserves.

• Climate Change mitigation and adaptation

As nations shift from fossil fuel-dependent systems to cleaner and renewable energy sources, they actively reduce the emission of greenhouse gases responsible for global warming. These gases are largely, carbon dioxide, methane and nitrous oxide gases.  By propagating renewable energy, the transition contributes significantly to climate change mitigation by curbing carbon emissions and other pollutants associated with conventional energy sources. Additionally, the deployment of decentralized and resilient renewable energy infrastructure enhances adaptability to the changing climate conditions. Localized renewable energy systems can provide reliable power even in the face of extreme weather events, ensuring continued energy access during disruptions. Moreover, the just energy transition pays laser-focused consideration to vulnerable communities, which in turn fosters social equity thereby ensuring that the benefits of clean energy are accessible to all. This inclusive approach contributes to broader societal resilience in the face of climate-related disasters, creating a more sustainable and equitable future for Uganda.

• Reduction in the dependence on imported fuels and the ancillary price fluctuations

The just energy transition has the ability of significantly diminishing Uganda’s reliance on imported fuels, thereby mitigating the impact of the price fluctuations associated with global energy markets. Globally, as countries transition to sustainable and locally-sourced energy solutions, they reduce their dependence on foreign oil and gas imports. This strategic shift not only bolsters energy security but also insulates the economy from the volatility of international fuel prices. By harnessing abundant domestic renewable resources, nations can stabilize their energy costs and mitigate vulnerability to geopolitical tensions or market fluctuations. The just energy transition, therefore, not only contributes to environmental sustainability but also enhances economic stability by promoting energy independence and reducing exposure to the uncertainties inherent in the global fossil fuel market.

• Renewable Energy induced macro and micro-economic growth and the attendant poverty eradication

At the macroeconomic level, the shift towards renewable energy sources can stimulate new industries and create jobs in the renewable energy sector. Investments in clean energy technologies drive innovation and economic diversification, fostering sustainable growth. As Uganda develops robust renewable energy infrastructure, she can reduce her reliance on costly imported fossil fuels, creating a more stable and resilient economy. At the microeconomic level, decentralized and community-based renewable energy projects empower local communities by providing job opportunities and incentivizing entrepreneurship. Access to affordable and sustainable energy enhances productivity in various sectors, including agriculture and small-scale enterprises, lifting communities out of poverty. The just energy transition, by prioritizing equitable access to clean energy resources, ensures that the benefits of economic growth are shared equitably, contributing to poverty eradication and creating a more sustainable and equitable society.

4. Risks:

• Dependency on Weather-Dependent Sources.

The reliance on hydro-power and solar energy makes Uganda’s energy sector susceptible to climate variability. Changes in weather patterns, such as droughts, can lead to fluctuations in energy production, affecting reliability.

• Technological and Infrastructural Challenges.

The transition to renewable energy requires substantial investments in new technologies and infrastructure. Uganda may face challenges in terms of technological readiness, skill-gaps, and the need for an upgraded grid system to accommodate intermittent renewable sources.

• Economic Disruptions for Fossil Fuel Industries.

The shift away from fossil fuels can have economic repercussions for existing industries, potentially leading to job losses and economic downturns in regions dependent on traditional energy sources. Ensuring a just transition involves addressing these economic impacts and providing support for affected groups through skilling and upskilling.

• Policy and Regulatory Uncertainties:

Inconsistent or unclear policies and regulations can impede the progress of the just energy transition in Uganda. Uganda must develop and deploy robust legal, regulatory and institutional frameworks that encourage investment in renewable energy while addressing social and environmental concerns.

5. Bottlenecks

• Limited Financial Resources

Uganda faces financial constraints that may hinder the implementation of large-scale renewable energy projects. Securing funding for such projects remains a significant bottleneck that requires innovative financing mechanisms and partnerships. A conducive investment environment punctuated by enabling legal, regulatory and institutional frameworks can go a long way in attracting substantial investment in Uganda’s renewable energy transition.

• Lack of Public Awareness and Participation

The success of the just energy transition in Uganda will certainly necessitate public awareness and active participation of the people of Uganda. At present, there is lack of awareness on and popular appreciation of the benefits of renewable energy and the relevance of a sustainable energy transition in Uganda.

• Political Will and Governance

The political will to embrace, implement and enforce policies propagating the just energy transition is crucial. Uganda must overcome challenges related to governance, corruption, and political instability to ensure the effective execution of sustainable energy programmes, projects and initiatives.

Conclusion

By and large, Uganda’s pursuit of a just energy transition presents a pathway towards sustainable development, economic growth, and climate resilience. While the opportunities are substantial, addressing the associated risks and bottlenecks is imperative for the success of the just energy transition in Uganda. A collaborative effort involving government, the private sector, civil society and all concerned stakeholders is essential in navigating the tangential complexities and ensuring that the transition is not only seamless but also just for all stakeholders involved. Through strategic planning, international cooperation, and a commitment to inclusive development, Uganda can chart a course towards a more sustainable and equitable energy future for all.

ENERGY, ENVIRONMENT & SUSTAINABILITY DEPARTMENT